Taxing Offshore Investment Income

Description

Increasing numbers of taxpayers who invest abroad are able to reduce the tax they pay, to defer when they pay it, and to decide to whom they pay it. In response, several countries have enacted what have become known as offshore or foreign investment fund regimes in order to tax the income as it is earned. Several of these countries are currently reviewing their regimes. Other jurisdictions are actively considering the need for similar rules.

Foreign investment fund regimes originally targeted investments in offshore mutual funds by attributing the investor's share of the annual income of a fund to the local investor and taxing that investor's share as it accrued. Nowadays, regimes capture not only the income of mutual funds but also of listed investment companies, of superannuation funds, of portfolio investments, and even of savings that compound on life insurance premiums: in short, the income of most residents' offshore investments.

The authors, an international panel of experts, address the design and operation of offshore investment fund regimes. They explore questions such as: what interests do they cover? How do regimes calculate, or estimate, residents' shares of income? What credit is there for foreign tax? When do regimes allow residents to set off losses on their foreign investments against domestic income? How is the bite of regimes limited to save costs of compliance and administration or to relieve tax burdens on internationally mobile executives?

This book is comparative, dealing with topics issue-by-issue rather than country-by-country. It is written for practitioners who need to understand how foreign investment fund regimes work, for scholars and students of international tax law and principles, and for policy makers tasked with designing foreign investment fund regimes for their countries.

This text is sponsored by Lenz & Staehelin and endorsed by The International Fiscal Association (IFA).