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Tag: tax

  • How Do Tax-Free Countries Make Money?

    It would be smooth sailing if you didn’t have to pay property taxes, income taxes, corporation taxes, sales tax, all direct and indirect taxes, and even water taxes, right? Whether you are wealthy or impoverished, you are obligated to pay the tax no matter what! Tax is a compulsory contribution towards the government.

    India has two integrated tax systems- direct and indirect tax systems, whereby direct tax relies on individuals’ income and property and indirect tax levies on goods and services incurred by an individual.

    As a taxpayer, you are required to contribute a specific percentage as tax from your income to pay for the things you have purchased as Good services Tax.

    Even if you are affluent, you have to deal with paying a high rate of taxes, and the poor would have to contribute according to the tax slab. As we all know, the tax system was established to produce revenue for initiatives aimed at boosting the country’s economy and raising the standard of living of its residents. But, what if there isn’t a tax system in place? How does the government deal with residents of lower socioeconomic status? Here we have listed out tax-free countries and how they earn a decent lifestyle without contributing to the economy.

    How Do Tax-Free Countries Earn?
    Top Countries With No Income Tax

    How Do Tax-Free Countries Earn?

    Customs & Import Duties

    Implementing tariffs on imported goods is one of the simplest and most effective ways for the tax-free government to generate revenue. Import duties, often known as customs duties, are an indirect tax placed on commodities that are brought into the country.

    This would assist the government in increasing revenue as well as regulation of commodities in the countries while also providing protection to the indigenous industry through the circulation of imported items.

    The rates of customs/import duties differ by country; for example, Kuwait charges roughly 5% in customs duty.

    There are five types of customs duties, that which a government levy on imported goods such as-

    • Basic Customs Duty
    • Countervailing Duty
    • Additional Customs Duty or Special
    • Protective Duty
    • Anti-dumping Duty

    Corporate registration and renewal fees

    In most cases, our country imposes a corporate tax on high-profiled corporate entities; however, in tax-free countries, there is no need to spend a lot of money on preliminary expenses for incorporation; instead, they ask you to meet corporate registration requirements for newly incorporated businesses under their jurisdiction.

    Aside from that, businesses should pay annual renewal costs in order to maintain their status as operational entities, which varies depending on the type of company they do. Banking, insurance, and other mutual financing corporations, for example, should pay additional annual renewal fees in order to function in such a finance industry.

    Countries such as Kuwait, Brunei, the United Arab Emirates, and others require foreign companies that have formed and are operating in their jurisdictions to pay registration and renewal fees.

    Tax Haven

    Any country or jurisdiction that gives foreign individuals and corporations reduced tax liability is known as a tax haven or offshore financial hub. To gain tax benefits, tax havens do not require enterprises or individuals to operate outside of their country.

    Tax Haven countries benefit from attracting cash to their banks and financial institutions, which may then be utilized to develop a vibrant financial industry. Individuals and businesses benefit from tax savings, which can vary from zero to low single digits in tax haven countries compared to high taxes in their own country.

    Apple, Nike, Goldman Sachs, and other major U.S. corporations such as Microsoft, IBM, General Electric, Pfizer, Exxon Mobil, Chevron, and Walmart are among the top tax haven beneficiaries. Ireland was exploited by Apple as a tax hideaway.

    If Apple had not taken advantage of tax havens, it would have repaid the US government $65.4 billion in taxes. Bermuda is used by Nike as a tax shelter. If tax haven benefits were not utilized, it would have paid $3.6 billion in taxes. Goldman Sachs holds $28.6 billion in Bermuda as a tax shelter.

    Luxembourg is often regarded as the best tax haven on the planet. The Cayman Islands currently have banking assets worth one-fifth of the world’s total banking assets of $30 trillion. The Cayman Islands have no direct taxes on residents, including property, income, and payroll taxes, in addition to no corporate tax.

    Hedge fund managers like the Cayman Islands because there is no corporate or income tax, including on interest and dividends generated on investments. Fortune 500 firms such as Pepsi, Marriott, and Wells Fargo have subsidiaries in the Cayman Islands.

    Top Tax Havens in the World:

    • Netherlands
    • Luxembourg
    • Singapore
    • Bermuda
    • The Channel Islands
    • Cayman Islands
    • Isle of Man
    • Mauritius
    • Switzerland
    • Ireland

    Departure taxes

    A departure tax is a price charged by a country when a person leaves the country, or a tax that airline passengers must pay in order to use an airport. A departure tax is levied by some countries only when a person departs by plane. The tax can be paid at the airport or by some other prepayment mechanism, or it can be charged to the airlines and included in the price of the plane ticket.

    Below is a list of nations that collect departure taxes:

    • Australia
    • Austria
    • Bangladesh
    • Brunei
    • Bermuda
    • Canada
    • Cambodia
    • China
    • Costa Rica
    • Cuba
    • Dominican Republic
    • Ecuador
    • Egypt
    • Fiji
    • Germany
    • Guyana
    • Honduras
    • Hong Kong
    • Iran
    • Ireland
    • Indonesia
    • Jamaica
    • Japan
    • Lebanon
    • Malaysia
    • Mexico
    • Palau
    • Panama
    • Peru
    • Philippines
    • Samoa
    • Saudi Arabia
    • Sri Lanka
    • Sweden
    • Thailand
    • Tunisia
    • Turkey
    • United Kingdom

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    Top Countries With No Income Tax

    Here is a list of some countries with no income tax:

    United Arab Emirates

    Individuals in the United Arab Emirates pay no income taxes, allowing them to earn tax-free wages. This Arab country is abundant in natural resources such as oil, and its free trade zones, which are open to foreign ownership and have no taxes, making it a popular investment location.

    Only international banks and oil businesses are subject to corporate tax, while all other industries are exempt. Excise duty is imposed on a small number of goods and services, however beginning in 2018, Value Added Tax will be imposed on the vast majority of goods. As is the case, Emirates Airline is one of the renowned brands in the airline industry, which literally contributed 3.044% GDP as of 2022.

    Qatar

    Individuals can generate money without paying taxes in this Arab country. Commercial activity is subject to an annual ten percent company tax on total state income. Rental income is taxed at a fixed rate of 10 percent.

    The country attracts a large number of ex-pats due to its tax-free atmosphere and sophisticated infrastructure. Some countries, such as the United States, the United Kingdom, Australia, Canada, Ireland, and South Africa, tax their citizens according to their governments’ tax laws.

    Bahamas

    This Caribbean country boasts tax-friendly legislation, making it a desirable location for foreign financial institutions and commercial interests. Personal and corporate income is not taxed in this tax haven.

    International businesses operating in the Bahamas are only subject to corporate taxes if their revenue is generated in the country. Wealth, inheritance, and capital gains are other categories that are tax-free. Residents of the country, regardless of citizenship status, can benefit from tax-free income.

