Case Studies of Tax Evasion by Changing Country of Residence －with Focus on Shipping and Toy Magnates－
Asian Tax Journal Vol. 15 No. 1 (2014), pp. 31-62
Abstract
In response to recently increasing offshore tax evasion cases, governments are conductingteleological law analysis and are emphasizing substantial taxation in interpretation of law. As aresult, position of taxpayers has become unstable and tax disputes have become frequent. The recentcases of shipping and toy magnates have significance from the perspective of scale of taxation,concept of resident, and tax planning. In this study, these cases are introduced and evaluated interms of the law and tax planning, and their implications are discussed as the following. Shipping and toy magnates both performed tax planning from the perspective of taxminimization taking into account the tax effect applicable to all parties involved. However, theyhad to pay significant nontax costs by executing unrealistic tax planning that involved themagnates being residents of nowhere. Also, transaction risks involved in application of tax lawsintroduced uncertainty into realizing the goal of tax minimization. Therefore, their tax planningmust be evaluated as failures. Considering that the original purpose of defining the concept of resident was in establishing thetaxation jurisdiction and that the criteria discriminating between tax saving and tax evasion areambiguous, expanding the concept of resident in order to respond to tax planning involving avoidanceof resident requirement is problematic. Instead, the problem must be resolved by more detailed andclearer legislation. Specifically, income tax law must list more detailed criteria for determiningdomicile such that a person would be determined as a resident upon satisfying a part or the wholeof the criteria. Also, duration of stay in determining domicile should be clearly indicated, and thepriority between objective fact of living relationship and duration of stay should be determined. While evaluation of tax planning cases of shipping and tax magnates from the legal and taxplanning aspects has both theoretical and practical contributions, more in－depth analysis isexpected from future research.
Keywords
- resident requirement
- effective tax planning
- tax magnate
- toy magnate
- domicile
Related Articles
Study on the Tax Strategy of a Cultural Contents Publisher33)
18(6) 53-83
A Case Study on Tax Planning Using Net Operating Loss and Non－Deducted Bad Debt Reserve on Merger
13(3) 113-140
Interpretation of the Concept of “Resident” Where the Person Subject to Foreign Financial Account Reporting Obligations Is a Dual Resident : Supreme Court Decision No. 2024Ma6881, April 17, 2025
27(2) 103-131
A Examination of the Relation between ESG and Tax Avoidance
27(1) 67-101
A Study on the Introduction of Exit Tax
14(5) 191-219