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Free ADIT content to help you pass your June 2021 exams. For easy access to all our free international tax content, subscribe to our YouTube channel

Each week in ADITextrathe blog for ADIT candidates – we discuss the topics covered in our online ADIT courses and share free video content from our live classes. Follow along with Principles of International Tax, Transfer Pricing, UK & US Tax to guide your self-study. 

Read on for a summary of our free ADIT content. In addition, watch our founder explain the new UK Digital Services Tax.

 

1. Transfer Pricing

While we’re taking a fortnight’s break from the live transfer pricing classes, take the opportunity to check out our free video content on key topics from the ADIT Transfer Pricing syllabus:

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. We’ll shortly be launching the December 2021 courses with an attractive early bird booking offer!

 

2. Principles of International Tax

The Principles of International Taxation classes are also on an Easter break, with the students using the time to consolidate their knowledge and tackle their first mock exam. If you missed them in previous editions of ADITextra, watch free videos from the Principles of International Tax course discussing:

 

Controlled Foreign Company (CFC) anti-avoidance rules are part of the Principles of International Tax syllabus. You should have an awareness about the types of CFC legislation implemented by OECD states. So you should check out last week’s edition of ADITextra to watch an overview of the Controlled Foreign Company rules in the United States.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. Soon, we will launch the December 2021 courses with an attractive early bird booking offer!

 

 

3. UK Tax

On Thursday, the UK tax course returned after a two week break. For the first hour, Catriona Loughran led the discussion on the UK’s Digital Services Tax – see the Spotlight section below for free content from the class.

 

Next, it was time to learn about a key topic from the ADIT UK syllabus – Controlled Foreign Company (CFC) rules. This is a popular area for an exam question. You should understand how the legislation works and be able to apply it to the scenario given in the question. Getting to grips with the UK CFC rules is not straightforward – the gateway tests can be confusing and you may find yourself lost in the complexities.

 

As always, don’t spend too much time reading about the topic. Once you think you understand it, start practising questions, working your way up to past paper questions. It’s the application of your knowledge that matters for the exam, so making yourself type out full answers to past paper questions is the best preparation!

 

UK Tax – Free ADIT Content

If you missed them in previous editions of ADITextra, watch free content from the United Kingdom Taxation course covering:

 

ADIT UK Tax – Online Distance Learning Course

Although we’re no longer accepting bookings for this semester’s UK Tax course, you can still benefit from our expertise by signing up for our new online distance learning course.

 

The online distance learning course for Module 2.09 includes:

  • Tutor support from Catriona – contact her directly from an app in the study materials
  • Mock exam with tailored feedback

 

 

4. US Tax

In Thursday’s US Taxation course, Ishali Patel shared her international tax expertise, discussing:

  • Related party financing of a US subsidiary: anti-earnings stripping rules & debt versus equity

  • Anti-conduit rules

  • Distributions from a US subsidiary

  • Investment in foreign partnerships and funds

  • Distributions from foreign subsidiaries

  • Corporate transfers to foreign subsidiaries

 

US Tax – Free ADIT Content

If you missed them in previous editions of ADITextra, watch free content from the United States Taxation course discussing:

 

We’re no longer accepting bookings for this semester’s United States Taxation course. If you would like to express your interest in joining us for the next ADIT exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on UK Digital Services Tax (DST)

Each week, we put the spotlight on a topic covered in one of our classes and offer you free ADIT content. This time, let’s look at the UK Digital Services Tax, introduced by Finance Act 2020. While this was discussed in this week’s UK Tax course, it’s also of interest for the Principles of International Taxation module due to the OECD’s work in this area.

 

The UK’s Digital Services Tax legislation is contained in Part 2 of, and Schedules 8 to 10 to, the Finance Act 2020. It applies to revenue earned in connection with digital services activities from 1 April 2020.

 

DST is a tax on UK revenues (not profits) of digital businesses that provide one or more of the following three digital services activities:

  • a social media service;
  • an internet search engine; and / or
  • an online marketplace.

 

Where the revenues received in connection with the digital services activities, attributable to UK users, exceed annual thresholds, the group must submit DST returns and may have to pay DST.

 

The annual revenue thresholds applying to a group are:

  • £500m of worldwide revenue from the digital services activities; with
  • £25m of these revenues attributable to UK users.

 

DST applies at a rate of 2% on UK digital services revenues above an annual allowance of £25m; unless the group elects to calculate their liability on the Alternative Basis of Charge provision.

 

The DST legislation is new and complex. We’re grateful to Sarah Blakelock, who wrote the learning materials for this topic. Her clear explanations on how the legislation operates, along with helpful illustrations, provide our students with everything they need to successfully answer a DST question.

 

Watch & Learn

Watch part of this week’s UK Tax course for an overview of  ‘Digital Services Tax‘.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Studying for the Advanced Diploma in International Tax qualification is an excellent way to learn the fundamentals of international taxation. Read ADITextrathe blog for ADIT – to find out more!

Whether you are new to international tax or an experienced professional wishing to showcase your expertise, the ADIT certification offers you the opportunity to stand out from the crowd.

Read on to discover how online study programmes from Extratax Training guide you to success. The spotlight for this edition of ADITextra is the US Controlled Foreign Companies rules.

 

1. Transfer Pricing

While we’re taking a fortnight’s break from the live transfer pricing classes, take the opportunity to check out our free video content on key topics from the ADIT Transfer Pricing syllabus:

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. We’ll shorty be launching the December 2021 courses with an attractive early bird booking offer!

 

2. Principles of International Tax

The Principles of International Taxation classes are also on an Easter break, with the students using the time to consolidate their knowledge and tackle their first mock exam. If you missed them in previous editions of ADITextra, watch free videos from the Principles of International Tax course discussing:

 

Controlled Foreign Company (CFC) anti-avoidance rules are part of the Principles of International Tax syllabus. You should have an awareness about the types of CFC legislation implemented by OECD states. So you should check out this week’s spotlight section below, giving you an overview of the Controlled Foreign Company rules in the United States.

 

Fundamentals – Principles of International Taxation

The Principles of International Tax syllabus provides you with the fundamentals of international taxation – a reason why many ADIT candidates choose to study it first, before moving on to a thematic or jurisdiction module.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com. We’ll shorty be launching the December 2021 courses with an attractive early bird booking offer!

 

 

3. UK Tax

The UK tax course is currently on a two week break. This gives the students time to review what they’ve learnt so far, revisit any challenging areas and work on past exam questions. Plus some relaxation time, of course!

 

ADIT UK Tax – Distance Learning Course

Although we’re no longer accepting bookings for this semester’s United Kingdom Advanced International Tax course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’ve just launched a limited edition beta-testing version of these materials as part of our distance learning course.

 

The UK distance learning course was written by Catriona Loughran FCA CTA ADIT and other experienced tax professionals, including:

 

If you are interested in joining the distance learning course for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

In Thursday’s US Taxation course, Ishali Patel shared her international tax expertise, discussing:

  • US company expanding operations globally

  • Foreign branches

  • Controlled Foreign Corporations (CFCs)

  • Global Intangible Low-Taxed Income (GILTI)

  • Passive Foreign Investment Companies (PFICs)

  • Foreign Derived Intangible Income (FDII)

  • Participation exemption

 

Check out the Spotlight section below for a discussion on the CFC rules.

