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ADIT Network: Guest Article by Narelle MacKenzie

Ms. MacKenzie’s guest article has been featured in the February 2015 issues of the ADIT Student Newsletter. In the article, Ms. MacKenzie shares valuable exam preparation tips and strategies. These tips on studying for ADIT exams have come from successful ADIT students. Tips include advanced preparation, use of past papers, and proper time allocations. View the entire ADIT Student Newsletter.

AdminADIT Network: Guest Article by Narelle MacKenzie
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DJH International Tax – Live, Compact Training Courses – March 2015

DJH International Tax Ltd. has been conducting short, intensive courses in international tax, US corporate tax and transfer pricing since 2011. Each course is 3-4 days in length, making them ideal for those who have limited free time. To learn more about the March 2015 courses on international, US tax and transfer pricing, please see the DJH International Tax brochure.

The tutors teach regularly and are experts in their field. With this experience, they can bring unique practical experience to the classes.
Classes are small in size, which allows everyone to benefit fully from the tutors’ attention. The small classes also mean everyone can have their questions answered live.

While DJH focuses on providing practical help on real international tax problems, their courses featured here are based around the relevant syllabus for the Advanced Diploma in International Taxation.

Among the classes are:

Principles of US International Corporate Taxation
23-26 March 2015
Course Tutor: Narelle MacKenzie

In-depth US International Corporate Taxation
30 March – 2 April 2015
Course Tutor: Narelle MacKenzie

Please see the brochure for details and registration information.

AdminDJH International Tax – Live, Compact Training Courses – March 2015
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Form 5471 – The $10,000 Mistake

On December 2, 2014, Ms. MacKenzie presented to the CalCPA International Tax Discussion group in San Diego. The presentation is about preparation of IRS Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, and some of the issues to be considered.

Objectives of the presentation include:

  • Gain an understanding of the tax terms for outbound tax issues
  • Discover when Form 5471 may be required to be filed
  • Explore the information to be reported on Form 5471
  • Understand the penalties for failure to file Form 5471

View the presentation.

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Introduction to U.S International Tax Seminar

Learn the fundamentals of U.S. international taxation! This basic seminar will provide a basic understanding of U.S. international tax codes and tax reporting requirements for U.S. corporations with operations abroad. This course is for corporate tax, finance and accounting executives, CPAs, tax attorneys and counsel. There is no advance preparation or pre-requisites for this group live seminar.

On Monday, March 3, 2014, Narelle MacKenzie, International Tax Consultant, presents an Introduction and Overview of U.S. International Taxation. Topics include:

  • Understanding worldwide vs. territorial tax systems
  • Residence vs. activity based tax jurisdiction
  • Taxation of foreign income of U.S. corporations
  • U.S. income and sourcing rules
  • Permanent establishment principles and double taxation
  • Claiming a deduction or credit for foreign income taxes

View the brochure for the seminar.

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DJH International Tax – Live, Compact Training Courses

DJH international tax has created a series of courses based on the relevant syllabus for various papers making up the Advanced Diploma in International Taxation.

We began in 2011 with transfer pricing, the ADIT syllabus for which was developed by the course tutors; principles of international taxation was added in 2012; and courses for both US options in 2013. There is now a course available for each option paper.

But you don’t have to be studying for ADIT to benefit from the courses. Many participants, who come from all over the world and from commerce and industry as well as professional practice, say they are new to the topic, want to refresh their knowledge, or have identified gaps they need to fill to work more effectively.

All courses run at a dedicated and fully equipped training venue in central London, convenient for both UK and international travellers. We can also offer help with finding convenient accommodation.

Classes are limited in size to ensure all participants can engage fully and get maximum benefit from the course. All courses run for three and a half days. For transfer pricing the final half day is optional and will be devoted to consideration of sample exam questions.

Courses include: Principles of International Taxation; Principles and Practice of Transfer Pricing; Principles of US International Taxation, and; In-Depth US International Taxation. For more information about the course programs, dates, and pricing, please see our 2014 course brochure.

Information for the Principles of US International Taxation course is provided below.

The Principles of US International Taxation
Course Tutor: Narelle MacKenzie, CPA
Date: December 2-5, 2013

The structure of the US tax system
– Federal taxation vs. state and local taxation
– The federal tax system: the Internal Revenue Code

US federal income taxation: overview
– Basic rule: taxation of worldwide income of US persons
– Individuals
– Corporations
– Partnerships
– Trusts and estates
– Classification of business entities: the “check the box” regime
– Basic rules regarding taxation of non-US persons
– Source of income: section 861 et seq.

