Taxation of multinational banks: Using formulary apportionment to reflect economic reality (Part 1)

Sadiq, Kerrie (2011) Taxation of multinational banks: Using formulary apportionment to reflect economic reality (Part 1). Journal of International Taxation, 22 5: 46-58.

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Name Description MIMEType Size Downloads
Author Sadiq, Kerrie
Title Taxation of multinational banks: Using formulary apportionment to reflect economic reality (Part 1)
Journal name Journal of International Taxation   Check publisher's open access policy
ISSN 1049-6378
Publication date 2011-05
Year available 2011
Sub-type Article (original research)
Volume 22
Issue 5
Start page 46
End page 58
Total pages 13
Place of publication New York, NY, U.S.A.
Publisher W G & L Financial Reporting & Management Research
Collection year 2012
Language eng
Subject CX
180125 Taxation Law
949999 Law, Politics and Community Services not elsewhere classified
Formatted abstract
Formulary apportionment does not attempt to undertake a transactional division of a highly integrated multinational entity. Rather, it allocates income to the jurisdictions based on an economically justifiable formula. Opposition to formulary apportionment is generally based on the argument that it is not a theoretically superior (or optimal) model because of the implementation difficulties. The conclusion that the unitary taxation model may be theoretically superior to the current arm's-length model that applies to multinational banks, despite significant implementation, compliance, and enforcement issues, is based on the unitary taxation model providing greater alignment with the unique features of these banks. The formulary apportionment model looks to the economic substance of the multinational entity and, in this sense, adopts a substance-over- form approach. Formulary apportionment further recognizes the impossibility of using arm's-length pricing for economically interdependent multinational entities. A final advantage to formulary apportionment, which is also a consequence of this model achieving greater inter-nation equity, is the elimination of double taxation.
Q-Index Code CX
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Non HERDC
TC Beirne School of Law Publications
 
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Created: Mon, 12 Sep 2011, 14:03:23 EST by Carmen Buttery on behalf of T.C. Beirne School of Law