    Monaco

    Monaco is well-known as a tax haven due to its personal and business tax rules. It does not levy taxes on citizens’ personal incomes. A person who has lived in Monaco for six months or longer is considered a resident and is free from paying income tax. In addition, there are no taxes on capital gains or net worth in this city-state.

    Monaco residents enjoy tax-free property ownership, however, rental homes are subject to a 1% annual tax. Monaco does not levy a business tax. Only specific sorts of businesses that make 25% or more of their profits from operations outside of the country are taxed.

    These tax rules, together with a strong commitment to financial confidentiality and data privacy, make this a very attractive place for ex-pats and foreign investors.

    Oman

    The tax regulations in this Gulf country are permissive and pro-business. It does not tax residents’ or non-residents’ personal incomes. These tax-free regulations include everything from wealth to capital gains to property. On their taxable income, businesses and enterprises must pay a 15% tax. Petroleum-related businesses, on the other hand, must pay a tax of 55%. Expats may be subject to a tax on their income.

    Bahrain

    Bahrain, which is located on the Persian Gulf, is a tax-free country that derives much of its income and government earnings from the finding of oil. Citizenship in Bahrain is tough to get, but permanent residency requires you to be retired, spend $135,000 in real estate, or invest $270,000 in a Bahraini enterprise.

    Maldives

    The Maldives has a thriving tourism economy, so there’s little justification for the island nation to collect an income tax on its citizens. Because the country does not offer a scheme for foreigners to become permanent residents, establishing citizenship or permanent residency is virtually impossible. If it did, it would necessitate the conversion of a Sunni Muslim. Moreover, Maldives is a go-to place for many travellers, in this way the government make tons of money from its tourism sector.

    Brunei

    Brunei is a small Asian country with large oil and natural gas deposits, which account for roughly half (60%) of its GDP. With its GDP rate, Brunei bestows free education and medical care to its citizens, although obtaining a permanent residency costs a lot more money than renting there. As a result, Brunei does not levy a social security tax on its residents, and individuals contribute 5% of their salaries to the state provident fund.

    Kuwait

    As we know Kuwait is one such country that has a high foreign currency rate is also one of the tax-free countries. This country’s government emphasises oil production, as it counts as a positive approach towards the Gross domestic product. individuals are not subject to any personal taxes, wealth taxes, or sales taxes in Kuwait, however international companies must pay specific fees to set up any corporation in the country.

    Cayman Islands

    The Cayman Islands, like Bermuda Island, are part of the British Overseas Territories. The government of the Cayman Islands makes money through tourism, which accounts for more than 70% of the country’s GDP. People in Cayman Island enjoy a  standard lifestyle since there are no direct taxes, property taxes, or payroll taxes, among other things.

    Nauru

    Nauru is one of the richest countries in the world, because of its abundant natural resource of phosphate. Aside from that, the government runs an Economic Citizenship Program in which citizens are required to pay a nominal fee, by this, the government could raise revenue from its citizens also.

    Saint Kitts and Nevis

    One of the regions in the West Indies, Saint Kitts and Nevis relives more on tourism and sugar production. Despite the loss of sugar production and shut down of many sugar factories, the country still withstand to have a standard of living and became one of the world’s countries with the highest debt-to-GDP ratios.

    Somalia

    Somalia is well-known for being a dangerous country due to the burden of civil conflict and territory, owing to its splintered government and political instability. Somalia earns money through livestock and telecommunications, as well as a 10% sales tax.

    Vanuatu

    Vanuatu, like India, derives its GDP from its agricultural industry, which employs roughly two-thirds of the people. Aside from fielding, Vanuatu’s economy is supported by offshore financial services, tourism, fishing, and other farming-related activities.

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    Conclusion

    People’s taxes are still one of the most essential resources that contribute to the proper operation of the government in many countries. Among such countries, these are the only ones that are tax-free.

    These countries earn money not only through customs charges, tax havens, and registration fees, but also from livestock, agriculture, fishing, investments, natural resource production, and a variety of other activities. Despite the fact that they are tax-free countries, the government allows their citizens to live a normal life.

    FAQs

    How do countries with no tax make money?

    Customs & Import Duties, Departure tax, and Corporate registration and renewal fees are some of the ways countries with no income tax make money.

    Which countries are tax-free?

    United Arab Emirates, Vanuatu, Kuwait, Maldives, Bahrain, Monaco, and Qatar are countries that have no income tax.

  • Why does South Dakota hold Half a Trillion Dollars Worth of Assets?

    South Dakota has been much in the news for its half a trillion dollars worth of assets in recent years. It is considered as the US next haven! Impressive, right? As per the FDIC’s bank statistics report, South Dakota ranked first with $3.13 trillion as of the commercial and saving bank assets, widely ahead of Ohio with $2.96 trillion.

    According to the South Dakota Department of Labour and Regulation, trust companies held around $175 billion in assets which was an increase of 45% from the last two years. These trust assets are utilised mainly for the rich people to safeguard their wealth for a longer duration. And in South Dakota, these trusts are growing with an exponential graph, mainly because of the country’s permissive trust laws.

    But the actual question that arrives here, is how does South Dakota hold such a massive amount of assets? Previously, in October, Pandora Papers (millions of financial records) got in the hands of journalists. Within which, the state data showed how South Dakota held half a billion dollars of assets in its trust.

    And that’s what we are discussing in this article in brief. So, let’s get started!

    Adoption of Key Laws by South Dakota
    U.S. Low levied Tax Rates
    South Dakota is a major spot for foreign assets
    Zero Income or Estate Tax over Trusts
    FAQ

    Adoption of Key Laws by South Dakota

    Nearly four decades ago, the state adopted a few of the key laws in its financial systems, which are: Eliminated cap on interest rates for lending and No expiry period on trust laws.

    This majorly drives the attention of the financial industry towards the state. The state has zero tax income which makes it one of the most popular spots for people who want to pass their assets to the future without any liability of estate taxes. Ever since then, South Dakota has been gaining huge clients.

    The Pandora papers revealed how the politicians and businessmen have been transferring their wealth into U.S. trusts funds, saving them from paying taxes or getting directly involved in any deals.

    U.S. Low levied Tax Rates

    “The U.S. is widely known as the world’s best place for dumping hot money,” said Heller. The main reason behind this is the no rule for reporting foreign assets to the respective countries for the investors.

    With the extremely smooth and lenient banking system of the United States, wealthy families and businessmen come here to gain the same level of privacy that they previously got from places like Switzerland.

    This makes the United States the second-ranked Tax haven in the world, as per the report of Tax Justice Network. And states like South Dakota and Nevada, are widely considered as the most attractive spot for people who dodge taxes.