Inbound investment
– Non-US person engaged in the conduct of a US trade or business
– Non-US persons not engaged in the conduct of a US trade or business
– Foreign Investment in Real Property Tax Act
– Special US tax treaty issues: Limitation of benefit articles, saving clauses, treaty overrides
– Specific anti-avoidance rules: interest-stripping and anti-conduit regulations

Outbound investment
– Foreign tax credit
– Anti-deferral rules
– Outbound transfers: Code section 367

Other issues
– Transfer pricing rules: Code section 482 and regulations
– Anti-avoidance: general case law doctrines and main statutory provisions
– Estate and Gift Tax
– Indirect Taxes: customs duties; state and local sales taxes

Preparation: No detailed prior knowledge of US taxation is assumed but you will be expected to be broadly familiar with international tax terms.

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“Peeling the Apple”

Am getting excited about speaking next week to CalCPA on international tax – “Peeling the Apple”! SD Taxation: International Tax/Peeling the “Apple” | K2160713 Event Start time: 12:00 pm End time: 2:00 pm Location: San Diego Area Instructor(s): Narelle Elizabeth MacKenzie, CPA Facility: Handlery Hotel & Resort Get Directions group registration Single Registration dP CPE Credits: 2.00 CPE: Continuing Professional Education Technical Do you know how Apple and other multinational corporations navigate through Subpart F and manage to lower their global tax rate well below the US federal statutory rate of 35%? Are you familiar with the interplay between US tax rules and the tax rules of other countries utilized in global tax planning? Don’t miss the opportunity to hear a detailed presentation from Narelle MacKenzie, CPA, international tax consultant, and SDSU lecturer. Objectives: . Gain insight into the operation of Subpart F including exceptions . Discover how other countries might be able to tax local activities . Explore the available planning opportunities due to the interplay of tax rules of the US and other countries Major Subjects: Subpart F of the US IRS code Tax planning structures Worldwide taxation system vs territorial tax system Level of Difficulty: Update Field of Interest: Taxes Prerequisites: None Designed For: CPAs, corporate tax directors, and other professionals who are interested in the process by which a company achieves a low global effective tax rate. Advanced Prep: None Event Notes: The meeting is held at the Handlery Hotel & Resort located just off of IH8 and east of IH5 in Mission Valley. The fee includes lunch, CPE credit, and parking.

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International tax course

Very excited as start the 2013 summer session of Seminar Acctg 659 at SDSU, starting Monday, July 8, 2013!

This is part of the syllabus for the course…

The global economy is an economic reality and taxes are a key component of the global economy as they are paid by taxpayers and fund governments. The United States of America (“US”) has the highest federal corporate tax rate of any OECD country. The highest US corporate income tax rate is 35% and the highest US federal individual tax rate is 39.6%. When you factor in state income taxes, the corporate and individual tax rates are even higher than these amounts if the US person is subject to state income taxes. Taxpayers have a moral and ethical obligation to pay the appropriate amount of taxes – no more, no less.

As students learned in Accounting 321 and Accounting 503, taxation is complex and that understanding the US tax rules is critical to informed decision-making for US taxpayers. This course is the comprehensive study of the federal US tax rules as they apply in an international tax context. Topics include: taxation of US persons; taxation of non-US persons; source of income; FDAP income and withholding; inbound taxation; outbound taxation; foreign tax credits; the role of tax treaties; US anti-deferral regimes and transfer pricing.

Course Objectives: The primary objective is to help you understand the US International Tax rules. You will gain an in-depth understanding of the fundamentals of the US tax law in an international context and apply that understanding with international tax planning concepts. The focus of this course is the US federal income tax rules as it relates to international and cross-border transactions.

You will also use and develop higher-level skills such as the ability to analyze, synthesize and critically evaluate information and rules and then to communicate that critical learning to others in an informative, constructive and ethical manner. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ ++

