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- Formulary apportionment, also known as unitary taxation, is a method of splitting the total pre-tax profit earned (or loss incurred) by a multinational between the tax jurisdictions where it does business.
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A unitary state is a state or sovereign state governed as a single entity in which the central government is the supreme authority. The central government may create or abolish administrative divisions (sub-national units).
- Sovereign States
A sovereign state, a sovereign country, or simply a country,...
- Federation
A federation (also called a federal state) is an entity...
- Sovereign States
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A unitary state is a state governed as a single power in which the central government is ultimately supreme and any administrative divisions (sub-national units) exercise only the powers that the central government chooses to delegate. The majority of states in the world have a unitary system of government.
- In North America Taxation
- In International Taxation
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Formulary methods are used in both the United States and Canada to apportion income of corporations between the states or provinces in which they operate. However, trade between the United States and Canada is not covered, thus requiring transfer prices, leading to increased compliance costs for the corporation. Tax in each US state and Canadian pr...
Formulary apportionment is not used as a method of attributing profit between (rather than within) national tax jurisdictions. The adoption of formulary apportionment has been advocated at various times since the 1970s. The matter has been hotly debated by OECD member states beginning in the 1970s. In 2000, there was a proposal to use formulary app...
Reduced compliance costs to the multinational;Reduced policing costs for governments;Profits are apportioned more closely to where value is created;Multinationals will locate activities in the most efficient locations, not based on tax rates;Critics argue: 1. Formulary apportionment leads to double taxationof the same profits unless there is agreement among all the jurisdictions on the formula to be used and the composition of the combined group. 2. Tax could be avoided by manipulation of the components of the formula like the location of mobile assets. 3. Compliance costswould be incr...
Clausing, Kimberley A.; Avi-Yonah, Reuben S. (June 2007), Reforming Corporate Taxation in a Global Economy: A Proposal to Adopt Formulary Apportionment (PDF), The Hamilton Project, Brookings Instit...Mayer, Stefan (2009), Formulary apportionment for the internal market, Doctoral Series No. 17, International Bureau of Fiscal Documentation, ISBN 978-90-8722-048-8McLure, Charles E. Jr.; Weiner, Joann M. (2000), "Deciding whether the European Union should adopt Formulary Apportionment of Company income", in Cnossen, Sijbren (ed.), Taxing capital income in th...Weiner, Joann Martens (March 2005), Formulary Apportionment and Group Taxation in the European Union: Insights from the United States and Canada (PDF), Working Papers No. 8, Taxation and Customs Un...Avi-Yonah, Reuven S.; Benshalom, Ilan (October 2010), Formulary Apportionment: Myths and Prospects - Promoting Better International Tax Policy and Utilizing the Misunderstood and Under-Theorized Fo...Morse, Susan C. (2010), "Revisiting Global Formulary Apportionment", Virginia Tax Review, 29: 593–644, SSRN 1617461Petutschnig, Matthias (2010), Common consolidated corporate tax base: Effects of formulary apportionment on corporate group entities, Discussion Papers No. 38., SFB International Tax Coordination,...Devereux, M. P., & Loretz, S. (2008). The Effects of EU Formula Apportionment on Corporate Tax Revenues. Fiscal Studies, 29(1), 1-33.Unitary state, a system of political organization in which most or all of the governing power resides in a centralized government. In a unitary state, the central government commonly delegates authority to subnational units and channels policy decisions down to them for implementation.
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The concept of operational function simply recognizes that an asset can be part of a taxpayer’s unitary business even if what we may term a ‘unitary relationship’ does not exist between the ‘payor and the payee.’
Sep 1, 2024 · A unitary state, or unitary government, is a governing system in which a single central government has total power over all of its other political subdivisions. A unitary state is the opposite of a federation, where governmental powers and responsibilities are divided.
A unitary state is a state whose three organs of state are ruled constitutionally as one unit, with central legislature. It differs from a federal state, in which the authority is divided between the head (for example the central government of a country) and the political units governed by it (for example the municipalities or provinces of the ...
