Taxation of Corporate Groups

Due to its vital societal role, the corporate income tax (CIT) is driven by various economic, political, social, and ideological forces. Legislators, tax authorities, political parties, corporate lobbies, and interest groups compete to influence the design of its objectives and legislative order. The internal tension of these forces turns the process of CIT reform into a piecemeal endeavor that more often than not generates asymmetric and logically incoherent tax rules and principles. Add market imperfections and the behavioral nature of the corporate taxpayer, and the problems of corporate taxation in practice can seem insurmountable.

This book refines the features of a variety of different common law and civil law systems down to a recognizable standard CIT system, identifying in the process the system''s core strengths and problems, as well as the factors that determine its impact on corporate behavior. The author offers insightful perspectives on such crucial issues as the following:

• - corporate group members versus corporate groups as taxable entities;
• - anti-abuse rules and developments in judicial anti-abuse doctrines;
• - costs associated with, e.g., valuation of assets, compliance, and administration;
• - how certain core CIT concepts are independent of tax law;
• - efficiency, equity, and the protection of existing property rights;
• - the firm''s reaction to behavioral control instruments;
• - limitations on the use of losses;
• - depreciation and amortization rules;
• - manipulation of legal characterization; and
• - transfer of assets and income.

The work has an interdisciplinary approach drawing on the literatures of tax law, economics, corporate law, accounting, and business management. It concludes with a set of policy guidelines that should be considered when approaching the traditionally cumbersome interaction between tax systems and corporate groups. Especially valuable to the practitioner are the book''s extensive graphic design solutions illustrating the subtleties of the operation of corporate tax laws.

Analyzing the taxation of corporate groups in a user-friendly form not available in any other source, this book greatly enhances the development of advanced tax planning methods that do not disrupt the economic operation of businesses. Its comprehensive conceptual framework will greatly facilitate the work of those, from practitioners to researchers, interested in developing a practical approach to corporate income taxation applicable at a global level.