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    South Dakota is a major spot for foreign assets

    Pandora papers have revealed many major facts regarding the assets and taxes in the U.S.A, among these, one was South Dakota being a tax shelter for wealthy families and businessmen. The state is considered the main attractive spot for foreign assets.

    The report revealed that South Dakota has over quadrupled to $360 billion in the past decades.

    The lawmakers of South Dakota have drafted the legislation by the trust industry insiders which gives them great protection and benefits over the trust funds to the trust customers all across the United States and foreign countries.

    The biggest flex for the rich people is the state’s ban on the “rule against perpetuities”. This builds a very safe space for the wealthy families to establish their dynasty trust and let it go on forever, without any burden of estate taxes.

    Trust Assets in South Dakota
    Trust Assets in South Dakota

    Zero Income or Estate Tax over Trusts

    Another biggest reason for wealthy families and business people to set up their trust in South Dakota is because of its extremely lenient tax rules. The state does not have any income or estate tax over the trusts. Yes, it’s very true!

    All the funds placed in the private trusts are not bound with any return of income tax by the state. South Dakota does not ask and collect the income generated through these trust funds, even if it’s in the count of billions.

    Alongside, the state does not ask for any estate tax, even after the death of the owner.

    The people of South Dakota’s law does not necessarily need to invest in any local trust in order to live in the states. Although the investors are lying around the states with billions of trusts funds, they do not directly contribute to any sales or estate tax revenues.

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    Conclusion

    Being one of the most attractive spots for wealthy families and business people, South Dakota is counted among the top tax havens in the United States. The people living in the state earn good benefits from the lenient trust laws of South Dakota.

    In fact, the state is expected to experience the biggest wealth transfer that ever occurred in the history of mankind. And because of this only, the trust companies in South Dakota have been growing the job market within the state over the past few years. South Dakota does benefit from its trust laws and so are the rich people living in the state.

    FAQ

    Are taxes high in South Dakota?

    No, South Dakota is one of the lowest tax state in United States.

    What states are considered tax havens?

    South Dakota and Nevada are considered as tax havens in United States.

    Is there income tax in South Dakota?

    No, South Dakota does not levy any income tax.

  • What is Tax Haven? | How Tax Havens Works?

    Tax revenue maintains the nation afloat. But not all taxpayers perform the same set of policies and rules. By supporting attorneys, accountants, white-shoe experts, and complicit Western governments, the affluent and well-attached have ignored spending trillions of bucks in taxes. The rest of us surround the distinction or, generally, can’t, leaving capital needed to build roads, schools and deal with existential menaces like environmental change and widespread pandemics.

    Tax havens make it all likely to be feasible and possible too. By some estimations, almost 10% of the gross production of all the economies in the civilization is placed in offshore monetary hubs, maintained by shell corporations that exist only on paper. The taxes to governments, in lost revenue, is totaled to surpass $800 billion a year.

    The wealthy preserve the capital to create inter-generational riches, building a modern and new global noble class and worsening the dividing range between the global haves and have-nots. Multinational companies use more cash to cite shareholders and edge out smaller competitors.

    Nations that require tax revenue the most lose more tax money as a percentage of GDP than wealthy countries. As with other inequities, the poor get it the worst.

    What is Tax Haven?
    Tax Haven Countries
    How does Tax Haven work?
    Who Uses Tax Havens?
    How Do The Companies Benefit From Tax Havens?
    Is Tax Havens legal or Illegal?
    Is Luxembourg A Tax Haven For India?
    Conclusion
    FAQs

    what is tax havens? | Tax Haven meaning

    What is Tax Haven?

    There is no particular definition, but tax havens, or offshore monetary centers, are commonly nations or areas with no corporate tariffs that permit outsiders to establish companies quickly. Tax havens commonly curb public exposure to companies and their proprietors too. Because data can be hard to drag, tax havens are also called secrecy jurisdictions or private authorities. Tax havens mostly always refute surviving as tax havens.

    Tax Haven Countries

    Tax Haven Countries
    Tax Haven Countries

    Let us know more about Tax havens by knowing where they’re found. One can find it all over the world. Some are independent and self-reliant countries, like Panama, the Netherlands, and Malta. Others are within countries, as the U.S. state of Delaware and in the territories, like the Cayman Islands.
    Several inquiries have indicated other tax havens, often relying on the origin and subject of papers, such as, the Panama Papers, which disclosed how Mossack Fonseca, one of the massive offshore law firms in the world, sold thousands of shell firms in the British Virgin Islands to buyers around the world.

    On the other hand, Mauritius Leaks analyzed how firms used Mauritius to avoid taxes. At the same time, Paradise Papers disclosed the secrets of Bermuda, the isle where the law company Appleby laid the first stone.

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    How does Tax Haven work?

    Tax havens are not inevitably tax-free. They usually charge a rate of taxes significantly lower than the rate of taxes compared to other nations. They typically wrap this loss of revenue through other sources, like by charging massive taxes on import duties, policies, etc.

    They may charge high and even recurring taxes for a firm enrollment and other fees, such as license fees, etc. Hence, the government makes up for the revenue lost due to the reduction in tax prices.

    Tax Haven Meaning | tax haven Countries

    Who Uses Tax Havens?

    Wealthy but contrarily “average” community, involving dentists and at least one Alabama greengrocer, use shell companies for motives. These may encompass preparing it difficult for credible creditors – such as displeased business partners, or tax inspectors, former spouses to observe and regain monies allegedly owed. Investments earned through tax refuges can be very lucrative, owing to the significant tax savings offshore firms may relish.

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    How Do The Companies Benefit From Tax Havens?

    Businesses, particularly those that transact across boundaries, can relish substantial tax savings by routing expenditures, earnings, or enterprises through assistants in offshore monetary hubs.

    For example, a giant pharmaceutical firm might establish a new entity in Bermuda or the Netherlands and “sell” that entity a document for a profitable drug. The parent firm might then spend a massive licensing fee on the offshore company, enabling it to compute lower profits at home and pay a lower tax charge. Drugs company have avoided billions of dollars in taxes of this kind.

    Every year, many companies avert spending more than $500 billion in taxes adopting strategies like these. Some pay little or don’t pay at all in their home countries.

    When a company says that it pays the taxes it owes, it means the tax mantra. It permits companies to emerge to be good corporate dwellers but does not deny that various firms use loopholes (some later found to be illicit to avoid paying taxes.

    Tax havens have been cited as “global black holes,” which are adopted to protect the money of the rich and powerful. When tax havens are noticed in such a way, they seem to be illegal, formulated to soothe the wealthy rather than encourage development, which is one of the primary purposes of collecting tax. And, this is not entirely true.

    The basic tenet of Public International Law is that of “Sovereignty”. It implies that each sovereign country has the only ability and power to govern its internal affairs and legitimate system. It is upon the government as to whether it prefers to charge tax and to agree on the amount of tax it wants to impose. Thus, this procedure of building a tax haven is not unlawful by itself.

