Richard Ainsworth - tax.network

Adjunct Faculty, Boston University - School of Law, Boston, MA, USA

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Biometrics, Certified Software Solutions, and the Japanese Consumption Tax: a Proposal For the Tax Commission

Significant change is anticipated in the Japanese Consumption Tax. This is the conclusion of the Japanese Tax Commission in its mid-term report, presented to Prime Minister Junichiro Koizumi on June 17, 2003. When the Tax Commission’s Chairman, Professor Hiromitsu Ishi,[1]submitted A Sustainable Tax System for Japan’s Aging Society[2]the Commission indicated ...

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The Digital VAT (D-VAT)

The most sustained U.S. tax policy debate of the past 30 years concerns proposals to replace and/ or supplement the Federal Income Tax with a consumption tax.[2] Public finance economists and legal tax policy scholars challenged[3] and defended[4] the current income tax system on grounds of fairness,[5] efficiency, [6] and ...

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California Zappers: a Proposal for California’s Commission on the 21st Century Economy

On December 11, 2008 California Governor Arnold Schwarzenegger and legislative leaders announced appointments to the Commission on the 21stCentury Economy. The mandate is to propose ways to modernize the California revenue system by April 15, 2009. The Governor is concerned with the “feast-or-famine” budget cycles, and Senate President pro Tempore ...

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Carousel Fraud in the EU: a Digital Vat Solution

The future of the VAT is digital.[1]In the foresee- able future, all VAT processes will be auto- mated. VAT determinations, collection, the remission of funds, as well as all reporting, audit, and refund activities will be digitized.[2]Certified proprietary and third-party software systems will perform all critical VAT functions for large ...

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Digital VAT and Development: D-VAT and D-velopment

INTRODUCTION Since the e-commerce revolution began in the 1990’s, tax policy discussions in developed economies have enlisted “e-solutions” to streamline consumption tax administration, as well as to resolve technical problems. These well-considered discussions are now producing systemic, multi-jurisdictional changes in European[2]and United States[3]consumption tax regimes. Inspiration came from the marketplace. Policy-makers observed ...

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The one-stop-shop in VAT and RST: common approaches to EU-US consumption tax problems

In March 2004 the European Commission solicited comments on a proposal to simplify value added tax (VAT) obligations through a one-stop scheme.[1] The proposal was modest in scope. It was designed to build upon the success of a similar scheme[2] that dealt with non-EU established persons supplying digital products to ...

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VAT Fraud: MTIC & MTEC – The Tradable Services Problem

Tradable services – VoIP termination services, mobile minutes, software as a service (SaaS), or almost any service bought or sold in the “cloud”[1] – are a distinct class of taxable supplies. These service-based supplies both resemble and differ fundamentally from goods. They also differ from services that are consumed-on-purchase (consumed ...

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Virtual Intermediaries: Consumption Tax Problems In Japan, Europe, And The United States – The Case Of The Virtual Travel Agent

INTRODUCTION Marketplace technology is (inadvertently) chipping away at the effectiveness of consumption taxes – the Japanese Consumption Tax (CT), the European value added tax (VAT), and the American sales tax (ST) are all affected. Frequently a technology-patch or a law change can repair the tax-damage, but sometimes even though a patch ...

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Use And Enjoyment Of Intangible Services: The Czech Republic’s VAT Derogation

On January 1, 2009 a minor change in the Czech Republic VAT[1] became effective. A use and enjoyment standard was added to modify the sourcing of certain service transactions.[2] Traditional proxy-based rules, derived from Articles 43 and 56(1) of the Recast VAT Directive (RVD),[3] are set aside by this modification ...

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EU, UK, French, US, Australian and Japanese Responses To Auditor Independence: The Case Of Non-Audit Tax Services

Auditor independence was a global concern of financial regulators in the 1990’s. Some observers saw this in a positive light, a natural development. Adjusting auditor independence rules was a manifestation of global convergence in corporate governance structures.[1] New rules, especially rules leaning toward a harmonized system were welcome. There was ...

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Zappers & Phantom-Ware: A Global Demand For Tax Fraud Technology

There is a demand-market for technology that facilitates tax fraud. By all accounts the providers in this market are working in a growth industry. In the short term this is bad news for those concerned with tax policy[1] and information privacy.[2] In the long term however, the ...

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Transfer Pricing in VAT/GST vs. Direct Taxation: A Paper On The Topic Of Relations Between Associated Companies

Two caveats open this paper, one dealing with the scope of analysis, the other with the results we are expecting. First, the scope of this inquiry needs to be broadened. Even though the topic asks that we limit ourselves to VAT/GST and direct taxes, in most jurisdictions there are three ...

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Quebec’s Module D’enregistrement Des Ventes (MEV): Fighting The Zapper, Phantomware And Tax Fraud With Technology

On January 28, 2008 the Quebec Minister of Revenue, Jean-Marc Fournier, announced[1] that by late 2009 the MRQ will begin testing a device, the module d’enregistrement des ventes (MEV)[2] that is projected to substantially reduce tax fraud in the restaurant sector. By 2010 or 2011 MEVs will be mandatory in ...

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German VAT Compliance – Moving One Step Closer To Automated Third party Solutions

Recent developments in German VAT compliance, notably the imposition of criminal penalties for failing to immediately amend a preliminary return that is known to be in error, are leading businesses to third-party VAT solutions.[1] Germany is not alone in the creative use of criminal enforcement to collect the VAT,[2] but ...

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Will Cutting The Payroll Tax Increase Jobs? (Empirical Evidence From The EU VAT)

Red Ink Rising, the Peterson-Pew Commission on Budget Reform’s report,[1] presents the country with a fiscal/employment dilemma – Congress must act immediately to stem the federal debt, but it must move carefully lest it harm employment in the fragile economy. In short, we must act fast and slow – we ...

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Zappers: Tax Fraud, Technology And Terrorist Funding

“Zappers,[1]” or automated sales suppression devices, have brought unheard of efficiencies and economies of scale to a very simple tax fraud – skimming the cash sales that pass through point of sale (POS) systems, network connected electronic cash registers (ECRs). Until recently “the largest criminal tax case in the history ...

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Electronic Tax Fraud – Are There “Sales Zappers” In Japan?

Skimming cash receipts is an old fashioned tax fraud; a fraud traditionally associated with small or medium sized enterprises. Large businesses with formalized internal control mechanisms, external accountants, and professional management structures do not normally engaged in skimming.[1] Businesses that skim frequently keep two sets of books (one for the ...

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VAT Fraud as a Policy Stimulus – Is the US Watching? VAT Withholding, RTVAT, and the Mittler Model

The EU VAT, like most mature tax regimes, is resistant to change. Fraudsters are testing this resilience today, and this may not be such a bad thing for policy-makers. Significant challenges produce significant reforms proposals.[1] If the US is seriously considering a VAT it would do well to observe this ...

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Massachusetts Zappers – Collecting the Sales Tax that has already Been Paid

No other New England state is as vulnerable to Zappers as is the State of Massachusetts.[1] Zappers and related software programming, Phantom-ware, facilitate an old tax fraud – skimming cash receipts. In this instance skimming is performed with modern electronic cash registers (ECRs). Zappers are a global revenue problem, but ...

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An Industry-Specific VAT in Michigan – Objective Valuation in The Retail Gasoline Trade

New York adopted an industry-specific value added tax (VAT) to solve problems with virtual intermediaries (room remarketers) under its hotel accommodations tax.[1] The New York VAT resembles the VAT used in the European Union (EU). It is a credit-invoice VAT[2] that subjectively values supplies.[3] Michigan has also adopted an industry-specific ...