Those lazy-hazy-crazy days of summer
The annual silly season is upon us, when the media inundates an unsuspecting public with frivolous news stories to replace the serious ones about Donald Trump, Boris Johnson and the Women’s Soccer World Cup.
I was tempted to join in, but the international tax field has been awash with important updates over the last month. To name but a few: corporate takeovers, royalty definition, VAT on export services, incentives for green vehicles, an enhanced contributor regulation system for pensions, invoicing, digital currencies, VAT on business reorganizations, and adoption of the Apostille Convention.
The thing is, that not one of those updates was by any of the usual suspects – US, Britain, France, Germany, Italy, Spain or, even, my own Israel. Every one of them was reported by a separate country, the governments of which – to put it politely – have a consistent record of consistently not passing the free world media’s smell test, be it CNN, BBC or even Fox News (truth be told, I can’t be sure about Fox News).
Funnily enough, at any time over the 11 months since the last Silly Season, I wouldn’t have batted an eyelid at being told that President Duterte had taken time out from condoning summary executions to sign a 1961 international agreement that now allows Americans not to have documents apostilled – if that is the correct term – by the Secretary of State, or a reliable underling, at Foggy Bottom.
As an international tax wonk, I just tend to look at updates and file them somewhere in the recesses of my mind. It has never occurred to me as strange that, while so many of the world’s governments are semi-functional, they all seem to have the patience to get down to the nitty gritty of tax law, even if in many cases that law is more honoured in the breach than in the observance.
I am now convinced, however, that senior politicians find something cathartic in overseeing the drafting of detailed tax legislation, perhaps because – as opposed to virtually everything else they do – they are able to control the input (if not the practical side of subsequent collection). We need look no further than Donald Trump’s rapturous reaction to US tax reform (‘Great’ just couldn’t describe it). And, if POTUS 45 was excited, POTUS 35 was so ecstatic he almost took tax reform with him (and us) in a mushroom cloud of smoke.
On October 16, 1962, in-between being informed of the placement of Soviet missiles in Cuba and meeting the Crown Prince of Libya, JFK found time to sign into law the Revenue Act of 1962, which included the world’s first Controlled Foreign Corporation (CFC) legislation. As he toyed with the prospect of all-out nuclear war, the leader of the free world must have felt satisfaction that – whatever else happened that day – those Americans who would still be around on October 17 would be efficiently taxed on their foreign passive income the following year (if there was one). Of course, clever tax consultants have been finding ways around CFC ever since, and laughing with their clients all the way to the bank. The alternative would have been less funny. Indeed, as Irving Berlin presciently wrote: ‘The world would not be in such a snarl, had Marx been Groucho instead of Karl’.
Happy Silly Season!