    Still, in the age of large globalization, building offshore shell companies are simple. Many companies utilize such tax havens to change the positions of their earnings to such tax havens with the only motive of avoiding taxes, as seen in the example explained above. Such action may be illegal, as it destroys the tax root of the nation, which is something every responsible citizen of that nation is responsible.

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    Is Luxembourg A Tax Haven For India?

    Luxembourg, a country that captivates a massive amount of Foreign Direct Investment (FDI), is entitled to be one of the essential tax havens in the realm. Low tax and inflation rates, a booming market economy, and their priority on financial privacy make Luxembourg the excellent place to avert the pressure of paying fees.

    Luxembourg is ranked at 6th position as one of the most significant enablers of monetary privacy globally by the Tax Justice Network. Though, Luxembourg does not look like it to be such a fairy tale garden for tax evaders anymore.

    If it is created that the main purpose of such investments and agreements is to avoid taxes, then the advantage of the Treaty will not be ready to the person making such investment, and according to Indian Law, their earnings will be taxed in India, therefore precluding tax evasion.

    Conclusion

    Efforts are being given rise by global organizations like the Organization for Economic Co-operation and Development (OECD) and other nations. It is to avert tax evasion through the exploitation of international laws. The beginning of the BEPS Action Plan and the consequential amendment of DTAAs to form MLIs is a considerable effort to prevent tax evasion.

    However, while steps are taken to prevent the method of Base Erosion and Profit Shifting. It’s very tough to shut all the loopholes as the sovereignty of the nations cannot be altered.

    FAQs

    What is called tax heaven?

    A tax haven is any country or jurisdiction that offers foreign businesses and individuals minimal tax liability or Interest Tax Shields for their bank deposits in a politically and economically stable environment.

    Which countries are tax free havens?

    Some of the Tax havens are are:

    • Switzerland
    • Netherlands
    • The British Virgin Islands
    • Bermuda
    • Panama
    • The Cayman Islands
    • Luxembourg

  • Top 7 Tax Saving Investments under Section 80C

    Tyro professionals are incipient every year, so the tax is levied as much a burden or responsibility to them. However, those fledgling employees/professionals become seasoned ones, someday and may see an uplift or augment in their income in the coming years, thus this will increase the burden as well as responsibility to pay high on income tax.

    As is the case, high incomes represent high tax levied on individual incomes and vice-versa. This will reflect a slow-down in the development of future plans of a person, when he/she is paying a high share of tax in the present. And, in such cases, when the taxpayer has paid a superfluous share or underpaying on the prescribed tax, is solicited to make sure to file a return.

    That’s where the Government of India introduced various Tax-saving investments to progress financial stable career paths in the future.

    Here are Top 7 Tax-saving investments you can invest in 2021:

    Bajaj Life Insurance Capital Guarantee Solution
    Bajaj Allianz Life Goal Assures
    Canara HSBC OBC Life Insurance investment 4G
    Edelweiss Tokio life Wealth secure plus
    Max life Online Saving plan
    HDFC Life Click2Wealth
    ICICI Prudential life signature
    FAQ

    As said, the future is uncertain, we don’t know what will happen the very next moment? In some cases, only the invested or saved amount of an investment lends as a helping hand in the forlorn situations in the future, despite getting a low rate of return on such investment. Similarly, business is uncertain in various factors such as market price, trends, capital value or profit etc.

    Bajaj Life Insurance Capital Guarantee Solution

    Bajaj Allianz has come up with its new scheme on tax-saving in 2021- the Bajaj Life insurance Capital Guarantee solution that aids individuals to earn a 100% high rate of return on the investment amount which is piqued to 16.3% in the market as of now. Besides, the schemes provide zero risks and no commission is charged on the invested amount.

    Eligibility: This policy/scheme is applicable to 18-65 years.

    Policy term: 20 years

    Benefits: Bajaj Life insurance Capital Guarantee solution bestows zero risk as well as commissions on the invested amount. The policyholder gets the benefit of partial withdrawals.

    This tax-saving plan allows the policyholder for multiple withdrawals and no tax levied under section 10 (10D). Therefore, inbuilt life covers a maximum of 12 lakhs throughout the policy term.

    Bajaj Allianz Life Goal Assures

    Health is wealth, as we see the reality of the ongoing pandemic really made many individuals enroll on the tax-saving scheme- Bajaj Allianz Life Goal assures. Moreover, we have loads of obligations to fulfil, from education to living under a safe roof and for all that we need a sturdy amount of money to acquire. Because of this, Bajaj Allianz Life Goal Assures provides financial support to individuals as well as his/her family throughout their lives in accomplishing their needs.

    Eligibility: This policy/scheme is applicable to 18-60 years.

    Policy term: 10-30 years

    Benefits: Bajaj Allianz Life Goal Assures offers special loyalty additions on augmenting maturity value at the time of every 5 years of the policy term and mortality charges which have been deducted in the policy term, will be added to the return fund at the time of maturity.

    The tax-saving scheme comes with zero commission as well as tolerating partial withdrawals. Apart from that, this scheme permits the policyholder for flexible transfer of different funds in order to maximise the return in various markets.

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    Canara HSBC OBC Life Insurance investment 4G

    This tax-saving scheme covers the demise of the policyholder or their beloved one in the family by supporting them financially. The sum assured is expected to be 105% of total premiums which will be received either at the time of maturity/death of the holder or take the fund amount in periodic instalments under the Settlement Options(SO).

    Eligibility: This policy/scheme is applicable to 18-65 years.

    Policy term: 10 – 30 Years

    Benefits: Canara HSBC OBC Life Insurance investment 4G benefits in providing loyalty additions and wealth booster during the policy term. Besides, this scheme offers flexible transfer of invested funds, partial withdrawals, tax exemption, Settlement Options are available to the holders in case to receive benefits on the maturity and Premium redirection is available if the policyholder wants to modify the allocation of future premium into one ULIP fund or more.

    Edelweiss Tokio life Wealth secure plus

    This tax scheme comes with a combo of insurance plan and investment plan, which is built to protect the wealth of an individual in the present as well as for future generations. The scheme gives 15 lakhs in 30 years if a premium of 8% per annum is paid.

    Eligibility: This policy/scheme is applicable to 1-55 years.

    Policy term: 10-20 years

    Benefits: the fund value will be received either at the time of maturity or death of the insured, not taxable, offers three additions- Loyalty addition at the 6th year of the policy term, Wealth booster addition and Maturity addition.

    Max life Online Saving plan

    Every individual chooses to join a savings insurance plan so that they and their family can get financial support in times of need. If you want to protect your dear ones the Max life online saving plan is what you are looking for.

    Eligibility: This policy/scheme is applicable to 18-60 years.

    Policy term: 5 years to the selected policy term for maturity.