Class Date (2013) Topic Reading
1 July 8 Introduction
Course Overview
Re
sidency, Sec. 911
Code: 871-877, 881-885, 911 and Regs
IRS Form(s): 1040NR, 2555, 8938, TDF90.22-1
2 July 10 Jurisdiction to Tax
Scheme of Taxation 
Code: 7701(b) and Regs.
Text: pp 16-60 (¶ 1070-1225)
3 July 15 Source of Income Code: 861-865 and Regs.
Text: pp 76-140 (¶ 2000-2245)
Case: Wodehouse (¶ 4015) 
4 July 17 Trade or Business
FDAP Withholding
Code: 871-875, 881-885, 1441-2 and Regs
Text: pp 141-179, 228-241, 260-276 (¶ 3000-3140, 4000-4045, 4110-4180)
Case: SDI Netherlands (¶ 4151)
IRS Form(s): W8-BEN, 1042 
5 July 22 Class test 1 (30 minutes)
FDAP
Earnings stripping
Branch Profits Tax 
Code: 163(j), 884(a), 897 and Regs.
Text: pp 222-227, 277-292Sec. 897 (¶ 3230-3240, 4185-4275)
IRS Forms(s): 1120-F, 5472
6 July 24 Class test 2 (30 minutes)
Foreign Tax Credit and Limitation
 Code: 901-907 and Regs.
Text: pp 302-315, 324-325, 331, 336-338, 406-428,664-681 (¶ 5000-5025, 5060, 5075-5080, 5105-5110, 5215-5275, 7000-7070)
IRS Form(s): 1116, 1118 
7  July 29 Class test 3 (30 minutes)
Tax Treaties
Code: 894
Text: pp 62-75, 181-220, 242-259, 417-484(¶ 1235-1295, 3160-3220, 4050-4102, 5380-5390)
IRS Form(s): 8833
 
8 July 31  CFC, Subpart F, 956 Code: 951-958
Text: pp 485-581(¶ 6000-6190) 
9 August 5  CFC-continued, 959, 1248 Code: 898, 959, 964, 1248, 6038, 6046
Text: pp 584-602, 603-608(¶ 6200-6230, 6240-6245)
IRS Form(s): 5471 
10 August 7  Major class test (120 minutes)  
11 August 12  Section 482 Code: 482 and Regs
Text: pp 710-760 (¶ 8000-8175) 
12 August 14  Class Presentations  
AdminInternational tax course
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OECD Base Erosion Report

This OECD Base Erosion report is interesting reading for those of us interested in international tax planning and/or have BODs asking about tax management for the company (interestingly the OECD report sees this as an important role for BODs).

The OECD believes tax policy should be designed with a global view in mind. Governments usually design tax policy with a view to local country economic and social goals. The activity that some countries view as creating a PE/taxable presence differs, such as Rep Offices for supply chain activities. In Europe such activities are generally seen as creating a PE, contrast this to Asia generally these activities are not seen as creating a PE/taxable presence. There can be local economic and social reasons for these policies, but none the less these are real issues that the OECD must face in dealing with getting to a global viewpoint on tax policies.

The EU has not been able to develop one taxing system: VAT – different interpretations for the same transaction; income tax – UK group loss case involving Marks and Spencer; income tax – different corporate tax rates. But perhaps the EU model will be the base for the OECD model going forward.

Another issue that needs to be considered is does this also mean changing from a civil law or common law system in those countries?

The report recognizes that BODs have a duty to their shareholders as it relates to corporate governance and taxation. I would argue that BODs have to do more than that in their duty to shareholders. They have a responsibility to legally and ethically maximize the EPS for shareholders. This includes ensuring all costs are appropriately managed – tax should not be seen as any different from to any other cost. If the supply chain has a choice between two or three suppliers, then all things being equal, they should choose the lowest cost option – same principal should apply for taxes.

The OECD recognizes that different countries have different statutory corporate income tax rates. This is one of the more difficult areas for US MNCs as the US federal corporate tax rate of 35% (when combined with a blended state tax rate, tends to set a rate at approx.. 38% for US MNCs) is significantly higher than the average for the OECD countries of 25.4% for 2011 (refer to page 16 of the report). That is a huge cost disadvantage for US MNCs. When this is highlighted to the politicians in DC, they are argue they are concerned with a fall in tax receipts, and yet the OECD report provides that during the period 2000-2011, while the average corporate tax rates fell 7.26%, the corporate tax to GDP ratio did not fall. That is something I think should be highlighted to the politicians in Washington. Not merely for the cost of doing business for US based MNCs, but the cost of doing business for non-US companies wanting to invest in the USA.

Another issue that is not raised in the report (and in fairness the focus of the report is income taxes) , is the other taxes that are a cost of doing business – VAT, GST, sales/use taxes, services taxes, state/provincial/municipal taxes. Often the structuring that MNCs undertake for the Global Value Chains is how to minimize these taxes – again, don’t companies have an obligation to minimize costs in the supply chain to provide the maximum value to shareholders?

It will be interesting to see what happens at the Forum of Tax Administrators to be held in Moscow in May 2013.

AdminOECD Base Erosion Report
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