 

Fundamentals of International Taxation – United States

As you can see from the list of topics above, to the uninitiated, US tax can seem like a confusing maze of acronyms! Ishali’s deep understanding of US tax, along with her enthusiasm for sharing her knowledge, means she can guide you through the maze to conquer the fundamentals of US international tax.

 

We’re no longer accepting bookings for this semester’s United States Taxation course. If you would like to express your interest in joining us for the next ADIT exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on United States Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the US Controlled Foreign Corporations rules. While this was discussed in this week’s US Tax course, it’s also relevant for the Principles of  International Taxation module.

 

A foreign corporation is a CFC if US shareholders own:

  • more than 50% off the combined voting power of all classes of shares, or
  • more than 50% of the total value of the foreign corporation.

 

A US shareholder is any US person owning at least 10% of the value off the foreign corporation.

 

There are two anti-deferral systems in place to prevent CFC’s sheltering income from US tax:

  • Subpart F income, and
  • Globally Intangible Low-Taxed Income (GILTI).

 

Watch & Learn

Watch part of this week’s US Tax course for an overview of  ‘Controlled Foreign Corporations‘.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

ADITextrathe blog for ADIT International Tax. Choosing the right international tax course for you is key to your success.

ADITextra tells you more about Extratax Training’s online international tax courses to help you make this important decision.

Read on to learn about the topics covered in this week’s online classes. The spotlight for this edition of ADITextra is on Principles of International Taxation.

 

1. Transfer Pricing

In Tuesday’s session, James (Jimmy) Ryan started the class by looking at recharacterisation issues. Tax authorities can recharacterise a transaction when they feel it should be disregarded, setting aside the contractual terms of a transaction. A tax authority can do this in one of two ways:

  • Disregard the actual transaction; or
  • Impose another transaction which is closer in substance to what independent entities would have entered into.

Tax authorities typically use domestic anti-avoidance legislation to achieve this outcome, for example, a GAAR (General Anti-Avoidance Rule).

 

Jimmy moved on to discuss Permanent Establishments in the context of transfer pricing. Firstly considering the creation of a Permanent Establishment, then the attribution of profits to a PE. In answering PE questions in your exam, you should be comfortable discussing case law on PEs, including:

 

Online Transfer Pricing Course

If you regularly read ADITextra, you’ll have heard us talking about the importance of practising past paper questions. There are no Transfer Pricing classes for the next two weeks, so it’s the perfect time for our students to consolidate their knowledge and work on their exam technique.

 

Jimmy had planned to release a ‘test’ mock exam for completion over the break, before the full mock takes place at the beginning of May. But then he mentioned to the students that he’s always happy to give them more exam-style questions. And guess what? He’d barely finished speaking before the students said yes, great idea, please give us two mock papers to do! It’s fantastic to see such dedication and enthusiasm from our students.

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax course, Jimmy discussed the following key topics from the ADIT syllabus:

  • Entity characterisation

  • Hybrid entities and hybrid mismatches

  • Tax havens and harmful tax competition

  • Controlled foreign company (CFC) anti-avoidance legislation

 

Check out the Spotlight section below to learn more about entity classification.

 

Online Principles of International Tax Course

One of the benefits of joining live classes in small groups is asking questions and chatting with the tutor & other students. In this week’s class, the lively discussion covered a range of topics including digital services tax, withholding taxes, work of the OECD on the digital economy and double taxation.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

3. UK Tax

The UK tax course is currently on a two week break. This gives the students time to review what they’ve learnt so far, revisit any challenging areas and work on past exam questions. Plus some relaxation time, of course!

 

ADIT UK Tax – Distance Learning Course

Although we’re no longer accepting bookings for this semester’s United Kingdom Advanced International Tax course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’re launching a limited edition beta-testing version of these materials as part of our distance learning course this week.

 

The UK distance learning course was written by Catriona Loughran FCA CTA ADIT and other experienced tax professionals, including:

 

If you are interested in joining the distance learning course for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

In Thursday’s US Taxation course, Ishali Patel shared her international tax expertise, discussing:

  • Whether a US trade or business exists

  • Safe harbours for US investment activity

  • Permanent Establishment

  • Effectively connected income

  • US branch taxes

 

US International Tax Course

It’s great to see students from across the world coming together to learn about US tax. A minority work in US tax, the rest of them have chosen the US tax module because of its importance in the global business environment.

 

We’re no longer accepting bookings for this semester’s United States Taxation course. If you would like to express your interest in joining us for the next ADIT exam sitting for Module 2.10 in June 2022, please use the contact form below or email info@extrataxtraining.com.

 

5. Spotlight on Principles of International Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at entity classification. While this was discussed in this week’s Principles of International Tax course, it’s equally relevant for the UK Tax module.

 

Private International Law is a branch of law dealing with a state’s domestic recognition of overseas law, and how the courts interpret overseas legislation in a domestic context. How do domestic courts recognise overseas entities and payments? A number of questions have been developed by UK law to help the courts determine the nature of the entity and the payment being made:

  • What kind of entity is it under the foreign law?
  • What kind of payment is it under the foreign law?
  • Given the answer to these questions, what is the tax treatment in the UK?

 

The key case law is the UK Court of Appeal’s decision in Memec plc v HMRC. For your exam, you should know the tests set out in the Memec case for determining whether an entity is transparent or opaque for UK tax purposes:

  1. Does the entity have a separate legal identity?

  2. Has the entity issued share capital (or something analogous to share capital)?

  3. Is the business carried on by the entity or by its members?

  4. Are the members of the entity entitled to a share of the profits as they arise or only when the it distributes the profits to its members?

  5. Who is responsible for debts incurred by the business?

  6. Does the entity beneficially own its assets or do the members?

 

You should be able to apply these tests to a scenario given in the exam, discussing whether an entity is likely to be considered as transparent or opaque.

 

Watch & Learn

Watch part of this week’s Principles of International Tax course for an explanation of ‘Entity Classification‘.

 

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

ADITextrathe blog for ADIT International Tax candidates. Achieving ADIT makes you a truly global tax professional, ready for the challenges of today’s international tax landscape.

Speaking recently, a former head of a Big 4 tax practice described how multinational enterprises ‘think globally, but operate locally’. Through studying ADIT, you develop your expertise in international tax law, ready to advise global clients.

Read on to learn about the topics covered in this week’s online ADIT International Tax classes. The spotlight for this edition of ADITextra is on Transfer Pricing Guidance on Financial Transactions.

 

1. Transfer Pricing

In Tuesday’s session, James (Jimmy) Ryan continued looking at loans and other financial transactions. As the OECD’s Transfer Pricing Guidance on Financial Transactions was only released in February 2020, it remains topical and, therefore, highly examinable. You can learn more about this topic, and watch part of Jimmy’s class, in the Spotlight section below.

 

To build the expertise to pass the ADIT exams, you have to gain the knowledge and learn how to apply it by practicing past paper questions. By running live classes with small numbers, we make this skillset a focus of our study programmes.

