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

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.

The implementation of social and economic policy through the tax regime : a review of Australia's tax expenditures program

Each year the Australian Federal Treasury releases its Tax Expenditures Statement providing details of concessions, benefits, and incentives delivered through the tax regime to Australian taxpayers. The current Tax Expenditures Statement, released on 25 January 2008, lists approximately 300 tax expenditures and reports on the estimated pecuniary value in terms of revenue foregone, estimated to be a total of $50.12 billion for the 2006-07 financial year. Apart from the annual Tax Expenditures Statement, and despite the recurring fiscal impact, there is very little other scrutiny of Australia’s Federal tax expenditures program. This is despite tax expenditures often being seen as an alternative to direct expenditures with similar impact on the Federal budget. The object of tax expenditures is to provide government assistance and meet government objectives, and, as such, tax expenditures are departures from the revenue raising aspect of the tax regime. Within this context, this article examines the fundamental concept of tax expenditures as contrasted with direct expenditures and considers the role they play in the current tax regime.

The taxation of multinational banks : alternative apportionment through a unitary taxation regime aligning with economic reality

The taxation of multinational banks currently is governed by the general principles of international tax. However, it is arguable that there are characteristics exclusive to multinational banks that may warrant the consideration of a separate taxing regime. This article argues that because of the unique nature of multinational banks, the traditional international tax rules governing jurisdiction to tax and allocation of income do not produce a result which is optimal, as it does not reflect economic reality. That is, the current system does not produce a result that accurately reflects the economic source of the income or the location of the economic activity. The suggested alternative is unitary taxation using global formulary apportionment. Formulary apportionment is considered as an alternative that reflects economic reality by recognising the unique nature of multinational banks and allocating the income to the location of the economic activity. The unique nature of multinational banking is recognised in the fact that 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. Starting from this recognition, the purpose of this article is to demonstrate that formulary apportionment is a theoretically superior (or optimal) model for the taxation of multinational banks. An optimal regime, for the purposes of this article, is considered to be one that distributes the taxing rights in an equitable manner between the relevant jurisdictions, while, simultaneously allowing decisions of the international banks to be tax neutral. In this sense, neutrality is viewed as an economic concept and equity is regarded as a legal concept. A neutral tax system is one in which tax rules do not affect economic choices about commercial activities. Neutrality will ideally be across jurisdictions as well as across traditional and non-traditional industries. The primary focus of this article is jurisdictional neutrality. A system that distributes taxing rights in an equitable manner between the relevant jurisdictions ensures that each country receives its fair share of tax revenue. Given the increase in multinational banking, jurisdictions should be concerned that they are receiving their fair share. Inter-nation equity is concerned with re-determining the proper division of the tax base among countries. Richard and Peggy Musgrave argue that sharing of the tax base by countries of source should be seen as a matter of inter-nation equity requiring international cooperation. The rights of the jurisdiction of residency will also be at issue. To this extent, while it is agreed that inter-nation equity is an essential attribute to an international tax regime, there is no universal agreement as to how to achieve it. The current system attempts to achieve such equity through a combined residency and source regime, with the transfer pricing rules used to apportion income between the relevant jurisdictions. However, this article suggests, that as an alternative to the current regime, equity would be achieved through formulary apportionment. 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. Yet these are two separate issues. As such, this article is divided into two core parts. The first part examines the theoretical soundness of the formulary apportionment model concluding that it is theoretically superior to the arm’s length pricing requirement of the traditional transfer pricing regime. The second part examines the practical implications of accepting formulary apportionment as an optimal model with a view to disclosing the issues that arise when a formulary apportionment regime is adopted. Prior to an analysis of the theoretical and practical application of formulary apportionment to multinational banks, the unique nature of these banks is considered. The article concludes that, while there are significant implementation, compliance, and enforcement issues to overcome, the unitary taxation model may be theoretically superior to the current arm’s length model which applies to multinational banks. This conclusion is based on the unitary taxation model providing greater alignment with the unique features of these banks.

Taxation of multinational banks : using formulary apportionment to reflect economic reality (Part 2)

As stated in Part 1 of this article, formulary appointment does not attempt to undertake a transactional division of a highly integrated multinational entity; rather, it allocates income to the jurisdictions based on economically justifiable formula. This article argues that the unitary taxation model is superior to the current arms-lenght model for the taxation of multinational banks despite significant implementation, complicance and enforcement issues. Part one of the article gave some background on the taxation of multinational banks, followed by a discussion of their uniqueness, and the theoretical benefits of the unitary tax model for multinational banking. Part 2 below covers the practical implications of accepting formulary apportionment as an 'optimal' regime for taxing multinational banks.

