The European Union (EU) proposed a tax on digital services in the draft package for “Fair and Effective Taxation of the Digital Economy”, which it released on March 21, 2018.
According to the European Commission, top digital companies pay an average tax rate of only 9.5% in EU, which is less than the 23.3% paid by traditional companies. The aim of the proposal is to tax the business in the member state in which value is created, even though the business has little or no physical presence in that state. (more…)
We all have heard and know of people becoming millionaires overnight with “stock option” money, especially in Silicon Valley. Stock options are an important part of the compensation package for many employees in the technology sector. For companies, it is a tool to retain employees and motivate them to perform better as the company’s growth and success translates to their success.
The most common types of stock options are Incentive Stock Options (ISO’s) and Non-Qualified Stock Options (NQSO’s). The tax consequences to employees are as follows:
Incentive Stock Options (ISO) (more…)
June 30th deadline for filing the Form 114 – Individuals Filing the Report of Foreign Bank and Financial Accounts has passed, but the IRS continues its fight to secure US tax revenue from foreign financial accounts. (more…)
The treaty signed between India and Mauritius in 1983, a decade before India opened its door to foreign investors made Mauritius the most favored route to invest in India. Many foreign companies incorporated a holding company in Mauritius which held shares in an Indian company. The sale of shares in Indian company would not result in capital gains tax in India and Mauritius- thereby making it a preferred vehicle for foreign investment.
According to government data, from 2000 – 2015, about $94 billion, a third of all foreign direct investment into India, came via Mauritius. It was a boon to the Indian economy at the brink of liberalization in 1990’s, but gave rise to “round tripping” i.e., Income on which taxes were not paid was routed via Mauritius companies to avoid tax, revenue loss and treaty abuse. (more…)
It is very common for U.S. parent companies to include key non-resident alien employees of their foreign subsidiaries in their stock option plans. What happens when the non-resident exercises the options or sells the options? Is the non-resident subject to withholding tax? Is there a U.S. tax filing requirement?
IRS recently reminded all taxpayers about the June 30 deadline for Foreign Bank and Financial Accounts (FBAR) reporting. FBAR filings have risen dramatically in recent years as FATCA phases in and other international compliance efforts have raised awareness among taxpayers with offshore assets. According to data from FINCEN, FBAR filings exceeded 1 Million in calendar year 2014.
It comes as no surprise that R&D credit has been retroactively extended for the 2014 tax year. According to sciencemag.org the credit has been extended 15 times and has undergone five major rewrites. It is likely to be extended again later this year to include 2015 and possibly future years. Due to the federal government’s budget process, making the R&D credit permanent has proved elusive. However, California has managed to make their R&D credit rules permanent.
Almost every prospect we meet is working on a technology idea that will have a significant impact on our daily lives. Most often we are asked if the R&D credit is available for the technology they are developing.
The tax implications surrounding cloud computing transactions are complex, and guidance has been “up in the air,” as tax authorities try to catch up with technology. Tax implications depend on the characterization of the transaction; therefore, contracts become very important for defining the characterization. Is sales tax assessed on cloud computing transactions?…
I have noticed that people use the term “service,” “product,” and “intangible” interchangeably in relation to software. For example, I was recently going through a client’s website to learn more about their technology and business, and I asked my husband (an engineer) to help me. He started explaining what they did with various acronyms like WLAN, CMOS, LTE-capable and so on, but it didn’t take long for me to get lost in his tech jargon. After seeing my blank face, he boiled it down to this: they sell a software product. But what does that really mean? What is licensing of software considered? And really, why does it matter?…