The Point at Which Tax Is Levied

GAAP – Generally accepted accounting principles are the rules and practices to be followed for the maintenance of financial records and books. PROFIT, CAPITAL — See: Capital gain GEARING — Term widely used in relation to a company`s leverage ratio. A company is highly concentrated when the debt-to-equity ratio is high. Sometimes referred to as capital debt or leverage. COMPLEMENTARY – In a partnership, a partner whose liability is not limited. All shareholders of an ordinary business corporation are general partners. A limited partnership must have at least one general partner and at least one limited partner. PARTNERSHIP — See: PARTNERSHIP – SKIPPED GENERATIONS TAX — Tax levied to prevent tax evasion of transfer taxes (i.e. inheritance tax and gift tax) on successive generations. GIFT CAUSA MORTIS – A transfer of ownership by a person facing imminent death. The donee thus becomes the owner of the property, but on condition that the donation is revoked if the donor does not die. GIFT BETWEEN LIVING PERSONS – Free transfer of property during the lifetime of the transferor (donor).

In many countries, the free transfer of property is subject to gift tax. GLOBAL FORMULA ALLOCATION METHOD — See: Global method GLOBAL COVERAGE — A risk management strategy to balance the positions of different business units or with independent third parties. GLOBAL INCOME TAX – An income tax that aggregates income from all sources at the individual (or family unit) level. The income is then taxed at a single progressive rate. AGGREGATE METHOD – The aggregate method does not calculate the profits of each member of a multinational corporation (MNE) on the basis of arm`s length transactions, but allocates the total profit of the corporation to the members of the multinational corporation based on, for example, the turnover of each member, the expenses incurred by each member or the labour costs of each member. GLOBAL TRADE — A term used to describe transactions carried out, among others, by investment banks and securities dealers in relation to financial instruments, financial services and financial assets. Also known as 24-hour trading, as trades are carried out continuously for one day in financial markets around the world. GOING CONCERN – A business that is actually in business, such as at the time of acquisition. The benefit of acquiring a business as a business in operation (if it operates profitably) is usually captured by a payment for goodwill and other assets. GOSHE VALUE – The element of value that connects ownership due to the ability of a business or business to continue working and generating income after a transfer of ownership. GOOD FAITH – “Good faith” refers to a state of mind in which a person honestly and sincerely believes that certain facts or circumstances are what they are saying.

PRODUCT AND SALES TAX – Multi-level sales tax levied on purchases (and the tenant). Sellers (and landlords) are usually responsible for moving in. CAPITAL – All real property held by a taxpayer for investment purposes. CALL OPTION – A contract in which the holder of the option has the right, but not the obligation, to purchase securities or commodities no later than a specified date at a specified strike price. CAPITAL EXPENDITURES — Expenditures on improvements rather than repairs. If expenses are more closely related to the income structure of the business than to its earning capacity, they are capital expenditures. CAPITAL GAINS – A gain from the sale of capital assets. CAPITAL TAX – Tax based on investments in shares, as opposed to capital gains tax.

CAPITALIZE – Accounting for capital expenditures as additions to asset accounts, not as expenses. CAPITAL LOSS – A loss arising from the sale of a capital asset. CAPTIVE BANK — A wholly-owned subsidiary of a multinational group whose purpose is to provide banking services to the Group and those with whom the Group does business. A corporate-owned bank is usually located in a tax haven to take advantage of low capital requirements and lack of exchange controls. CAPTIVE INSURANCE COMPANY – A wholly-owned subsidiary of a multinational group that insures or reinsures only the risks of companies belonging to the group. A captive insurance company is usually based in a low-tax jurisdiction. Whether premiums paid to captive insurance are recorded as operating expenses depends on the country. Carry-back — See: Forward carry-forward — See: Report Report — The procedure whereby deductions or credits from a taxation year that cannot be used to reduce tax payable in that year are deducted from a tax liability from future years (carry-forward) or previous years (carry-forward). CASH ACCOUNTING (CASH BASIS) – The accounting method that records revenues and deductions when money is received or paid. CAD — See: Cost Contribution Agreements CENTRALIZED MANAGEMENT AND CONTROL — The location of centralized management and control is a test for determining a company`s place of residence. Generally speaking, this is the highest level of control over a company`s activities.

VITAL FOCUS – This is one of the criteria used to solve the problem of dual residence of individuals. It refers to where the taxpayer`s personal and economic relationships are closer. CFC — See Controlled Foreign Company CHERRY PICKING — Term used in the United States in R&D agreements to prevent a party from selecting or financing only successfully developed technologies, i.e. cherry-picking. In the transfer pricing context, it often describes a situation in which a tax authority attempts to impose a TP adjustment on a taxpayer on the basis of certain related corporations and individuals from other comparable corporations in order to maximize the adjustment. CIF VALUE – The value of imported goods, including cost, insurance and freight. CIVIL LAW – Legal systems based primarily on laws or codes rather than judicial decisions. The French and German systems are examples of this. CLOSE HOLD COMPANY – a company owned or controlled by an individual shareholder or a group of closely related shareholders. ACCORDING TO INCOME STANDARD – See: Determination of COMMERCIAL INTANGIBLE Super Royalties – Intangible value used in commercial activities such as the production of goods or the provision of a service, as well as an intangible right, which is itself a business asset transferred to customers or used in the course of commercial transactions. COMMODITY FUTURES – Contracts traded on recognized futures markets where sellers promise to deliver a certain commodity on a certain date at a predetermined price.

RAW MATERIALS TAX – Tax based on a selective number of goods. COMMON LAW — The body of law developed by the judiciary in systems based on English law and followed according to the doctrine of case law, that is, previous judicial decisions in similar cases. Much of that is now enshrined in law. This term is also used to describe a system that is ultimately based on English legal systems, as opposed to civil law systems. COMMON SHARES – The common shares of a corporation. A share capital or an interest in a company. The holder of common shares usually has one vote in deciding matters relating to the corporation. Common shares generally have final priority when profits or assets are distributed. ENTERPRISE – Often used to refer to a separate legal entity (a corporation) organized to carry on an activity, business, or industrial enterprise. Sometimes it has a broader meaning to designate individual or collective enterprises that seek profit. COMPARABILITY ANALYSIS — Comparison of the conditions of controlled transactions with the conditions of transactions between independent companies (non-controlled transactions). Controlled and non-controlled transactions are comparable if none of the differences between the transactions can have a material impact on the factor examined in the methodology (e.g.

price or margin) or if sufficiently precise adjustments can be made to eliminate the material effects of these differences. COMPARABLE PROFIT METHOD (CPM) — Under U.S. regulations, CPM is a method of determining arm`s length consideration for transfers of intangibles. If the declared operating result of the tested party is not within a certain range, an adjustment is made. That method requires a comparison of the operating income resulting from the consideration actually obtained in the context of a controlled transfer with the operating income of similar taxable persons which are not controlled. COMPARABLE UNCONTROLLED PRICING METHOD (CUP) – A transfer pricing method that compares the price of real property or services transferred in a controlled transaction to the price charged for real property or services transferred in a comparable uncontrolled transaction in similar circumstances. COMPARABLE UNCONTROLLED TRANSACTION (CUT) — A transfer pricing method used in the United States that determines an independent royalty rate for intangible assets by reference to uncontrolled transfers of comparable intangibles in comparable circumstances.