Economic fluctuations and productivity in the Malaysian construction sector

Growth in productivity is the key determinant of the long-term health and prosperity of an economy. The construction industry being one of major strategic importance, its productivity performance has a significant effect on national economic growth. The relationship between construction output and economy has received intensive studies, but there is lack of empirical study on the relationship between construction productivity and economic fluctuations. Fluctuations in construction output are endemic in the industry. In part they are caused by the boom and slump of the economy as a whole and in part by the nature of the construction product. This research aims to uncover how the productivity of construction sector is influenced in the course of economic fluctuations in Malaysia. Malaysia has adopted three economic policies – New Economic Policy (1971-1990), National Development Policy (1991-2000) and the National Vision Policy (2001-2010) since gaining independence in 1959. The Privatisation Master Plan was introduced in 1991. Operating within this historical context, the Malaysian construction sector has experienced four business cycles since 1960. A mixed-method design approach is adopted in this study. Quantitative analysis was conducted on the published official statistics of the construction industry and the overall economy in Malaysia between 1970 and 2009. Qualitative study involved interviews with a purposive sample of 21 industrial participants. This study identified a 32-year long building cycle appears in 1975-2006. It is superimposed with three shorter construction business cycles in 1975-1987, 1987-1999 and 1999-2006. The correlations of Construction labour productivity (CLP) and GDP per capita are statistically significant for the 1975-2006 building cycle, 1987-1999 and 1999-2006 construction business cycles. It was not significant in 1975-1987 construction business cycles. The Construction Industry Surveys/Census over the period from 1996 to 2007 show that the average growth rate of total output per employee expanded but the added value per employee contracted which imply high cost of bought-in materials and services and inefficient usage of purchases. The construction labour productivity is peaked at 2004 although there is contraction of construction sector in 2004. The residential subsector performed relatively better than the other sub-sectors in most of the productivity indicators. Improvements are found in output per employee, value added per employee, labour competitiveness and capital investment but declines are recorded in value added content and capital productivity. The civil engineering construction is most productive in the labour productivity nevertheless relatively poorer in the capital productivity. The labour cost is more competitive in the larger size establishment. The added value per labour cost is higher in larger sized establishment attributed to efficient in utilization of capital. The interview with the industrial participant reveals that the productivity of the construction sector is influenced by the economic environment, the construction methods, contract arrangement, payment chain and regulatory policies. The fluctuations of construction demand have caused companies switched to defensive strategy during the economic downturn and to ensure short-term survival than to make a profit for the long-term survival and growth. It leads the company to take drastic measures to curb expenses, downsizing, employ contract employment, diversification and venture overseas market. There is no empirical evidence supports downsizing as a necessary step in a process of reviving productivity. The productivity does not correlate with size of firm. A relatively smaller and focused firm is more productive than the larger and diversified organisation. However diversified company experienced less fluctuation in both labour and capital productivity. In order to improve the productivity of the construction sector, it is necessary to remove the negatives and flaws from past practices. The recommended measures include long-term strategic planning and coordinated approaches of government agencies in planning of infrastructure development and to provide regulatory environments which encourage competition and facilitate productivity improvement.

Transition to day care for older people in Taiwan : a grounded theory study

Adult day care centres provide a means whereby frail or disabled older people can remain living at home particularly when their family care-givers engage in waged work. In Taiwan, adult day care services appear to meet the cultural needs of both older people and their families for whom filial care is vital. Little research attention has been paid to the use of day care services in Taiwan, the uptake rate of which is low. This grounded theory study explored the ways in which older people and family care-givers construct meanings around the use of day care services in Taiwan. Forty-four semi-structured interviews were undertaken with older people, care-givers and day care centre managers. The findings from grounded theory data analysis bring focus to the assumptions and structures that underpin the process of transition to day care services. A key feature of this process is the reconstruction of personal identity as both the older people and family care-givers work to make sense of the relationship between the self and a changing social structure. Reconstructing identity in a shifting world is the core category of the study and reflects a process of reframing whereby older people came to new definitions of social responsibility and independence within the context of the day care centre. Similarly, the family care-givers actively reformulated the concept of filial piety as they interacted with and interpreted the changes in economic and social conditions in Taiwan.

The taxation of multinational banking income : is the traditional rationale correct?