    Benefits: In Max life, an online saving plan, the total premium paid till the date of death is 105%. The insured can also renounce during the policy term, the person will be funded the sum minus the charge from when they discontinued. Till the last days, the insured will receive the fund value.

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    HDFC Life Click2Wealth

    HDFC Life Click2Wealth is the same as other insurance that not only supports you but also your family. They give us many alternatives in which we can choose the best that suits us. No policy loans are available. The insured person’s family has benefited accordingly if the person dies. Grace periods are also available as per the plan.

    Eligibility: This policy/scheme is applicable to 18-75 years.

    Policy term: 10 to 40 years

    Benefits: The policy has maturity and death benefits. The fund will be growing even after the policyholder dies as per the premium waiver option. The Premium modes contain many options from which you can choose the best instalments. 1% of the annual premium is added to the fund value. They have 10 fund options. After 5 years, the policyholder can withdraw the money.

    ICICI Prudential life signature

    A unit-linked insurance plan that supports you to achieve your goals and protects your family. In a systematic plan, Withdrawals in Regular intervals are allowed to support your dreams. Monthly, half-yearly and annual are the three premium paying modes.

    Eligibility: This policy/scheme is applicable to 18-75 years.

    Policy term: 10 to 30 years

    Benefits: After the mature period, the policyholder can choose to withdraw the whole amount or choose a structured payout. The insured will receive the top fund value even if the policyholder dies with a minimum death benefit. The insured is exempt from tax for the premium amount as per section 80c and section 10D.

    Conclusion:

    Everyone wants to see their loved ones lead a happy and wealthy life, even if they are not present to witness or share the moments with them. Life is precarious, no one can guess what tomorrow will hold for us, so start planning, it’s never too late to start. If you are in search of a path that can help you to lead a financially secure life, then we suggest you seek assistance from any of the above-mentioned insurance companies.

    FAQ

    How to save tax in 2021?

    Life Insurance, ULIP’s, Mutual Funds, Tax Saving Fixed Deposit, SCSS or Senior Citizens Savings Scheme and Provident Fund are some of the ways you can save tax.

    What is Section 80c?

    Section 80C is one of the most popular section that allows taxpayers to reduce their taxable income by investing in various schemes.

    Is your savings account taxed?

    Yes, any interest on your savings account is taxable income.

  • Top 7 Unusual Tax Rules around the World

    Taxes have a very intriguing history around the globe! As we are well familiar with the fact that tax rules are essential for our country. Taxes are as certain as deaths. For the social welfare and development of any country, taxes are crucial and must be taken more promptly by its citizens. With such a serious entity of taxes, it’s quite surprising to know about those extremely unusual and weird taxes across the world. Did you know, some countries even charge taxes on prostitution? Weird, right?

    To sum up such weird and unusual tax rules across the globe, we have presented this article. Such unusual tax rules pass because of the sudden financial needs in order to fill up the gaps that occurred in budgets.

    Throughout the world’s history, numerous weird and unusual tax rules have been passed. Some fraction of these taxes were passed to generate additional revenue, whereas others were passed for social welfare purposes.

    Well, we can not turn down the tax rules due to the chances of arrests are pretty high. That’s why willingly or unwillingly, people do follow the tax rules and pay their fraction. Let’s begin with the most unusual tax rules around the globe.

    Germany: Tax deduction on Bribes
    Denmark: Cow Flatulence Tax
    Hungary: The Junk food Tax
    Britain: Films Tax Reduction
    Russia: Beard tax
    Canada: Cereal Toys Tax Reduction
    Ireland: Artist Tax Exemptions
    FAQ

    Germany: Tax deduction on Bribes

    According to German laws, bribery was legal in all sectors. This continued till 2002, after which various laws were passed and bribery became illegal. But, this isn’t the unusual part. Bribes were not only legal in Germany but it was also tax-deductible, published by Businessweek editorial of 1995.

    However, this wasn’t allowed when the briber or its recipient was involved in any kind of criminal offense or proceedings. On this note, bribery was restricted by the prosecution. This ended when Germany passed the public contracts of 20-30%. Germany made its proceedings of eliminating this tax deduction for bribery till 1999.

    Denmark: Cow Flatulence Tax

    A wide fraction of people believe the cause of greenhouse gasses is the black smoke coming from factories or the highway of Los Angeles but, Denmark holds a different perspective here! It believes the cause of greenhouse gases is cow gas.

    According to research and analysis, around 18% of Europe’s greenhouse gasses come from methane, released in cow gas because of the slow digestion of greens in the cow.

    To prevent the epidemic of greenhouse gas, caused by the cow fueled, several European countries passed tax charges on each cow. Thus, Denmark’s cows are worth $110.

    Hungary: The Junk Food Tax

    It’s quite shocking to know that some countries even charge taxes on packaged foods that are high in salt and sugar. Basically, on all junk foods. One such country is Hungary. This junk food tax is officially termed as ‘Public Health Product Tax‘, which adds up to around 20% more than the initial price.

    The government of Hungary basically prioritizes the healthy diet and assesses it to the citizens of having a better product choice. This results in around 59 to 73% of consumers eliminating junk foods from their lists.

    Britain: Films Tax Reduction

    Great Britain charges a distinct tax deduction to films that are based on British culture. Such films need to be registered to various authorities and would be rated according to their cultural content, practitioners, hubs, and contribution.

    Those films which are rated highly on the scale, get a tax reduction of 25 percent on the earnings generated by the films.

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    Russia: Beard tax

    It’s very unusual for Russia to introduce a beard tax. Well, it is true! In the times of Peter the Great who was known to be the most popular Czar of Russia. And he was the one who introduced the beard tax.

    Beard was the typical fare for a wide number of people in Chilly Russia. When Peter the Great visited Western Europe where he was intrigued by the barbarian culture and that’s when he decided to tax the bread. For keeping a beard, men had to give some token as in beard tax.

    Canada: Cereal Toys Tax Reduction

    One of the most fascinating things for a kid is to find the toy hidden in the cereal box. And Canada leaves no grounds to promote such packaging. That’s why it has provided tax breaks on cereal companies for putting a toy in the cereal box. This is unusual but at the same time, promotes kids’ welfare.

    Those cereal companies that hide a toy in their cereal box around our Northern Neighbor get a reduction on the extra tax.

    Ireland: Artist Tax Exemptions

    For artists, managing their economic status is quite tough and often leaves them starving. But in Ireland, artists from all categories including sculptures, writers, composers, and visual artists who sell their work are not compelled to pay the income tax.

    For getting such tax exemption, the artists have to file a lawsuit for their original work under the tax authorities of Ireland. They further check and provide the final statement on whether the work is original, valuable, and passes the cultural merits or not.