 

For the weekly assignment, the Transfer Pricing class are submitting two past paper questions for Jimmy’s feedback:

  • Q1 December 2018 – transfer pricing for a global financial services business.
  • Q2 December 2018 – transfer pricing implications of loans, hedging and guarantee fees.

 

If you want to practice these questions to test your understanding, you’ll find the past exam papers and suggested solutions here.

 

Jimmy Ryan ADIT – Global Tax Professional

Maintaining your expertise as a global tax professional requires continuous effort, particularly in the fast-paced area of Transfer Pricing. Jimmy participated in an advanced transfer pricing programme earlier this year to deepen his knowledge. He enthusiastically shares his expertise with his students to develop their skills, both for the ADIT exams and their global tax careers.

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax class, Jimmy discussed important global tax topics from the ADIT syllabus:

  • The application of double tax treaties to e-commerce

  • The interaction of double tax treaties and domestic law

  • Approaches to applying a double tax treaty

  • The interpretation of double tax treaties

  • Conventions for administrative assistance in tax administration

 

ADIT Exam Preparation

How are your studies for Principles of International Tax progressing? Are you ready to start attempting past paper questions? When you’re undertaking self-study, it can be difficult to know when to start practicing past papers. If you begin too early, you may find yourself confused & disheartened. On the other hand, starting too late means you won’t have enough time to learn how to apply your knowledge and work on your exam technique.

 

We’re now 11 weeks away from the June exams. The time will pass quickly and, if you haven’t already done so, now is the time to get a study plan in place. For more help getting prepared, check out our recent article for the CIOT’s Study Advance newsletter.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

3. UK Tax

Thursday’s UK tax class with Extratax Training’s founder Catriona Loughran covered the following areas of the syllabus:

  • Attribution of Profits to a Permanent Establishment

  • Diverted Profits Tax (DPT):

    • DPT aims to deter and counteract the diversion of profits from the UK by large groups that either:
      • use arrangements or entities which lack economic substance to exploit tax mismatches either through expenditure or the diversion of income within the group, or
      • seek to avoid creating a UK permanent establishment that would bring a foreign company into the charge to UK Corporation Tax (an avoided PE).
    • The Diverted Profits Tax legislation is contained in Finance Act 2015.
    • DPT is a separate tax from Corporation Tax, with its own administrative rules and procedures. The current rate of DPT is 25%.
  • Offshore Receipts in respect of Intangible Property (ORIP) 

 

Finance Act 2019 introduced the ORIP rules. They were examined in December 2020. One of the optional 15-mark questions in Part C provided a scenario and asked candidates to:

  • Outline the background and scope of the Offshore Receipts in respect to Intangible Property (ORIP) rules introduced in April 2019, and provide a high level analysis of how they might apply to the group in the question.

 

The suggested solutions for the December 2020 exam paper have not yet been published. When they are published, you should look at the answer to this question, as it is likely to provide you with a good explanation of the ORIP rules.

 

ADIT UK Tax – Distance Learning Course

Although we’re no longer accepting bookings for this semester’s United Kingdom Taxation course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’re launching a limited edition beta-testing version of these materials as part of our distance learning course next week.

 

The UK distance learning course was written by Catriona Loughran FCA CTA ADIT and other global tax professionals, including:

 

If you are interested in joining the distance learning course for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

Thursday was also the second week of tuition classes for the US Taxation course with Ishali PatelIf you missed it, you can watch Ishali explain the US residency test for individuals in last week’s ADITextra.

 

Moving on, this week Ishali covered the following topics:

  • Foreign tax credits

  • Foreign currency rules, including virtual currencies

  • Entity classification

    • Branch
    • Subsidiary
    • Domestic hybrid entity
    • Reverse domestic hybrid entity
  • Corporate groups & consolidated returns

 

The good news is that you are not too late to join us for the US Tax option. Plus, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on Transfer Pricing

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the recently released OECD guidance on financial transactions.

 

You should make sure that you’re comfortable to answer questions on the application of the guidance, including:

  • Whether a purported loan should be regarded as a loan?

    • Consider the balance of debt & equity funding.
    • Would an independent entity have leant the money in the first place?

 

  • Economically relevant characteristics of actual financial transactions:

    • What are the contractual terms?
    • Performing a functional analysis, from both the lender’s and the borrower’s perspective.
    • Looking at the economic circumstances, such as currency, location, business sector, timing of transactions, macroeconomic trends.

 

You are allowed to take a bound copy of the OECD Transfer Pricing Guidelines into your ADIT Transfer Pricing paper as a permitted book. However, if you are using an older copy of the TPG or the 2020/21 version of the Kees Van Raad ‘Materials on International & EU Tax Law‘, the new Chapter 10 will not be included.

 

If you want to use a self-printed version of the OECD’s report on ‘Transfer Pricing Guidance on Financial Transactions‘ as your permitted text, you must obtain individual, written dispensation from the CIOT for each exam. Therefore, you should contact the CIOT at education@adit.org for further advice and instructions. You can find further guidance on self-printed books here.

 

Watch & Learn

Watch part of this week’s Transfer Pricing class for highlights of the ‘Transfer Pricing Guidance on Financial Transactions‘.

 

 

We wish you luck with studying for ADIT – enhancing your standing as a global tax professional.

 

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Welcome back to ADITextra – the theme for this week’s blog for ADIT International Tax candidates is expertise. The ADIT certification is an excellent way to increase and showcase your international tax expertise.

The Advanced Diploma in International Tax is a practical qualification, with the exam questions mainly focused on applying your knowledge to real-world scenarios. We’ve now reached the half-way point with our live tuition classes for Principles of International Tax, Transfer Pricing and UK Taxation. As a result, the students can see more clearly how different topics on the syllabus blend together to build their overall understanding and improve their expertise.

Read on to learn about the areas of expertise covered in this week’s online ADIT International Tax classes. As our US Tax course launched on Thursday, the spotlight for this edition of ADITextra is Introduction to US Taxation.

 

1. Transfer Pricing

In Tuesday’s session, James (Jimmy) Ryan looked at specific types of transactions:

    • Intra-Group Services

Chapter VII of the OECD Transfer Pricing Guidelines (TPG) on intra-group services concentrates on two issues:
• Has a service actually been rendered?
• If so, what is the charge in accordance with the arm’s length principle?

 

When considering whether a service has actually been rendered, you can reach the conclusion by asking:
• Would a 3rd party business in similar circumstances have been willing to pay for the service, or
• Would the entity have performed the activity itself?

 

Section D of Chapter 7 offers specific guidance on a particular category of intra-group services, known as low value-adding intra-group services, where a simplified approach may be used. Paragraph 7.49 provides examples of services likely to meet the definition of low value-adding services. However, it is important to remember that the services listed in this paragraph do not automatically fall within the definition. For instance, these types of services must not be part of the core business of the multinational group (see Paragraph 7.45).

 

    • Loans and Other Financial Transactions

The OECD released Transfer Pricing Guidance on Financial Transactions in February 2020. Sections A to E became included in Chapter X of the OECD Transfer Pricing Guidelines. While Section F was added to Section D.1.2.1 in Chapter 1 of the TPG.

