Welcome to the new edition of International Tax Review's Holding Companies guide.
Governments will cling to the right to organise their tax systems in ways that will attract the most foreign direct investment.
Creating the tax environment to make your country attractive as a holding company location is a key tool for governments around the world. The OECD-led discussions on BEPS are likely to lead a tightening of tax rules around the world. However, governments are unlikely to push through changes that will reduce their ability to encourage multinational companies to locate holding companies on their territory.
Jurisdictions who compete for multinationals to establish holding companies in their territory do so through a range of different measures, such as low tax rates, lenient or non-existent controlled foreign company rules and limited transfer pricing regimes.
Cyprus is clear that the days of brass-plate companies are over and a tax-competitive regime, backed up by support for substance, is the future of investment there.
Ireland is also intent on ensuring investors are aware that they must have substance. Indeed, the consensus is that the outcomes from the BEPS project will be positive for jurisdictions such as Ireland, that follow this approach.
While Malta has many attractive tax attributes, they are not the only reasons why investors like the jurisdiction as their holding company location.
And Switzerland appears confident that the impending third tranche of corporate tax reforms will not affect its ability to attract overseas investment.
Ralph Cunningham
Managing editor
International Tax Review