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    Conclusion

    The history of tax rules is quite intriguing as well as unusual. And still, such unusual taxes are available in many countries across the globe. In fact, in historical times taxes were charged on cooking oils or beards. Every country has its distinct tax rules based on the country’s requirements or culture. Through this article, we did our best in covering such unusual and weird tax rules across the globe.

    FAQ

    Which countries are tax-free?

    Bermuda, Monaco, the Bahamas, Andorra and the United Arab Emirates (UAE) are tax-free countries.

    What are examples of hidden taxes?

    taxes on cigarettes, alcohol, gambling, gasoline and hotel rooms are some of the examples of hidden taxes.

    What are some weird taxes around the world

    Cow Tax, Junk Food Tax and Tax on bribe are some of the weird taxes in history.

  • How GPS imaging will replace Toll Booths in India within one year?

    Toll Booths are very common for an Indian citizen who takes a road trip often and stopping in between your road tips multiple times to pay tolls which consumes a lot of time. However, the Government had introduced FASTag to fasten the process but still was not effective as expected. The Transport Minister has currently announced that the toll booths will be removed from the country and will be replaced by GPS imaging. In this article let’s look at more information regarding it.

    GPS Imaging Toll Booths – Latest News
    Reason Why Government is moving to GPS imaging toll
    The success of FASTag Toll
    How does GPS Imaging work
    FAQ

    Toll Booths – Latest News

    The Government has announced that it would remove all toll booths across the country within a year and will continue the collection of tolls through GPS imaging on the vehicles instead of using toll booths. This was conveyed by the Road Transport and Highways Minister of the country, Nitin Gadkari.

    He conveyed to the Lok Sabha that he would provide an assurity within a year all the toll booths in the country would be removed and the toll collection would happen through GPS imaging.

    Reason Why Government is moving to GPS imaging toll

    The announcement of the removal of the toll booth was announced as an answer to the question that was raised by BSP’s Danish Ali.

    Danish Ali had complained about the toll booths in the Ganamukteshwar in the Hapur district saying that according to the rule there should be toll booths at an interval of 60 km on the National Highways but his constituency had toll booths at an interval of 40 km.

    The Transport Minister said that he knows that in some places there are too many toll booths and added that it is wrong and unfair and also conveyed that he would remove it.

    One of the reasons mentioned by him was that there was a lot of theft in this system and said that the income from toll booths used to be around INR 24,000 crore per year and during the Covid, the income generated from toll booths was less which was around INR 10,000 crore.

    Value of tolls collected on national highways across India
    Value of tolls collected on national highways across India

    The success of FASTag

    The FASTag system which helps in paying the fee on the toll plaza through an electronic system was introduced in the country in the year 2016. Around 93% of the existing vehicles use FASTag for paying the tolls but the remaining 7% have not adopted to using FASTag.

    The vehicles that have not adopted to paying toll through FASTag will have to pay double the amount as toll fees. Gadkari has conveyed that it seems like the rest of the vehicles do not want to leave a record of their travel details and added that he has called an police enquiry for the matter.

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    How does GPS Imaging work

    The collection of toll fees would be through the GPS which will collect the toll tax based on the image that is captured and charge them accordingly.

    At the beginning of the toll road, there will be a camera that will capture an image on GPS. The toll money will be charged based on from where a vehicle would be coming from and will be going to. There will be no toll booths and no one will be stopped on their way.

    Conclusion

    Toll booths are one of the major sources of income for the Government of India. Replacing of Toll booths with GPS Imaging will be one of the steps to achieve digitalization after the adoption of FASTag.

    FAQ

    What is GPS Imaging toll collection?

    GPS imaging means that toll collection will happen via GPS. The money will be collected based on GPS imaging on vehicles.

    Why are there tolls in India?

    In India, Toll tax is charged for raising the cost incurred in constructing as well as for maintaining the roads.

    What is GPS FASTag?

    The Government of India is planning to remove toll booths and implement low powered GPS FASTag, which will collect the toll tax by GPS imaging.

  • What are the Latest Tax Exemptions by the Government for Covid-19 treatment?

    The Covid-19 had affected a lot of families in India and has also wiped out a lot of wealth of many individuals and left many others unemployed. In order to provide a relief to the tax payers, the Income Tax Department of the country has announced certain tax benefits and reliefs for the taxpayers. In this article let’s look at some of the important announcements.

    Tax Exemptions – Latest News
    Tax Exemptions for Employees
    Tax Exemption on Ex – gratia payment
    Deadline extended by the Government
    FAQ

    Tax Exemptions – Latest News

    Anurag Thakur who is the Minister of state in the finance ministry had confirmed about the tax exemptions and the development regarding it. He conveyed that the amount paid by an employer to an employee or any other person for the treatment of Covid-19 for the year 2019-20 and the subsequent years will not be taxed.

    The Finance Ministry had released a report in detail about the information. As per the reports, any amount spent by anybody for the treatment of the employee or someone else would-be tax free. In simple terms, the person who has paid for the treatment and the beneficiary who has received the payment will be exempted from tax.

    Tax Exemptions for Employees

    The Government has announced exemptions on the tax that is received by employees from their employer or any other person for the treatment of Covid-19. The Government has stated that many employees and individuals have received help from their employers and other well-wishers to meet the expenses of their Covid treatment.

    The Press release has conveyed that in order to make sure that an individual would not have any liability on the income tax payment that arises on this account, the Government has decided to provide exemptions for the employees or the individuals or the tax payer for the amount received by their employers or well wishers for the payment of the expenses caused for the medical treatment of Covid-19 in the FY 2019-20 and the subsequent years.

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    Tax Exemption on Ex – gratia payment

    The Government has also conveyed that there won’t be any tax on the ex – gratia payment that is received by the family member of the deceased employee due to Covid-19. The Government has conveyed that there wouldn’t be any tax charged on the amount that an individual has received as a help from the family, friends or relatives due to Covid-19. The amount exempted from the tax would be up to INR 10 lakhs.

    This is considered to be one of the most important relief and a much needed one that is bought in by the Income Tax Department. The taxpayers have faced a lot of difficulties whenever they were hospitalized or under the treatment and the medical expenses for the Covid-19 had turned to be costlier for a lot of people.

    The exemption for the amount received for the medical treatment would provide some relief for the taxpayers and their families as well. It is considered that the families who have lost a member would get benefited by providing exemptions on the ex – gratia amount received by them.

    Deadline extended by the Government

    The Government has extended the deadline for linking PAN cards and Aadhar cards to 30 September 2021 from 30 June 2021 as many people were facing troubles in linking the PAN with Aadhar cards. The deadline for making payment under the Vivad Se Vishwas Scheme has also been extended till 31 August 2021.

    The deadline for the Tax Compliance for the deadline for saving Capital Gains tax has also been extended to 30 September 2021.