 

You are allowed to take a bound copy of the OECD Transfer Pricing Guidelines into your ADIT Transfer Pricing paper as a permitted book. However, if you are using an older copy of the TPG or the 2020/21 version of the Kees Van Raad ‘Materials on International & EU Tax Law‘, the new Chapter 10 will not be included.

 

If you want to use a self-printed version of the OECD’s report on ‘Transfer Pricing Guidance on Financial Transactions‘ as your permitted text, you must obtain individual, written dispensation from the CIOT for each exam. Therefore, you should contact the CIOT at education@adit.org for further advice and instructions. You can find further guidance on self-printed books here.

 

Sharing ADIT International Tax Expertise

Maintaining your international tax expertise requires continuous effort, particularly in the fast-paced area of Transfer Pricing. Jimmy participated in an advanced transfer pricing programme earlier this year to deepen his knowledge. He enthusiastically shares his expertise with his students to develop their skills, both for the ADIT exams and their international tax careers.

 

We’re no longer accepting bookings for this semester’s Transfer Pricing course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax class, Jimmy continued the detailed review of the OECD Model Tax Convention. If you missed it, check out this edition of ADITextra to watch Jimmy’s introduction to the OECD Model Tax Convention.

 

This week, he guided the students through the following articles:

  • Methods of Elimination of Double Taxation – Articles 23A and 23B

  • Non Discrimination – Article 24

  • Mutual Agreement Procedure (MAP) – Article 25

  • Exchange of Information – Article 26

  • Assistance in the Collection of Taxes – Article 27

 

As part of the discussion on non-discrimination under Article 24, Jimmy used his expertise to summarise the UK Court of Appeal’s judgment in HMRC v FCE Bank plc, which distinguished the same court’s decision in Boake Allen on its facts. You should be able to compare and contrast these cases in the context of an essay on the non-discrimination article in double tax treaties.

 

Building ADIT International Tax Expertise

To build the expertise to pass the ADIT exams, you have to gain the knowledge and learn how to apply it by practicing past paper questions. By running live classes with small numbers, we make this skillset a focus of our study programmes.

 

For the weekly assignment, the Principles of International Tax class are submitting two past paper questions for Jimmy’s feedback:

  • An essay question on non-discrimination:

A non-discrimination article can be found in most Double Taxation Conventions.

You are required to explore the function of the non-discrimination article. Your answer should, at the very least, include a consideration of the types of discrimination Article 24 does and does not contemplate, who benefits from the article, and non-discrimination in relation to permanent establishments.

  • A scenario-based question on assistance in the collection of taxes

 

Would you feel comfortable working on these questions at this stage in your studies? We’re only 12 weeks away from the June exams. The time will pass quickly and, if you haven’t already done so, now is the time to get serious! For more help getting prepared, check out our recent article for the CIOT’s Study Advance newsletter.

 

We’re no longer accepting bookings for this semester’s Principles of International Taxation course. If you would like to express your interest in joining us for the December 2021 course, please use the contact form below or email info@extrataxtraining.com.

 

 

3. UK Tax

Thursday’s UK tax class with Extratax Training’s founder Catriona Loughran covered the following areas of the syllabus:

 

You’ll note that the legal references above are to UK legislation and case law. When you’re sitting the UK ADIT paper (or another jurisdiction module), it’s important to always refer to the domestic legislation before moving on to consider the impact of international tax provisions.

 

For instance, the focus for a transfer pricing question on the Module 2.09 paper will be the UK’s legislation in Part 4 TIOPA 2010. You’ll need to understand and discuss if, why and how the UK legislation applies before considering the application of the OECD Transfer Pricing Guidelines.

 

Similarly, when considering if a non-resident company has a permanent establishment in the UK, the starting point is the UK’s domestic legislation. If the UK activities do not create a PE under CTA 2010, then you are not required to look at the definition in Article 5 of the OECD Model Tax Convention. However, if there is a permanent establishment under UK domestic law, you’ll move on to evaluate the impact of any double tax treaty provisions which could override it.

 

Improving ADIT International Tax Expertise

Although we’re no longer accepting bookings for this semester’s United Kingdom Taxation course, you can still benefit from our expertise. We have compiled a comprehensive set of online study materials for the ADIT UK paper. We’re launching a limited edition beta-testing version of these materials in the next couple of weeks.

 

The UK study materials were written by Catriona Loughran FCA CTA ADIT and other international tax specialists, including:

 

If you are interested in obtaining a set of the UK study materials for the June 2021 exam, please email info@extrataxtraining.com.

 

4. US Tax

Thursday was the first live tuition class for the US Taxation (Module 2.10) course with Ishali PatelIshali welcomed students from as far afield as Kiev, Ukraine and Chicago, USA.

 

As most of the participants are new to US tax, Ishali started with the fundamentals, discussing:

  • Who is a US person for tax purposes?

  • US residency test for individuals

  • Source of income rules

  • Exemptions from US tax

  • Source rules for expenses

  • Withholding tax principles

 

Check out the spotlight section below for an excerpt from Ishali’s class.

 

The good news is that you are not too late to join us for the US Tax option. Plus, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on Introduction to US Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the introduction to US tax provided by Ishali in this week’s first class.

 

US Residents

Who is a US person for tax purposes?

  • US citizens:
    • born in the US
    • one or both parents a US citizen
  • Resident alien individuals
    • green card test – lawful permanent residence
    • substantial presence test
  • Domestic corporation (organized under U.S. law)

 

Residency test for individuals

  • Greencard test – An alien individual is a US resident for a calendar year if, at any time during the calendar year, the alien is a lawful permanent resident of the US (i.e. has a greencard that he has not formally revoked).
  • Substantial Presence Test – To meet this test, an alien individual must be physically present in the US on at least:
    • 31 days during 2020 and
    • 183 days during the 3-year period that includes 2020, 2019 & 2018 counting:
      • All the days you were present in 2020 and
      • 1/3 of the days you were present in 2019
      • 1/6 of the days you were present in 2018

Watch & Learn

Watch part of this week’s United States Taxation class for an introduction to US tax.

 

There’s still time to join our US Taxation course and grow your ADIT International Tax expertise – Book now and let us guide you to ADIT success.

 

 

Stay Informed

Visit our ADITextra blog to find out what else we’ve covered this semester.

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

Visit our website
Contact us

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This article discusses the permitted text books for the ADIT International Tax exams.

 

CIOT ADIT logo

ADIT Permitted Text

The syllabus for each ADIT module lists books which you are permitted to bring into the exam hall to use as reference materials during the examinations (known as a Permitted Book or Permitted Text). You should include the costs of buying at least some of these Permitted Texts when evaluating the costs associated with ADIT.


It is possible to obtain free online copies of some of the materials, e.g. the UN Model Convention & Commentary, to use in your studies. However, it is not possible to bring printed versions of these materials into the exam centre, as all Permitted Texts must be bound books.


As a minimum, you should purchase the latest version of  the relevant volumes of ‘Materials on International, TP and EU Tax Law’ by Kees Van Raad. These are available to buy from the International Tax Center Leiden‘s webshop at https://webshop.itc-leiden.nl/.

