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Aggressive Tax Planning is a source of increasing concern for many countries. Numbers at stake are vast, often in the order of billions of dollars. Countries have developed various strategies to deal with aggressive tax planning and international co-operation features prominently among them. Working co-operatively countries can deter, detect and respond to aggressive tax planning in an effective way while at the same time ensuring certainty and predictability for compliant taxpayers.
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Due to the recent financial and economic crisis, the amount of global corporate losses is enormous. Over and above the immediate tax revenue impact of these losses as a result of the normal operation of countries’ loss relief rules, these losses also raise tax compliance risks, in particular if companies turn to aggressive tax planning as a means of increasing and/or accelerating tax relief on their losses. This report deals with corporate tax losses. The term “losses” has to be understood broadly for purposes of this report: although the report deals primarily with the tax treatment of taxpayers which have suffered overall losses, it also touches on issues which are relevant to deductions which may reduce a taxpayer’s profits without necessarily resulting in an overall loss. The report deals with both real and artificial losses, as well as with the issue of multiple deductions of the same (real or artificial) loss, typically through hybrid mismatch arrangements.
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Due to the recent financial and economic crisis, the amount of global corporate losses is enormous. Over and above the immediate tax revenue impact of these losses as a result of the normal operation of countries’ loss relief rules, these losses also raise tax compliance risks, in particular if companies turn to aggressive tax planning as a means of increasing and/or accelerating tax relief on their losses.
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Countries’ strategies have to operate within the broader context of their tax system, administrative practice and culture. It is up to each country to decide how to approach the issues addressed in this report and what strategies would be the most appropriate in the context of, and the most consistent with, its rules and framework. It is against this background that this report reaches the following conclusions and recommendations.
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