This article argues that multinational banks have characteristics which are unique and distinguishable from traditional multinational entities. The first distinguishing feature is the unique nature of the services and consequent products supplied by multinational banks, which are aimed at meeting client global demand. The second distinguishing feature is the non-traditional organisational structure that is adopted. This structure, also designed to meet client global demand, introduces issues previously not recognised in the traditional taxation system, which is designed for the structure of traditional multinational entities. The unique differences between traditional multinational entities and multinational banks means there may be the need for a distinct international tax regime. It is argued that there are “outmoded economic assumptions” upon which the present tax laws relating to multinational banks are based. An examination of the unique nature of multinational banks leads to the conclusion that the appropriate tax treatment of these banks is different from the appropriate tax treatment of multinational entities generally.

Homo- and heteronuclear meso,meso-(E)-Ethene-1,2-diyl-Linked Diporphyrins : preparation, X-ray crystal structure, electronic absorption and emission spectra and density functional theory calculations

Homo-and heteronuclear meso,meso-(E)-ethene-1,2-diyl-linked diporphyrins have been prepared by the Suzuki coupling of porphyrinylboronates and iodovinylporphyrins. Combinations comprising 5,10,15-triphenylporphyrin (TriPP) on both ends of the ethene-1,2-diyl bridge M 210 (M 2=H 2/Ni, Ni 2, Ni/Zn, H 4, H 2Zn, Zn 2) and 5,15-bis(3,5-di-tert-butylphenyl)porphyrinato-nickel(II) on one end and H 2, Ni, and ZnTriPP on the other (M 211), enable the first studies of this class of compounds possessing intrinsic polarity. The compounds were characterized by electronic absorption and steady state emission spectra, 1H NMR spectra, and for the Ni 2 bis(TriPP) complex Ni 210, single crystal X-ray structure determination. The crystal structure shows ruffled distortions of the porphyrin rings, typical of Ni II porphyrins, and the (E)-C 2H 2 bridge makes a dihedral angle of 50° with the mean planes of the macrocycles. The result is a stepped parallel arrangement of the porphyrin rings. The dihedral angles in the solid state reflect the interplay of steric and electronic effects of the bridge on interporphyrin communication. The emission spectra in particular, suggest energy transfer across the bridge is fast in conformations in which the bridge is nearly coplanar with the rings. Comparisons of the fluorescence behaviour of H 410 and H 2Ni10 show strong quenching of the free base fluorescence when the complex is excited at the lower energy component of the Soret band, a feature associated in the literature with more planar conformations. TDDFT calculations on the gas-phase optimized geometry of Ni 210 reproduce the features of the experimental electronic absorption spectrum within 0.1 eV. © 2012 WILEY-VCH Verlag GmbH & Co. KGaA, Weinheim.

Vibrational spectroscopic study of the minerals nekoite Ca3Si6O15•7H2O and okenite Ca10Si18O46•18H2O : implications for the molecular structure

Nekoite Ca3Si6O15•7H2O and okenite Ca10Si18O46•18H2O are both hydrated calcium silicates found respectively in contact metamorphosed limestone and in association with zeolites from the alteration of basalts. The minerals form two-Dimensional infinite sheets with other than six-membered rings with 3-, 4-, or 5-membered rings and 8-membered rings. The two minerals have been characterised by Raman, near-infrared and infrared spectroscopy. The Raman spectrum of nekoite is characterised by two sharp peaks at 1061 and 1092 cm-1 with bands of lesser intensity at 974, 994, 1023 and 1132 cm-1. The Raman spectrum of okenite shows an intense single Raman band at 1090 cm-1 with a shoulder band at 1075 cm-1.These bands are assigned to the SiO stretching vibrations of Si2O5 units. Raman water stretching bands of nekoite are observed at 3071, 3380, 3502 and 3567 cm-1. Raman spectrum of okenite shows water stretching bands at 3029, 3284, 3417, 3531 and 3607 cm-1. NIR spectra of the two minerals are subtly different inferring water with different hydrogen bond strengths. By using a Libowitzky empirical formula, hydrogen bond distances based upon these OH stretching vibrations. Two types of hydrogen bonds are distinguished: strong hydrogen bonds associated with structural water and weaker hydrogen bonds assigned to space filling water molecules.

Environmental law and the economic impact on Australian firms

In response to international awareness of environmental issues and the inadequacies of common law actions, legislation has been enacted by Australian governments to facilitate environmental protection. The Environmental Protection Act 1994 (Qld) and accompanying Environmental Protection (Interim) Regulation 1995 (Qld) is one example of government response to mounting public pressure to legislate for the environment. Investigation into the operation of the legislation exposes the costs faced by Australian firms in its application. The legislation identifies a number of environmentally relevant activities and imposes licensing and reporting requirements on firms undertaking such activities. In view of these legislative requirements and the increasing public awareness of environmental issues over the last decade in Australia, it could be expected that firms undertaking environmentally sensitive activities will place greater importance on the management of environmental issues. If so, the greater prominence placed on environmental management may be reflected in disclosures made by the firm to its shareholders and other interested parties. This article investigates the type and extent of costs currently imposed by the body of environmental laws in Australia with the discussion primarily focusing upon costs imposed due to the operation of environmental legislation in Queensland. Further, the article reports empirical analysis of management response to environmental issues where firms are undertaking environmentally sensitive activities.

