The ‘three-martini-lunch’ 🍸 tax deduction.
Among dozens of tax breaks within the USA coronavirus relief bill is a tax break for corporate meal expenses. This will allow companies to deduct the full cost of business meals off their federal taxes for the next 2 years, up from the 50% that has been permitted since the 1980s.
It was pushed by Trump for months – a way to revive the restaurant industry badly battered by the pandemic. But both parties, the Democrats, and the Republicans are wary of the idea.
✌️ The Second Time
Heard of Cairn Energy? It is a British oil and gas exploration company. They won an arbitration case against the Indian government and India’s ordered to pay INR 8000 cr in place of damages. So what is this?
🔙 Let’s go back to 2012 – the amendment which muddied the water. A new law came into effect which enabled the Indian government to tax companies for mergers and acquisitions. It included all such mergers going as far back as 1962. The move spooked investors. 👻 But why was this law introduced in the first place?
⚖️ Since 2007, a tax row between Vodafone and India’s taxman is in place. The acquisition of Hutchison Whampoa Ltd.’s Indian operations by Vodafone resulted in vast capital gains. The government wanted a piece of that pie. So they demanded USD 3B in taxes from Vodafone through a retrospective law. 🙉 India lost that case but a new law came into effect.
📜 In March 2015, Cairn received the tax claim from Indian authorities. It was over a restructuring carried out in 2006 while preparing for an IPO of Cairn India. By 2011, Cairn Energy had sold its majority stake in Cairn Indian to Vedanta Resources for USD 8.7B. Thereby, transferring ownership of its Rajasthan 🛢️ oil field, the country’s biggest onshore discovery in two decades, to Cairn India.
🤯 The pickle. Indian tax authorities seized the remaining 10% of Cairn India’s shares (then valued at about USD 1B), imposed a draft tax assessment of INR 10,247 crore alleging that Cairn had then made a capital gain of INR 24k cr while restructuring. Later, Cairn filed a dispute under the U.K.-India Investment Treaty in the international court of justice.
This is the second setback for India after Vodafone. Should India continue with this retrospective legislation in the future?
👇Ah, And Also This
🤑 One-off wealth Tax! Talking about the worst-hit countries of the world, Argentina was the 5th nation to cross the 1 million mark of Covi patients. The country is now joining the wagon of taxing the wealthiest. A one-off levy – dubbed the “millionaire’s tax” is in effect. People with assets worth more than 200M pesos (USD 2.5M; £1.8M) – some 12,000 people – will have to pay. 20% of the money raised will go to medical supplies, 20% to relief for small and medium-sized businesses, 20% to scholarships for students, 15% to social developments, and the remaining 25% to natural gas ventures. 2 weeks before, the United Kingdom had also announced something very similar.
₿ Taxing the Crypto. The digital currency market, with a total value of about USD 640B, turns over an estimated USD 181B a day through thousands of global exchanges. And Israel has decided to cash on it. Dozens of citizens received a notification from the tax authority to fully disclose their assets so that it could be taxed accordingly. And this came as soon as Bitcoin saw a price rise. Is this an example of the increasing trend of enforcement?
🥢 The Chopsticks Tax – Crazy Tax Story
😱 China makes 45 billion pairs of disposable/wooden chopsticks every year for its massive population of 1.4 billion. 70 million cubic feet of timber aka 25 million trees were chopped off for those purposes! This deforestation led to major environmental concerns. And in 2006, the lawmakers slapped a 5% tax on disposable chopsticks to save millions of trees in the countryside.
🍴 Did the Chinese find a fork in the road? Highly criticized, the citizens said that this tax might end a 5000-year tradition. Communism with capitalism, environmentalism with conspicuous consumption – the lawmakers also levied heftier taxes on buyers of yachts and of bigger sticks (golf clubs).
㊙️ The Poor Japanese consume a tremendous 25 billion sets of wooden chopsticks a year — about 200 pairs per person – some 97% of them come from China. But, the Chinese exporters responded to the tax by slapping a 30% hike on chopstick prices – with a planned additional 20% increase pending.
Food for thought – “Should we start taxing toothpicks now?”