Taxing Offshore Investment Income: A Comparative Review of Structural Issues (Introduction)
TAXING OFFSHORE INVESTMENT INCOME: A COMPARATIVE REVIEW OF STRUCTURAL ISSUES, Fiscal Publications, 2006
6 Pages Posted: 14 May 2010 Last revised: 8 Aug 2013
Date Written: 2006
Abstract
The taxation of offshore investment income is the subject of an increasing focus of legislative activity throughout the world. The reason is that offshore investment gives rise to problems of residence and of source, caused in particular by the interposition of non-natural persons between income and the natural person who enjoys the economic benefit of that income. For similar reasons, there are issues of deferral and of coverting income into capital. In short, there is a large gap, sometimes called an “ectopia”, between income as an economic benefit to an investor and that same income as defined by law. Legally speaking, the income often stays in the hands of a foreign company while the substantive economic benefit of the income rebounds to the benefit of natural persons.
A foreign investment fund regime targets income of organizations that are based in another jurisdiction and that offer pooled investment opportunities. The country of residence of investors requires the investors to add a sum to their income to represent their accruing shares of the profits of the foreign fund.
Keywords: Income Tax Law, Company Law, Full Imputation, Controlled Foreign Companies, Avoidance, Double Taxation. Offshore Investment, Foegin Investment Fund Regimes
JEL Classification: K33, K34
Suggested Citation: Suggested Citation