The volumes and current prices for the Kees Van Raad materials are:

Volume A is essential for Principles of International Taxation and many of the optional ADIT papers, including the jurisdictional options. Volume B is essential for the Transfer Pricing module. Volumes C1 & c2 are essential for the EU Direct Taxation module.

Buying all four volumes of Materials on International, TP and EU Tax Law currently costs €190 plus postage. These materials are a good investment for any practitioner of international tax, whether or not studying for ADIT.

 

We’re always happy to answer questions about our online ADIT training courses and give you the benefit of our ADIT experience. Email us at info@extrataxtraining.com or start a conversation with our founder, Catriona Loughran, on LinkedIn.

Visit our ADITextra blog to find out what our ADIT students have been studying this semester.

Welcome back to ADITextra – the theme for this week’s blog for ADIT International Tax candidates is support.

At Extratax Training, we believe strongly in the ADIT qualification, and offering you the best ADIT support. We want to see tax professionals around the world studying for it and becoming International Tax Affiliates of the Chartered Institute of Taxation.

This week was a time for celebration as 554 candidates passed at least one ADIT exam. But it was also a time for reaching out & offering support where it was needed.

 

Read on to learn about the topics covered in this week’s online ADIT International Tax classes. The spotlight for this edition of ADITextra is UK corporation tax.

 

1. Transfer Pricing

Following on from last Tuesday’s session, James (Jimmy) Ryan highlighted a key outcome from a functional analysis. Once a functional analysis is complete, it is possible to understand the economic purpose of each entity within the ‘value chain’. Understanding the value chain allows you to classify each entity and apply the correct transfer pricing method.

 

Typically, there is a direct correlation between the profit (and loss!) potential of a company and the type of functions it performs, the risks it assumes and the assets it uses. Last week’s ADITextra discusses how a good functional analysis draws out the FAR:

    • Functions performed

    • Assets used

    • Risks assumed

 

Complex entities holding intellectual property, assuming more risks and performing more complex functions would be considered to be ‘entrepreneurial’ in nature. In contrast, simpler entities carry out activities which can be easily replicated, such as distribution activities, contract manufacturing or contract research & development. These ‘routine’ entities will typically be the ‘tested party’ when determining the arm’s length pricing.

 

Jimmy continued by looking at how an entity with a sales function could be classified:

  • Sales support service

  • Sales agent or commissionaire

  • Limited risk distributor

  • Licensed distributor

  • Full risk distributor

 

Similarly, a company with a manufacturing function could be classified as a:

  • Toll manufacturer

  • Contract manufacturer

  • Licensed manufacturer

  • Full risk manufacturer

 

ADIT Support

After the ADIT results for December 2020 were released on Wednesday evening, we celebrated the success of last semester’s Extratax Training candidates.

 

Unfortunately, we had one Transfer Pricing student who didn’t achieve a pass mark. As part of our ADIT support system, we arranged a catch up. During the call, he explained that he had not managed his time correctly during the paper, so was not able to attempt all the required questions. This is a common yet critical error. It highlights the importance of practising past papers under exam conditions and being rigorous with your time keeping during the exam.

 

The good news is that we’re supporting him to resit the paper. He’s joining this semester’s course to refresh his knowledge and improve his exam technique through completing the weekly assignments and sitting a mock exam.

 

There’s still time for you to join the Transfer Pricing course – we’re accepting bookings until 8 March. You can catch up on the classes by watching the recordings and you’ll have one-to-one access to Jimmy and the team to get you fully up to speed. Don’t delay – book today to benefit from our ADIT support.

 

 

2. Principles of International Tax

In Wednesday’s Principles of International Tax class, Jimmy started by discussing the two past papers questions which the students had completed for the weekly assignment. As a highly experienced ADIT lecturer, Jimmy is ideally placed to offer advice on answering exam questions and help the students learn how to showcase their knowledge to the examiner.

 

While getting expert guidance is important, you will only learn by doing. We can sometimes fool ourselves by reading an exam question and thinking ‘I can answer that’, but it’s not so easy to sit down and write out an answer. That’s the real test of your expertise. And, of course, having someone knowledgeable giving you feedback on your answer is invaluable.

 

Jimmy then continued the detailed review of the OECD Model Tax Convention. If you missed it, check out last week’s ADITextra to watch Jimmy’s introduction to the OECD Model Tax Convention. He guided the students through the following articles:

  • Article 6 – Income from Immovable Property

  • Art 7 – Business Profits

  • Article 10 – Dividends

 

As part of the discussion on Article 10, Jimmy explained the concept of ‘beneficial ownership’, with reference to the following case law:

 

Celebrating ADIT Success

Following an anxious wait for the pass lists to be published on Wednesday evening, the celebrations began. 80% of the candidates who completed the Principles of International Tax course last semester passed the December 2020 paper! This compares very favourably to an overall pass rate of 51%. We’re so proud of their achievements.

 

It’s not too late for you to join the Principles of International Tax course to benefit from our ADIT support – you can book online until 8 March. And don’t worry, you can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Jimmy and the team to get you fully up to speed.

 

 

3. UK Tax

Thursday’s UK tax class with Extratax Training’s founder Catriona Loughran moved from personal tax to corporate tax. Catriona started by giving an overview of UK corporation tax, before zooming in on the main topic – corporate residence.

 

One of our aims is to improve accessibility to ADIT study courses – that’s why we focus on online training so that you can join from anywhere in the world. But accessibility isn’t just about being able to attend the classes, it’s about designing study materials to make it possible for you to gain sufficient knowledge of UK tax with little or no practical experience in UK tax.

 

In the UK paper, you would not be asked to do a full corporation tax calculation, or discuss reliefs like capital allowances or patent box in any detail. These are the types of topics you would study for the CTA qualification. However, you may be asked to advise a group setting up in the UK for the first time about the UK corporation tax regime. Therefore, it’s important that you have a general awareness of corporation tax. Plus, it is helpful when you come to study complex areas like Controlled Foreign Companies and the Corporate Interest Restriction.

 

Corporate Residence in the United Kingdom

When it comes to corporate residence, there are two tests in UK domestic law for determining whether a company is UK tax resident:

  • The incorporation test – a legislative test contained in s14 Corporation Tax Act 2009

  • The “central management and control” test – developed through case law

 

Catriona discussed the key cases on ‘central management and control’ (CMC):

  • De Beers Consolidated Mines v Howe (Surveyor of Taxes) [1906] AC 455

  • Bullock v Unit Construction Company [1959] Ch 147

  • Untelrab Ltd v McGregor (HMIT) [1995] Sp C 55

  • News Datacom v Atkinson [2006] S.T.I. 2346

  • Wood v Holden [2006] EWCA Civ 26

  • Laerstate BV v HMRC [2009] UKFTT 209 (TC)

  • Development Securities plc and others v HMRC [2020] EWCA Civ 1705

 

After examining how a company is resident under UK law, Catriona looked at the impact of the UK’s double tax treaties. This included comparing the ‘old’ treaty tie-breaker clause on ‘place of effective management‘ with the ‘new’ clause, where the competent authorities consider a number of factors in seeking to reach mutual agreement.

