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Centre for Tax Policy and Administration

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Corporate Loss Utilisation through Aggressive Tax Planning

Corporate losses raise compliance risks if aggressive tax planning is used as a means of increasing or accelerating tax relief in ways not intended by the legislator, or to generate artificial losses. This report describes the size of loss carry-forwards, the rules applicable in relation to losses, and identifies the following risk areas: corporate reorganisations, financial instruments and non-arm’s length transfer pricing. After having summarised aggressive tax planning schemes on losses, as well as country detection and response strategies, it offers a number of conclusions and recommendation for tax administration and tax policy officials.   

Published on August 03, 2011

TABLE OF CONTENTS

Foreword
Abbreviations
Executive Summary
Introduction
Size of Corporate Tax Losses
Policy Issues in the Tax Treatment of Losses
Country Rules on Corporate Tax Losses
Schemes Involving Tax Losses
Strategies for Detecting Schemes Involving Tax Losses
Strategies for Responding to Schemes Involving Tax Losses
Conclusions and Recommendations
References
Annex A - Size of loss carry-forwards compared to loss carry-forwards in percentage of gross domestic product
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