An Assessment of the appropriateness and effectiveness of anti tax haven measures in Australia and the United States

Abstract

The thesis seeks to demonstrate that tax havens are used for a number of purposes that provide planning which is not contrary to the domestic laws of Australia and the United States as indicative regimes.

The thesis will primarily utilise doctrinal research in reviewing and applying the legislative methods adopted to make the use of tax havens ineffective. Theoretical research will be conducted in a number of chapters where an in depth analysis of the legal principles involved in the methodologies and structures will be undertaken. In the final chapter reform-oriented research will be utilised.

Part A of the thesis will review a number of situations which it is submitted are legitimate and beyond the scope of the laws of OECD countries to prevent. The thesis will demonstrate that operations with substance established in tax havens to undertake the following types of activities will be effective to reduce the incidence of taxation on a corporate group – operation of a regional headquarters, treasury function or captive insurance company. The thesis will also demonstrate that basing operations in a tax haven to facilitate the use of an international agreement would also be effective in many cases. A review of the use of tax havens for asset protection will demonstrate that a number of tax havens provide extensive mechanisms which are established for purposes other than taxation. As these were found to be legally effective they are legitimate in the context of this thesis.

Part B of the thesis will consider a number of structures which have as one of their key design elements the non-application of the attribution regimes of Australia and the United States. The thesis will show that non charitable purpose trusts, star trusts, protected cell companies, foundations, companies limited by guarantee and insurance arrangements are effective to circumvent the attribution regimes of Australia and the United States. The thesis will however show that blind trusts are ineffective to circumvent the attribution regimes.

The thesis will also address the weaknesses in the attribution regimes and provide recommendations to overcome these weaknesses.