Tax

Caterpillar has long used a subsidiary in Geneva, Switzerland, called Caterpillar SARL, to process sales and profits for international orders, and the IRS wants the heavy-machinery maker to pay a $2 billion tax bill on that business, according to The Wall Street Journal.

The Journal story goes onto say that, although the company maintains that its Swiss strategy, which results in an effective tax rate there of as low as 4%, is legal, some Caterpillar employees have questioned the practice, which began in 1999.

Saudi Arabia and the United Arab Emirates (UAE) introduced the Value Added Tax (VAT) for the first time from Monday.

It is a five per cent tax on most goods and services to boost revenue. The VAT will be applied on food, clothes, electronics and gasoline, phone, water and electricity bills, as well as hotel reservations, the BBC reported. The five percent sales tax applies to most goods and services and analysts project that the two governments could raise as much as $21 billion in 2018, equivalent to 2.0 percent of GDP.

Switzerland’s value-added tax regime will change from January 1, 2018, including to level the playing field for domestic companies compared with their online, overseas rivals.

Currently, foreign companies providing services in Switzerland do not have to pay VAT on Swiss turnover up to a CHF100,000 threshold. In this way, it led to competitive disadvantages for Swiss businesses, especially in the border regions.

An investigation by Brussels is to be launched today into Ikea’s Dutch tax arrangements. The Financial Times is reporting that Margrethe Vestager, the EU’s competition commissioner, will today announce an official probe into Ikea’s tax arrangements in the Netherlands, which according to a report published by the Green Party in the European Parliament, allegedly have helped Ikea avoid nearly €1bn in EU taxes between 2009 to 2014.

The India’s Income Tax (I-T) department is trying to find a way to tax bitcoin transactions, news agency Reuters reported on Wednesday quoting officials. The I-T department’s intent may be seen in the light of the surveys it conducted at nine bitcoin exchanges across the country.

Facebook has become one of the first large technology companies to shake up its tax structure and book less of its revenue in Ireland, as multinationals come under pressure to pay tax in the countries where they operate.

From January 1st, Facebook will begin the process of booking revenues from large advertisers in about 28 countries – including France and Germany and other major European markets – in the countries in which they were earned. It will also pay the taxes on those revenues in those countries, and not in Ireland.

Apple on MOnday reached an agreement with the European Union to begin depositing the €13 billion ($15.4 billion) in back taxes it was ordered to pay Ireland last year, following the landmark decision to crackdown on tax shelter policies and profit offshoring, according to The Wall Street Journal.

A Swiss man was handed a suspended prison term of nearly two years and a fine on Thursday for spying on a German tax authority, in a case that has pitted Swiss bank secrecy against Germany’s clampdown on tax evasion.

The man had confessed to the Frankfurt state court that he accepted 28,000 euros ($33,000) from Switzerland’s NDB spy agency to obtain information on tax officials in the German state of North Rhine-Westphalia.