The Dilemma of Deferral Tax Havens and International Finance 117 Anti­Haven Measures 142 The Transfer Price Problem

a The Movement for Tax Reform 68 b European Community Harmonization 72

Chapter 4 International Tax Avoidance 77

1. The Legal Regulation of Economic Relations 77 a Liberal Forms and their Limits 79 b Fairness, Efficiency and Legitimacy in Taxation 82 2. Taxation of Revenues and Opportunities for Avoidance 83 3. The Economics, Politics and Morality of Avoidance 86 a The Business Purpose Rule 87 b General Statutory Anti­Avoidance Rules 89 c Abuse of Legal Forms 90 d Tax Planning 91 4. International Investment and Tax Avoidance 93

Chapter 5 The Dilemma of Deferral

97 1. The UK: Control over the Transfer of Residence 98 a The Islands 99 b Family Trusts: the Vestey cases 100 c Companies: Controls over Foreign Subsidiaries 102 d Modification of the Residence Rule 104 2. The US: Tax Deferral on Retained Foreign Earnings 106 a Individuals 106 b Foreign Corporations 106 c US Corporations: Foreign Branches and Subsidiaries 107 d The Deferral Debate 109 e The Controlled Foreign Corporation and Subpart F 111 3. The Limits of Unilateral Measures 114

Chapter 6 Tax Havens and International Finance 117

1. Offshore Finance 119 a The Growth of Deregulated Offshore Sectors 119 b The Inducements and Temptations of Offshore Finance 123 c Respectability and Supervision 125 i Problems of Supervision 126 ii Dilemmas of UK Policy Towards Havens 129 2. Tax Havens 131 3. Intermediary Company Strategies 135

Chapter 7 Anti­Haven Measures 142

1. Controlled Foreign Corporations 144 a The Spread of Anti­CFC Provisions 144 b Defining CFG Income 146 i The Income Liable to Tax 146 ii Control and Residence 148 c The Effect of Anti­CFC Measures 149 2. Anti­Avoidance and Tax Treaties 151 a Anti­Base Provisions 153 b Anti­Conduit Provisions 156 i Denial of Benefits under Tax Treaties 156 ii Treaty Benefits and Investment Flows 159 3. Combating Treaty­Shopping 160 a Limitation of Benefits Clauses 160 b Renegotiation or Termination of Treaties with Havens 164

Chapter 8 The Transfer Price Problem

171 1. Separate Accounts and the Arms Length Fiction 173 a The US: From Consolidation to Adjustment of Related Company Accounts 175 b France: Taxing Profits Transferred to a Foreign Parent 176 c The League of Nations and Arms Length 177 d The UK: Profit Split and Arms Length 180 e Germany: Organic Unity and Profit Split 180 f Other National Provisions 183 g The Advantages of Adjustment 183 2. Elaborating the Arms Length Principle 185 a The US Regulations of 1968 185 b International Concern about Transfer Price Manipulation 188 3. The Indeterminacy of Arms Length 193 a Arms Length Price or Arms Length Profit 193 i Identification of Specific Transactions 193 ii Profit­Split: Criterion or Check? 194 b Tangibles: The Search for Comparables 197 i The US Experience 197 ii The Administrative Burden of Scrutiny 200 c Safe Harbours and Intrafirm Financial Flows 201 i Thin Capitalization 202 ii Global Trading and Transfer Parking 206 iii Proportionate Allocation of Financing Costs 208 d Central Services: Joint Costs and Mutual Benefits 210 e Intangibles and Synergy Profits 212 f The Commensurate with Income Standard and the US White Paper 216 i Restriction of the CUP Method 217 ii Periodic Adjustments 218 iii The Arms Length Return Method 218 4. Transfer Prices in Theory and Practice 221 a Cost­Sharing and Profit­Split 222 b Economic Theory and Business Practice 224 5. Conclusion 228

Chapter 9 The Worldwide Unitary Taxation Controversy 230