 

Tailored ADIT Support

The December 2020 ADIT results show how our approach to teaching the UK course works for different types of students. Limiting class sizes to 15 means that we can offer you tailored ADIT support.

 

Contrasting two of our successful candidates, both of whom took advantage of one-to-one sessions with Catriona in the days leading up to the exam:

  • One was sitting the ADIT UK module as part of achieving the CTA qualification (did you know you can effectively substitute the ADIT Module 2.09 for the Taxation of Major Corporates advanced technical paper?) She is at an early stage in her tax career, but has good knowledge of UK tax due to her previous studies and ongoing work experience.
  • The other was working towards the ADIT qualification to demonstrate his international tax expertise. He is a tax lawyer with many years of experience, and is indeed a professional of international tax in his home country. However, he had little experience of UK tax and described finding Extratax Training to coach him for the UK exam as a ‘blessing’.

 

You can still choose to join the UK class and benefit from our ADIT support – the deadline to book is 8 March. You can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Catriona and the team to get you fully up to speed.

 

 

4. US Tax

An exciting update on our US Tax course, which starts this Thursday, 11 March. We’re delighted to announce that the lead tutor is Ishali Patel.

 

Ishali is a dually US and UK tax professional with over 17 years of experience with large and medium sized firms, advising on the US and UK tax needs for US persons living outside of the US. She is an IRS Enrolled Agent and a UK Chartered Tax Advisor. Having spent her career helping her clients navigate the complex worlds of both jurisdictions, she has a wealth of practical examples to bring the ADIT US Tax syllabus to life.

 

Ishali has always felt that a qualification such as ADIT would have helped immensely in her international tax career. She believes that the US Tax syllabus provides excellent coverage of the issues affecting globally mobile individuals and international businesses.

 

If you’re interested in joining us for the US Tax option, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on UK Corporation Tax

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the overview of UK corporation tax provided by Catriona in this week’s class.

 

It was Budget Day in the UK on Wednesday, with the Chancellor of the Exchequer announcing some changes to UK corporation tax. The headline grabbing announcement was the increase in the standard rate of UK corporation tax – from the current rate of 19% to 25% on 1 April 2023.

 

Any changes as a result of the 2021 Budget are not examinable for the June 2021 exams. You will be examined on legislation up to and including Finance Act 2020. However, you are expected to have a general awareness of developments up to the date of your exam. A 6% increase in the standard rate of corporation tax is one to note, as it could impact investment decisions by multinational groups.

 

Introduction to UK Corporation Tax

UK resident companies must file tax returns under Corporation Tax Self Assessment (CTSA) for an accounting period (generally in line with company’s financial year). The following documents should be filed with HM Revenue & Customs (HMRC):

  • CT600 tax return plus any supplementary pages, e.g. group relief, controlled foreign companies,
  • Statutory accounts (audited if required) in an iXBRL format,
  • Computations necessary to show that the return is complete and correct.

 

Returns are due within 12 months of the end of the accounting period. The starting point for the calculation of trading profits is the accounting Profit before Tax, calculated in accordance with UK Generally Accepted Accounting Practice (GAAP). Depending on the size of the company’s taxable profits, payment is due:

  • 9 months and 1 day after the end of the accounting period, or
  • in quarterly instalments, with the dates differing under the ‘large’ and ‘very large’ regimes for quarterly instalment payments.

 

There are a number of beneficial tax reliefs in the UK, including:

  • Capital allowances for expenditure on fixed assets:
    • Plant and machinery
    • Integral features
    • Structures and buildings
  • Research & Development (R&D) tax credits:
    • R&D scheme for Small & Medium-sized Enterprises (SMEs)
    • Large company R&D scheme offering a Research & Development Expenditure Credit (RDEC)
  • Patent box regime offering the benefit of a lower tax rate

 

Watch & Learn

Watch part of this week’s UK class for an introduction to UK corporate tax.

 

There’s still time to join our UK Taxation course – book today and let us guide you to ADIT success.

 

Stay Informed

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADIT community!

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Welcome back to ADITextra – the theme for this week’s blog for ADIT International Tax candidates is belonging.

Why belonging? Because understanding where a person or income ‘belongs’ is essential in international tax. Also, it fits with our aim to build a global ADIT community, bringing together international tax professionals from across the world.

 

Read on to learn how the topics covered in this week’s online ADIT International Tax classes come under the umbrella of belonging – from source taxation, residence and domicile through to functional analysis for transfer pricing. The spotlight for this edition of ADITextra is the OECD Model Tax Convention and its role in international tax.

 

1. Transfer Pricing

Following on from last Tuesday’s session, James (Jimmy) Ryan looked further at transfer pricing methods. Jimmy reminded the students that, since the 2017 update to the OECD Transfer Pricing Guidelines (TPG), there is no longer a hierarchy of methods. Above all, what matters now is finding the method which offers the best fit.

 

Next Jimmy discussed functional analysis – a critical part of establishing the arm’s length price. Jimmy referred the participants to the guidance in Section D of Chapter I of the OECD TPG. Remember that you will have the TPG available in your exam, but success in the exam is about applying the guidance.

 

Returning to the theme of belonging, you effectively determine what profit belongs where by doing a functional analysis. A good functional analysis draws out the FAR:

    • Functions performed

    • Assets used

    • Risks assumed

 

After explaining the purpose of the functional analysis, Jimmy discussed the practical approach to undertaking a functional analysis. How to conduct a functional analysis is listed in the ADIT syllabus as a specific item and comes up as an exam question.

 

Case Study

Each week, the students complete a weekly assignment to apply the knowledge gathered from the classes and self-study. This week’s assignment focuses on selecting and evaluating transfer pricing methods for two consumer products. Jimmy marks the assignments and gives individual feedback to each student. This allows us to check that everyone understands the material, and is invaluable to the students in improving their exam technique.

 

There’s still time for you to join the Transfer Pricing course – we’re accepting bookings until 8 March. You can catch up on the classes by watching the recordings and you’ll have one-to-one access to Jimmy and the team to get you fully up to speed.

 

 

2. Principles of International Tax

Wednesday’s Principles of International Tax class considered three model tax conventions:

  • US Model Tax Convention

The US uses the United States Model Income Tax Convention when negotiating double tax treaties with other states.

  • UN Model Tax Convention

The United Nations Model Tax Convention is designed for use by developing countries.

  • OECD Model Tax Convention

The OECD Model Tax Convention is used by, and referred to, in all other treaty negotiations by OECD member states and non-members.

 

After discussing each of the model conventions, Jimmy focused on the OECD Model Tax Convention. You can read more about this topic, and watch part of the class, below.

 

New to ADITextra International Tax 

It was great to see two new students join the Principles of International Tax course this week, extending our ADITextra international tax community to Germany and Canada. While the participants are diverse in their backgrounds and experience, they come together to expand their tax expertise and share their journey to ADIT success.

 

It’s not too late for you to join the Principles of International Tax course and become part of our ADIT community – you can book online until 8 March. And don’t worry, you can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Jimmy and the team to get you fully up to speed.

