unitary taxation

Unitary Tax

A corporate tax on a corporation's global income. Some countries levy unitary taxes on corporations operating in their borders in order to prevent them from avoiding taxes by transferring income to another country with a low or no corporate tax. See also: Transfer pricing mechanisms, Aggressive accounting.

unitary taxation

a system of TAXATION operated by a country that taxes a foreign-owned MULTINATIONAL ENTERPRISE on a predetermined proportion of its total worldwide income, rather than on the income which the multinational actually earned within that country. This involves the use of some rule of thumb to apportion tax liability: for example, if 10% of the total world ASSETS of a multinational are located in that country, then the country may seek to tax 10% of the multinational's world income, making no allowance for any foreign taxes paid. Countries might adopt unitary taxation to increase their taxation revenues and to counter manipulative TRANSFER PRICING by multinationals, but must bear in mind that such a taxation system is likely to discourage inward INVESTMENT. Compare DOUBLE TAXATION.

unitary taxation

a system of TAXATION operated by a country that taxes a foreign-owned MULTINATIONAL COMPANY on a proportion of its total world-wide income rather than on the income that the multinational actually earned within that country. Countries might adopt unitary taxation to increase their taxation revenues and to counter manipulative TRANSFER PRICING by multinationals. See DOUBLE TAXATION.
References in periodicals archive ?
Above all, I regret that Europe has not yet adopted unitary taxation of multinationals, imposing taxes on a multinational as a single entity - which they are in reality, rather than a myriad of so-called independent subsidiaries, as they claim.
And for some time now, the Independent Commission for the Reform of International Corporate Taxation has argued for the unitary taxation of MNCs.
According to Ylonen, to really tackle profit-shifting we would need a global unitary taxation system for multinational enterprises.
Most call for some type of "unitary taxation" in which the global profit of the multinational is allocated by formula, like the way American states allocate profit among themselves for corporate tax purposes, based on where sales are generated and where property and personnel are located.
The law provides for a gradual shift to unitary taxation to simplify the current multitiered structure for tobacco products and liquor by 2017.
(14.) In the tax case, see, for example, the OECD's opposition to unitary taxation with formulary apportionment.
The results for the related hearings were transmitted to President Reagan on July 31, 1984, in the Chairman's Report On The Worldwide Unitary Taxation Working Group: Activities, Issues and Recommendations.
These changes include nexus defined for MBT purposes, unitary taxation under the MBT, small business provisions, the MBT surcharge, and an MBT credits update.
A number of states have implemented unitary taxation in which, the firm is taxed on a worldwide taxation system.
Finally, the study examines whether the effects of the state income tax burden and tax incentives on corporations' new capital spending differ between states whose income tax base is determined using unitary taxation or the throwback rule, and states without those rules.
The encyclopedia is a handy guide, especially for those who are unfamiliar with or unclear about such federalism-relevant concepts as fiscal disparities, fiscal equalization, state gaming taxation, horizontal equity, median voter theorem, tax and revenue capacity and effort, tax competition, tax exportation, unitary taxation, and vertical equity.