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    Conclusion

    The move from the Income Tax Department of the country would help a lot of families and taxpayers to come out of the financial crisis they are currently facing due to the pandemic and this would provide a relief for them.

    FAQ

    What is exemption in income tax?

    Tax exemption is the monetary exclusion that reduces the taxable income which include exemption of charitable organizations from property taxes and income taxes, veterans.

    Who are tax exempted for Covid-19 treatment?

    The government stated that tax exemption will be presented to the amount received for medical treatment from the employer or the third party for treatment of Covid-19.

    What is the limit to the tax exemption provided for Covid-19?

    The exemption shall be limited to Rs 10 lakh in aggregate for the amount received from any other persons for Covid-19.

  • What is G7 Corporate Tax Deal and How will it Benefit India?

    There were a lot of articles and discussions about the tax evasions done by the big tech companies, which include Amazon, Google, Facebook, Netflix, etc. The companies have said to be paid very little amount in tax as they use tax havens and shift their operational region to avoid huge tax which should be paid to certain countries. The G7 summit has introduced a new tax system. Let’s look at the new tax system and how it would benefit India

    Corporate Tax deal – Latest News
    Countries that have agreed to the Corporate Tax Deal
    G7 Corporate Tax Deal Proposal
    How will India benefit from the tax deal?
    FAQ

    Corporate Tax deal – Latest News

    The group of 7 countries that are commonly known as G7 countries has decided on implementing the historical tax system on the global tech and multinational companies which will be a global tax. This proposal and decision are made with the aim to reduce the tax evasions conducted by the companies where they generally shift their operation base to the regions with a lower tax rate.

    Countries that have agreed to the Corporate Tax Deal

    The deal is likely to be put forth in the G20 summit, which is going to be held in July 2021. As of now, a total of 7 countries agreed that includes Canada, Germany, France, Japan, Italy, the United Kingdom and the United States.

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    G7 Corporate Tax Deal Proposal

    The proposal contained of 3 major decisions that were taken during the meeting.

    1. The companies or the multinational corporations will be forced to pay taxes on the profit they earn overseas.
    2. A minimum corporate tax of around 15% will be imposed on the multinational corporations on a global basis.
    3. The countries can share taxes on the profit earned by the companies or multinational corporations in a specific country through digital sales where the company has not got a physical presence.

    The G7 finance ministers and the Central bank governors conveyed that they will be committed to reaching an equitable solution on the allocation of taxing rights, the market countries will have to agree to share at least a taxation of 20% on the profits earned by the multinational corporations.

    They also conveyed that they would provide a proper coordination in applying the new tax rules and to remove the digital service taxes and other similar taxes that are levied on the corporations. They further added that they were looking forward to getting into an agreement with regards to the corporate tax in the G20 summit held in July 2021.

    How will India benefit from the tax deal?

    In the year 2019 the Finance Minister of India, Nirmala Sitharaman had cut down the corporate tax rates for the Indian based companies to 22 % and for the new Indian based manufacturing companies to 15 %. This would add an advantage as the bilateral tax agreements between the countries are also around a similar range.

    Since the tax rate in India is around 15 %, which is similar to the tax rate announced in the G7 summit, the country will not have to increase its tax rates. This would be a positive approach as India will be able to attract a lot of investments into the country. Furthermore, the existing tax havens may become unattractive and we can see a lot of investments coming into India.

    The decision of the countries in taxing the multinational corporations that have a significant sale in the country without a physical presence will let India tax a lot of corporations that earn a huge amount of money through digital sales alone.

    Amit Maheshwari who is a Tax Partner at the consulting firm AKM Global has conveyed that India would be able to benefit a lot from the newly proposed corporate tax as they are a big market for the huge tech companies.

    However, it is to be noted that as part of the agreement India will have to stop collecting the Digital service tax that it has levied on the companies such as Amazon and Google. India levies a Digital Service Tax of around 2 % on the revenues generated in India through the digital services offered by these companies. This includes digital platform services, data-related services and digital sales.

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    Conclusion

    India is expected to gain a lot from the new corporate tax discussed and approved in the G7 summit but tax havens such as Ireland, Netherlands, Luxemburg, Hong Kong and the Cayman Islands are going to face the consequences of the deal.

    FAQ

    What is G7 tax deal?

    The Group of Seven or G7 countries have agreed on a tax deal to impose a global tax on multinational corporations. The proposal is aimed at reducing tax evasion committed by large multinational corporations that often shift their base of operations to regions with lower tax rates.

    Which countries come under G7?

    The seven G7 countries are Canada, France, Germany, Italy, Japan, the UK and the US.

    Why was G7 tax deal proposed?

    G7 corporate tax deal was proposed to reduce tax evasion committed by large multinational corporations that often shift their base of operations to regions with lower tax rates.

  • Everything You Need to Know about ITR E-filing 2.0 – New ITR Filing Website

    The Income Tax Department of India has launched a new website that would help in the e-filing of tax returns. The new website has been updated with a lot of exciting features. Let’s look at these features, and all the other details of the new website launched by the Income Tax Department.

    ITR E-filing website – Latest News
    New Features of the ITR Filing Website
    New Tax Payment System
    Announcement of the New ITR Filing Portal
    FAQ

    ITR E-filing website – Latest News

    The new e-filing website was launched by the Income tax Department on 7 June 2021. This website packs in several interesting features and details that are expected to make the Income Tax returns process more smoother and faster.

    The website can be accessed at www.incometax.gov.in

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    New Features of the ITR Filing Website

    The website that has been launched recently, has been updated with numerous brand new features. One of the major updates is that the website will let you pay the online tax payment through multiple payment options, which include UPI, net banking, credit card, RTGS, or NEFT. This can be paid through any account from any bank of the taxpayer and this feature will make the payment process much easier.

    On 5 June 2021, the Ministry of Finance had issued a press statement that contained the list of new features and the changes that were being adapted on the new website which was going to be launched.

    • The new taxpayer portal is integrated with an immediate processing of Income Tax Returns which will help in issuing quick refunds to the taxpayers.
    • In order to make the follow up action easier, all the pending payments and uploads will be available on a single dashboard for the tax payers.
    • A free of cost software for preparing the Income Tax Returns will be available for the taxpayers with interactive questions to help the taxpayers in the ITR filing. The facility for preparation of ITRs 1 and 4 is available online and offline, ITR 2 is available offline for the beginning stage and the preparation for 3,5,6,7 is expected to be available soon.
    • The taxpayers will have an option to proactively update their profile by providing certain details of income which include the house property, salary, business or profession, which will be used in the pre-filing of the Income Tax Returns.
    • The detailed pre-filling of salary income, interest, dividend and capital gains is expected to be enabled and will be available only after the TDS and SFT statements are uploaded and the due date for the upload is 30 June 2021.
    • A new call center will be set for the assistance of the taxpayers to respond to their queries immediately. There will also be a provision of FAQs, User Manuals, chatbots, live agents and also videos.
    • There will also be the availability of functionalities for filing Income Tax Forms, submit responses to Notices in Faceless Scrutiny or appeals and to add tax professionals.
    New ITR filing website
    New ITR filing website

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    New Tax Payment System

    The New Tax Payment system is announced to be launched on 18 June 2021, which is after the due date of the Advance Tax installment. This will avoid any inconvenience for the taxpayers. The ministry has also announced that they will be releasing a mobile application subsequent to the launch of the new portal in order to help the taxpayers get used to the new features.