 

 

3. UK Tax

Belonging was a key element in Thursday’s UK Tax class. Extratax Training’s founder Catriona Loughran recapped on the residence of individuals before moving on to discuss domicile and deemed domicile. If you missed it, check out last week’s ADITextra to watch Catriona explaining the UK’s Statutory Residence Test.

 

To understand when and how an individual is subject to UK tax, you must understand the person’s residence and domicile status. Unlike residence, domicile is not defined in UK legislation. It is a common law concept, meaning that it has been developed through the courts.

 

However, the Income Tax Act 2007 and the Inheritance Tax Act 1984 contain definitions of ‘deemed domicile’. The definitions are similar, but not identical. It is important for you to know the differences between when someone will be deemed domiciled for Income Tax & Capital Gains Tax versus Inheritance Tax.

 

Past Paper Questions

After successfully completing a past exam question on residence last week, this week’s assignment is a past paper question on domicile. For 10 marks, the students have to discuss an individual’s domicile based on the facts in the scenario – covering domicile of origin, dependency and choice.

 

In the exam, you’ll have 18 minutes to answer a question worth 10 marks. It is critical to stick to timings in the exam. However, for now, Catriona advises the students not to worry about answering within the time allotted. At the minute, it is more important to make sure you understand the key concepts and practice writing out full answers to the questions.

 

You can still choose to join the UK class – the deadline to book is 8 March. You can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Catriona and the team to get you fully up to speed.

 

 

4. US Tax

Next for an update on US Tax, as we continue the preparations for the US course to start on Thursday 11 March. Look out for an announcement early next week about the lead tutor! We’re thrilled that she’s joining our ADIT community and can’t wait to introduce her to you.

 

In addition, Catriona’s been working to secure an exciting guest lecturer for US Transfer Pricing and Cross-Border Mergers & Acquisitions. We hope to have good news for you soon!

 

If you’re interested in joining us for the US Tax option, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on the OECD Model Tax Convention

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the OECD Model Tax Convention. Jimmy covered it in this week’s Principles of International Tax class. However, it is an area which cuts across all of the ADIT modules.

 

It’s critical to remember that a double tax treaty gives a jurisdiction permission to tax income or a gain – it does not create taxation where none exists in the state’s domestic law. For instance, for many years the UK did not tax non-residents on gains arising on the sale of UK land. It had the right to tax such gains in its double tax treaties. But, until quite recently, the UK chose not to exercise its right to tax gains from UK land.

 

Articles in the OECD Model Tax Convention

The OECD Model Tax Convention is split into seven chapters:

Chapters:
I – Scope of the Convention
II – Definitions
III – Taxation of Income
IV – Taxation of Capital
V – Methods of Elimination of Double Taxation
VI – Special Provisions
VII – Final Provisions

 

After giving an overview of this structure of the OECD Model Tax Convention, Jimmy started to walk the class through key articles. Clearly, some articles form a major part of the syllabus (for example, Article 5 on Permanent Establishment) and will be the subject of future classes.

 

Thinking about the theme of belonging, Article 4 on Residence is another key article. The tie-breaker clause in Article 4(2) is used to decide to which of the two states an individual ‘belongs’. Similarly, Article 4(3) is the tie-breaker clause for corporate residence.

 

Watch & Learn

Watch part of this week’s Principles of International Tax class to learn about the OECD Model Tax Convention.

 

There’s still time to join our Principles of International Taxation course – book today and let us guide you to ADIT success.

 

Stay Informed

Follow us on social media to keep up to date with our ADIT blogs. And don’t be shy, please say hello and let us welcome you to our ADITextra international tax community!

Visit our website
Contact us

Follow us on LinkedIn, Twitter & YouTube

 

 

Welcome back to ADITextra – the new blog for the ADIT community from Extratax Training. Here you’ll find out what’s been happening in our online ADIT courses each week.

 

You’ll learn more about our study programmes and how we support your ADIT journey. And if you’ve chosen the self-study option for your international tax exams, you can follow our training schedules as a guide to keep you on target.

 

Each week, we’ll select a key topic from one of the classes for the Spotlight section. This week, it’s the UK’s Statutory Residence Test – learn more in Section 5 below.

 

1. Transfer Pricing

Tuesdays are Transfer Pricing day at Extratax Training, with James (Jimmy) Ryan sharing his TP expertise. In Week 2 of this semester’s course, Jimmy talked about the methods set out in the OECD Transfer Pricing Guidelines:

Traditional Transaction Methods

    • CUP – Comparable Uncontrolled Price
    • RPM – Resale Price Method
    • Cost Plus

Transactional Profit Methods

    • TNMM – Transactional Net Margin Method
    • Profit Split Method

 

Taking each method in turn, Jimmy used examples to explore when each method would be appropriate and the factors to consider when using it. This is important because, in the exam, you’ll be required to advise on the most appropriate TP methods for the scenario before you. You need to apply the Transfer Pricing Guidelines and understand how the methods work in practice.

 

It’s not about repeating the wording of the Transfer Pricing Guidelines. It’s all about applying your transfer pricing knowledge.

 

Building an ADIT Community

Although it’s only the second week of the course, the Transfer Pricing students are already bonding over their shared ADIT experience and supporting each other with their learning. This is great to see, as building a global ADIT community is one of our key aims at Extratax Training.

 

There’s still time for you to join the Transfer Pricing course – we’re accepting bookings until 8 March. You can catch up on the classes by watching the recordings and you’ll have one-to-one access to Jimmy and the team to get you fully up to speed.

 

 

2. Principles of International Tax

Wednesdays mean that Jimmy’s back for Principles of International Tax. And our cohort this semester is truly international, stretching from the UK to the UAE, via Germany, Switzerland and Lithuania!

 

This week’s topic was double taxation. After looking at the causes of double taxation, Jimmy moved on to outline methods of relief from double taxation – the credit method, the exemption method – along with the pros & cons of each method.

 

Then Jimmy explained the interaction of double tax relief systems with the concepts of:

Capital Export Neutrality

Requires that sellers/investors face the same tax rate wherever the products are sold, thus maximising the choice of outbound investment opportunities.

 

Capital Import Neutrality

Requires sellers/investors in a particular location to face the same tax rate no matter where they are located, thus maximising the choice of inbound suppliers for consumers, and inbound capital investment, i.e. savers.

 

ADIT Community in Live Classes

Naturally, the students had lots of questions on the topic, leading to an engaging and informative discussion. That’s the benefit of live classes with a small group – you can ask questions to check your understanding and deepen your knowledge.

 

It’s not too late for you to join the Principles of International Tax course and become part of our ADIT community – you can book online until 8 March. And don’t worry, you can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Jimmy and the team to get you fully up to speed.

 

 

3. UK Tax

On Thursdays, it’s time for the UK class, taught by Extratax Training’s founder Catriona Loughran. After last week’s overview session, the focus for this week was the residence of individuals.

 

This is a key topic for the ADIT UK course. It’s fundamental that you are able to identify whether or not an individual is tax resident in the UK in a tax year.

 

Why does residence matter? Because an individual resident in the UK is subject to UK tax on worldwide income and gains (on an arising or remittance basis, depending on domicile statue). While a non-resident is liable to UK tax where there is a UK source.

 

Check out Section 5 below for more details on UK residence for individuals, including an extract from this week’s class.

