2004 – As part of a drive to help governments rationalise their tax policies, the OECD has issued a series of recommendations designed to achieve a common interpretation of how tax treaties apply with respect to employees or directors who receive stock-options as part of their remuneration. Over recent taxation of stock options in ireland, stock-options have come to account for an increasing share of executive pay packages. This has given rise to lively debate regarding their effect on incentives, risk taking and corporate governance.
The use of stock-options is influenced by different countries’ treatment of various forms of remuneration, raising a number of tax policy issues that have been a subject of study by the OECD over the last three years. The OECD’s recommendations on the interpretation of tax treaties and its analysis of transfer pricing issues are contained in two reports now published on the OECD’s web site and are summarised below. Comments on national taxation issues will be contained in a study on domestic tax issues to be released, along with the first two studies, in an OECD publication later this year. As a first step, following discussions in its Committee on Fiscal Affairs, the OECD is making changes to the Commentary on its Model Tax Convention, the basic document for the negotiation, application and interpretation of the global network of bilateral tax treaties that govern taxation of cross-border income and capital. The Commentary is not binding, but it gives guidance to governments on how to interpret and implement the provisions of the Model Tax Convention.
In addressing the transfer pricing issues that may arise between associated parties of a multinational enterprise as a result of the use of employee stock-options, the OECD bases its approach on the so-called arm’s length principle, whereby the conditions of commercial or financial relations between associated enterprises should be comparable to those which would have taken place between independent parties. The impact of provision of a stock-options plan on other intra-group transactions where the transfer pricing method to be applied to these other transactions is sensitive to employee remuneration, and the impact of stock-options on comparability where employee remuneration of either the taxpayer or third party comparables is materially impacted by stock-options. The impact of employee stock-options on Cost Contribution Arrangements within a multinational enterprise: based on an example, the study contains a discussion of whether and under what circumstances employee stock-options must be taken into account in the valuation of the participants’ contributions to a CCA, as well as a discussion of the valuation principles that may be applicable and circumstances in which employee stock-options may be omitted from the determination. Because of the complexity of the issues and the range of different circumstances to which they can apply, the OECD does not prescribe any single specific response.
It does, however, stress the importance of intra-group documentation to support the intent of the parties at the time that a stock-option plan is set up: e. It also highlights the importance of ensuring that intra-group arrangements achieve an arm’s length allocation of the risks inherent to the stock-option plan among the parties concerned, in order to ensure a consistent application of the arm’s length principle. 10 Percent Legacy and Succession Duty Impressed Duty Stamp. The raising of Money by any Mode or System of Taxation. The provincial legislatures have a more restricted authority under ss.
Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes. Shop, Saloon, Tavern, Auctioneer, and other Licences in order to the raising of a Revenue for Provincial, Local, or Municipal Purposes. The powers of taxation are circumscribed by ss. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons. It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for the Appropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been first recommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address, or Bill is proposed. No Lands or Property belonging to Canada or any Province shall be liable to Taxation. In order for a tax to be validly imposed, it must meet the requirements of s.
In my view, the rationale underlying s. The provision codifies the principle of no taxation without representation, by requiring any bill that imposes a tax to originate with the legislature. 53 does not prohibit Parliament or the legislatures from vesting any control over the details and mechanism of taxation in statutory delegates such as the Lieutenant Governor in Council. Rather, it prohibits not only the Senate, but also any other body other than the directly elected legislature, from imposing a tax on its own accord. Ontario English Catholic Teachers’ Assn. The delegation of the imposition of a tax is constitutional if express and unambiguous language is used in making the delegation. In such a situation, the delegated authority is not being used to impose a completely new tax, but only to impose a tax that has been approved by the legislature.
The democratic principle is thereby preserved in two ways. First, the legislation expressly delegating the imposition of a tax must be approved by the legislature. Second, the government enacting the delegating legislation remains ultimately accountable to the electorate at the next general election. This has resulted in situations where an imposition can be characterized as neither a valid regulatory charge nor a valid tax.