    Announcement of the New ITR Filing Portal

    The Income Tax Department had announced about the new portal to all the existing tax payers by sending a text message to their registered numbers. The message conveyed the news of the launch of the new e-filing portal along with the the date of launch, 7 June, 2021, and the link of the new portal.

    Conclusion

    The existing portal that is the older version was not available for the taxpayers for 6 days from 1 June 2021 to 6 June 2021 ahead of the launch of the new portal. The Central Board of Direct Taxes had asked all the taxpayers to complete all their tasks before the 1st of June in order to avoid any difficulty during that period.

    FAQ

    Is Income tax new site launched?

    Yes, the new  ITR filing website is launched and you can visit it on www.incometax.gov.in.

    What is the new Income tax portal?

    The new income tax portal is integrated with immediate processing of Income Tax Returns (ITRs) to issue quick refunds to taxpayers, and all interactions and uploads or pending actions will be displayed on a single dashboard

    What is e-filing portal?

    The e-filing portal is used by taxpayers to file their income tax returns (ITRs) and also to raise complaints seeking refunds.

  • Who are “Silicon Six” and how they Evaded 100 Billion in Tax?

    The Silicon Six tech giants have been accused by the fair tax foundation for inflating the tax payments by almost USD 100 billion. It was found that during the year 2011 to 2020 the firms have paid less in tax than the national figures mentioned on their annual reports. In this article let’s look at What is “Silicon Six” and how they Evaded 100 Billion in tax?

    Silicon Six – Latest News
    The claim on Silicon Six by Fair Tax Foundation
    Total Tax paid by the Silicon Six
    Did Amazon Evade Taxes?
    Amazon’s Reply to the claim
    Did Facebook Evade Taxes?
    Facebook’s Reply to the claim
    What is a Tech Tax Deal?
    FAQ

    Silicon Six – Latest News

    Silicon Six is the US based tech giants which include Amazon, Facebook, Google’s parent company Alphabet, Netflix Apple and Microsoft. They include the largest companies in the Silicon Valley. These companies have been accused of inflating the tax payments of almost USD 100 billion for the past decade.

    The claim on Silicon Six by Fair Tax Foundation

    A report by the campaign group Fair Tax Foundation ahead of the G7 Summit in the UK where chancellor Rishi Sunak has called on the world leaders to back a new tech tax before the G7 Summit have found that the tech companies which include Amazon, Facebook, Google’s parent company Alphabet, Netflix, Apple and Microsoft have paid USD 96 billion less in tax for the year 2011 to 2020.

    It is claimed that the companies have paid less amount of tax when compared to the national taxation figures they have shown in their financial annual reports.

    Total Tax paid by the Silicon Six

    Fair Tax Foundation has conveyed that the six tech firms have paid USD 149 billion less to global tax authorities than which they should have paid if the headline rates where they operate have been taken into consideration.

    It is found that overall, the companies have paid a tax of USD 219 billion in income tax over the past decade. That is 3.6% of their total revenue which was more than USD 6 trillion. Income tax is paid on the basis of profits earned by the company, but the researchers have conveyed that the silicon six companies have deliberately shifted their income to low-tax jurisdiction places in order to pay less amount of tax.

    Did Amazon Evade Taxes?

    The report based on the regulatory filings of the company has found that Amazon has collected a revenue of around USD 1.6 trillion and reported a profit of around USD 60.5 billion and has only paid a tax amount of USD 5.9 billion for the year 2011 to 2020.

    According to international tax rates, Amazon is supposed to pay an amount of USD 10.7 billion in taxes. The tax paid by Amazon over the past decade from 2011 to 2020 is the lowest of all the silicon six companies that are 9.8%.

    Annual net revenue of Amazon from 2010 to 2020
    Annual net revenue of Amazon from 2010 to 2020

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    Amazon’s Reply to the claim

    A spokesperson of Amazon had commented on the claims conveying that the calculations are extremely misleading. He added that Amazon is primarily a retail company whose profit margins are low and comparing to other tech companies who have an operating profit of more than 50% is completely irrational.

    The company has conveyed that the government writes the tax laws and Amazon has always tried to pay all the tax dues and always encourages the company to file the tax dues. They also mentioned that they have invested billions in creating jobs and infrastructure and said that these investments coupled with low margins would naturally result in a lower tax rate.

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    Did Facebook Evade Taxes?

    Facebook the social media platform that is run by Mark Zuckerberg has just paid USD 16.8 billion in income tax during the years 2011 to 2020. The company has reported a profit of USD 133 billion and a revenue of USD 328 billion. The tax paid as a percentage of profit was just 12.7% which is the second lowest among the silicon six companies after Amazon.

    Annual net revenue of facebook from 2010 to 2020
    Annual net revenue of Facebook from 2010 to 2020

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    Facebook’s Reply to the claim

    A Facebook spokesperson has mentioned that all companies pay taxes on their profits and not their revenues. He added that the previous year, the company has paid USD 4.23 billion in corporate income taxes globally and added that the company had paid an average tax rate of 20.71 % over the last 10 years. This is considered to be roughly in line with the Organisation for Economic Co-operation and Development (OECD) average.

    What is a Tech Tax Deal?

    Chancellor Rishi Sunak has conveyed that he would want the President Joe Biden’s administration to sign up for a tech tax deal and added that the tech companies are not paying the right tax amount at the right places which is not fair and which he wants to fix.

    The US government’s proposals to reform the global tax systems by imposing a minimum of 15% corporate tax would end the profit sharing to tax havens of the big tech companies. Global agreements on tax would have a really big impact on the tech giants with them having to pay billions of additional taxes across the world.

    Conclusion

    However, the rest companies of Silicon six which include Alphabet, Apple, Netflix and Microsoft have not responded to the request on the feedback and have declined to comment on the situation.

    FAQ

    Which companies come under the Silicon Six?

    Facebook, Amazon, Apple, Netflix Microsoft, and Google are known as the Silicon Six.

    Do Big companies pay tax?

    Large multinational companies save billions of dollars by using foreign subsidiaries and tax havens and avoid taxes.

    What big companies pay no taxes?

    In a report it was found that FedEx and Nike are among those who avoided U.S. tax liability for three straight years and atleast 55 large companies paid no taxes in America.