 

Past Paper Questions

Personal residence could be the starting point for a question, or it could be the main focus. One of the skills that the students will learn through practicing questions each week is how much time to spend discussing residence. It could be easy to devote your whole time for a question to working through the Statutory Residence Test – when the examiner intends you to reach a conclusion within a few minutes and move on to addressing other topics.

This week, the students looked at two past paper questions covering personal residence. During the class, the participants worked through Q9 from the June 2017 exam. Everyone took time individually to think about their approach to the question. Then the class came back together to discuss it. The question generated an interesting discussion, particularly around how to advise the person wanting to leave the UK about maintaining a non-UK resident position.

 

Secondly, the students have part of another past exam question to complete as the weekly assignment. This time, they have to consider the residency position of someone coming to work in the UK. Looking at these two questions will strengthen their understanding of the differences between applying the Statutory Residence Test to someone leaving the UK & someone coming to the UK.

 

You can still choose to join the UK class – the deadline to book is 8 March. You can catch up on the classes by watching the recordings. Plus you’ll have one-to-one access to Catriona and the team to get you fully up to speed.

 

 

4. US Tax

Next for an update on US Tax. While we’re getting ready for the US classes starting on Thursday 11 March, Catriona took an opportunity to improve her understanding of US transfer pricing. She joined a webinar by Robert Misey on ‘Transfer Pricing for Foreign-Owned U.S. Companies‘. It was an entertaining and educational hour as Robert used practical examples to illustrate the identification of related party transactions and the US rules on transfer pricing methods.

 

The webinar was available for free at the CPA Academy. If you get a chance, you should check it out. Also, look out for other free webinars on the site covering elements of the Module 2.10 syllabus.

 

When studying transfer pricing for the US, or other jurisdiction modules, it is important to think about the domestic rules, including –

  • Which legislation requires the application of the arm’s length principle?
  • What are the exact requirements of the domestic legislation?
  • Which transfer pricing methods are acceptable?
  • Who is a connected party?
  • Are there any exemptions?

 

If you’re familiar with the OECD Transfer Pricing Guidelines, it can be tempting to jump straight into them. The Guidelines are very much the focus of the Transfer Pricing paper. When you are being examined on a specific jurisdiction, your emphasis should be on the transfer pricing rules in that country.

 

If you’re interested in joining us for the US Tax option, we’re offering you the opportunity to book for June 2021 at a special introductory rate to celebrate adding Module 2.10 to our portfolio.

 

 

5. Spotlight on UK Tax – Statutory Residence Test

Each week, we’ll put the spotlight on a topic covered in one of our classes. This time, let’s look at the UK’s Statutory Residence Test (SRT). This forms part of a broader topic on residence, domicile and deemed domicile.

 

Initially, Catriona covered the materials for the students to read on the topic:

 

The good news about the two HMRC documents is that they are contained in Part 2 of Tolley’s Yellow Tax Handbook – a permitted text for you to take into the exam. Of course, it’s important to familiarise yourself with them beforehand and use them as reference tools for applying your knowledge.

 

Schedule 45 to Finance Act 2013

Schedule 45 to Finance Act 2013 introduced a Statutory Residence Test (SRT) with 3 parts:

  • Automatic Overseas Tests

    • If any of these tests are met for a tax year, an individual is conclusively non-UK resident
  • Automatic UK Residence Tests

    • If any of these tests are met for a tax year, an individual is conclusively UK resident
  • Sufficient Ties Test

    • Contains day-counting rules and other connection factors (known as sufficient ties) which only need to be considered by individuals whose residence status is not conclusively determined by the automatic tests.

 

There is guidance on applying the SRT in HMRC’s Residence, Domicile & Remittance Basis Manual (RDRM). For example, refer to RDRM11040 for the steps to be taken to ascertain an individual’s residence status under the SRT.

 

Watch & Learn

Watch part of this week’s UK class to learn about the Statutory Residence Test.

 

 

There’s still time to join our UK Taxation course – book today and let us guide you to ADIT success.

 

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Why does student feedback matter?

We’re committed to supporting every one of our ADIT candidates on their professional journey.
We believe the best way to do this is to find out what you need to succeed, and to provide it!

 

See what our students had to say on:

 

Choosing an ADIT study provider

I wanted someone to guide me as I had no clue about international tax or the ADIT Program.  Catriona’s openness, willingness to listen and give advice to a complete stranger, whilst not marketing her firm, convinced me to train with Extratax. It ended up being one of my best decisions in 2020.

Everyone is unique.  At Extratax Training we appreciate that the process of learning is different for each individual.  We are very open about the style of tuition and study support that we provide, so that prospective students understand the commitment involved before they book their place.

 

Course logistics

Start the course earlier as the time is too short to exams, especially to allow students without practical background time to catch up.

In response to this feedback, we extended the length of some of our live online classes this year, and included a mid-semester break, as well as the revision weeks we already include at the end of each course.

Most of our students are juggling a career alongside their family commitments.  We want to ensure the Extratax Training programme helps you to enhance your professional development in the most manageable and enjoyable (!) way possible.

 

The structure of the course was extremely beneficial for myself. It helped me to keep on with studies during extremely busy time at work

We spread the live online tuition across a 10 week timetable, and make the slides and recordings of these sessions available for students until the end of the semester.  This aids revision and allows everyone to catch up, or consolidate learning, at your own pace.

 

Tuition & exam practice

Participation from the rest of the students is really helpful because they sometimes bring a different perspective.

Our tutors set assignments and mock exam questions throughout the semester, which are marked and returned.  Everyone is encouraged to ask questions in the live classes, to share experiences and knowledge with their fellow tax students, and seek one to one support from their tutor when they need it.

I liked the ability to ask questions right on spot during classes…

 

Our expertise

The faculty is a big strength in Extratax – very knowledgeable not only on tax but knowing the ADIT program inside out. The advice shared by the Director, who herself is ADIT qualified, was invaluable to me as someone without previous understanding of the programme or the content.

Catriona Loughran and James Ryan lead and teach our ADIT exam study programmes.  Both are experienced international tax professionals, with outstanding practical knowledge in their field.  You can find out more about them on our website.

Find out about Catriona, Founder & Director of Extratax Training
Find out about James, Course Tutor at Extratax Training

You’ve heard enough from us!
We’ll give our students the final say…

 

“I am a 20 years Professor of International Tax Law in Mexico. Finding Extratax Training to prepare me for the ADIT exams was a blessing! They give great personalized teaching, with in-depth information, well organized and up to date.”

“Well structured course with plenty of useful practical tips.”

“I love how, as someone with no previous UK Tax experience or knowledge, the course made it possible for me to actually really understand and grasp the concepts.”

“After the course, I am not only feeling that I am ready for the exam but also see extreme improvements in my technical expertise that I can apply right on spot at my job.”

“The ADIT tutors are very knowledgeable and present the materials and theoretical concepts in a way to facilitate understanding much more easily than just reading them.”

“The classes and e-book are all you need to excel in your exam.
Thanks Catriona & team!!!”

____

If you’d like to join an Extratax Training study programme in preparation for your ADIT exams, get in touch.

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