Towards an effective IT governance structure for organizations in developing economies

The pervasive use of IT is prominent amongst organizations in developing economies. However, there is growing evidence that these economies fail to capitalize on their IT investment to transform their organizations to be competitive both locally and globally. IT-related benefits are possible with appropriate governance of the IT-related resources, and we need to broaden our understanding on the IT governance mechanics suitable for organizations in the developing economies. In this study, we adopted an initial interpretive design to obtain a deeper understanding of the IT governance (ITG) environment and conceptions of the stakeholders on effective IT governance structures for the developing economies. We found that the presence of an IT Strategic Planning Committee, Multiple level of authority, and a Forum for informal discussions as the crucial components of an ITG structure in developing economies.

Regulation of proteasome structure and function

Proteasomes are cylindrical particles made up of a stack of four heptameric rings. In animal cells the outer rings are made up of 7 different types of alpha subunits and the inner rings are composed of 7 out of 10 possible different beta subunits. Regulatory complexes can bind to the ends of the cylinder.We have investigated aspects of the assembly, activity and subunit composition of core proteasome particles and 26S proteasomes, the localization of proteasome subpopulations, and the possible role of phosphorylation in determining proteasome localization, activities and association with regulatory components.

Updating and verification for multi-scale finite element model of structure behavior

The method on concurrent multi-scale model of structural behavior (CMSM-of-SB) for the purpose of structural health monitoring including model updating and validating has been studied. The detailed process of model updating and validating is discussed in terms of reduced scale specimen of the steel box girder in longitudinal stiffening truss of a long span bridge. Firstly, some influence factors affecting the accuracy of the CMSM-of-SB including the boundary restraint regidity, the geometry and material parameters on the toe of the weld and its neighbor are analyzed using sensitivity method. Then, sensitivity-based model updating technology is adopted to update the developed CMSM-of-SB and model verification is carried out through calculating and comparing stresses on different locations under various loading from dynamic characteristic and static response. It can be concluded that the CMSM-of-SB based on the substructure method is valid.

A preliminary study into the environmental and economic consequences of a sugar factory depithing operation

Bagasse stockpile operations have the potential to lead to adverse environmental and social impacts. Dust releases can cause occupational health and safety concerns for factory workers and dust emissions impact on the surrounding community. Preliminary modelling showed that bagasse depithing would likely reduce the environmental risks, particularly dust emissions, associated with large scale bagasse stockpiling operations. Dust emission properties were measured and used for dispersion modelling with favourable outcomes. Modelling showed a 70% reduction in peak ground level concentrations of PM10 dust (particles with an aerodynamic diameter less than 10 µm) from operations on depithed bagasse stockpiles compared to similar operations on stockpiles of whole bagasse. However, the costs of a depithing operation at a sugar factory were estimated to be approximately $2.1 million in capital expenditure to process 100,000 t/y of bagasse and operating costs were approximately $200,000 p.a. The total capital cost for a 10,000 t/y operation was approximately $1.6 million. The cost of depithing based on a discounted cash flow analysis was $5.50 per tonne of bagasse for the 100,000 t/y scenario. This may make depithing prohibitively expensive in many situations if installed exclusively as a dust control measure.

Reading in the Australian curriculum English : describing the effects of structure and organisation on multimodal texts

The recently introduced Australian Curriculum: English Version 3.0 (Australian Curriculum, Assessment and Reporting Authority [ACARA], 2012) requires students to ‘read’ multimodal text and describe the effects of structure and organisation. We begin this article by tracing the variable understandings of what reading multimodal text might entail through the Framing Paper (National Curriculum Board, 2008), the Framing Paper Consultation Report (National Curriculum Board, 2009a), the Shaping Paper (National Curriculum Board, 2009b) and Version 3.0 of the Australian Curriculum English (ACARA, 2012). Our findings show that the theoretical and descriptive framework for doing so is implicit. Drawing together multiple but internally coherent theories from the field of semiotics, we suggest one way to work towards three Year 5 learning outcomes from the reading/writing mode. The affordances of assembling a broad but explicit technical metalanguage for an informed reading of the integrated design elements of multimodal texts are noted.