Tax arbitrage

Tax arbitrage

Trading that takes advantage of a difference in tax rates or tax systems as the basis for profit.

Tax Arbitrage

A form of arbitrage in which one attempts to profit on price differences on the same security resulting from different tax systems in the countries or jurisdictions in which the security is traded.
References in periodicals archive ?
For years, the shareholder-primacy model led CEOs to eke out profits through outsourcing or labor-force downsizing, regulatory and tax arbitrage, and stock buybacks that shower cash on shareholders at the expense of investing in their companies' future.
"The adoption of a single rate on capital income, including dividends, would simplify the current complicated tax structure that is susceptible to tax arbitrage.
Albertus, Carnegie Mellon University, "Does Foreign Tax Arbitrage Promote Innovation?"
"The combinations of applicable tax rates on tax bases, upon meeting certain qualifiers, results in a complicated tax map with plenty of room for tax arbitrage or sly mechanisms to reduce a taxpayer's liability.
In particular, and at least on the surface, the design of the two provisions appears to leave open a tax arbitrage opportunity for companies to pursue.
'Mutual funds will also opt to resume issuing of bonus shares due to the tax arbitrage between bonus and dividends' Khurram said and added that the brokers' tax made adjustable should improve volumes and liquidity in the market and reduce cost to investors.
Under GST, all the manufacturers are under the tax umbrella and no amount of tax arbitrage exists.
Now post tax arbitrage returns will get compressed by 10%, but these would still be better than liquid funds and most of the ultra short funds.
Analysts expect Q1 compensation growth of 4.8%, versus a 16-year average of 2.6%, and analysts may later see a Q1 boost and downward Q4 revision as tax arbitrage is incorporated.
One school of thought says that now that there is no tax arbitrage (earlier you had CST of 2 per cent and VAT of 14-15 per cent), why do you need an e-way bill system?
At present, supply chains across major manufacturing industries are strategised based on the tax arbitrage aspect.
"The gift tax is really a big deal because it's one of the ways the IRS prevents income tax arbitrage," says Delgass.