Tax Glossary

The OECD (Organization for Economic Co-operation and Development) is a multilateral organization comprised of 30 countries, which are mostly Western European countries and other industrialized countries including US and Japan. Founded in 1961, the OECD provides a forum for representatives of countries to discuss and attempt to coordinate economic and social policies. It has an especially significant role in international tax matters. Its website is www.oecd.org.

Tax offenses may be specified in the tax laws covering matters such as late filing, late payment, failure to declare taxable income or transactions, and negligent or fraudulent misstatements in tax declarations.

For the purpose of the application of a tax treaty, the office of an enterprise normally forms a permanent establishment if the business of that enterprise is wholly or partly carried on through that office.

An examination at a tax authority’s office, generally of an uncomplicated tax matter.

Offshore banking business consists of borrowing in foreign currencies for non-resident depositors outside the country and relending the foreign currencies to other non-residents. A number of countries have special regimes for the taxation of offshore banks.

Term usually applied to a company registered in a country (often a tax haven) other than the country or countries in which it carries on its business activities. An offshore (or non-resident owned) company is commonly used for captive insurance, marketing abroad, international shipping and tax shelter schemes.

A member of the US IRS Commissioner's immediate staff who directs the IRS's Problem Resolution Program.

Services provided by a parent company or a group service center, which are available at any time for members of an MNE group.

Presence in a country for 183 days or more in any 12-month period may have tax consequences, particularly in respect of an individual's residence for tax purposes or for the taxation of employment income (although other tests must also be met).

Term sometimes used to denote the converse of offshore company.

The burden and responsibility of proving an assertion. A widely adopted principle in tax law, for example, where the taxpayer has the basic responsibility of declaring his taxable income or transactions.

Lease where the lessor is regarded as the owner of the leased asset for tax purposes.

A contract conveying the right to buy (call) or sell (put) specific securities, commodities, or stocks at a predetermined price within a defined period.

In the VAT context, a VAT exempt entrepreneur sometimes can claim to be subject to VAT, the advantage being that to be entitled to his input tax against his output tax.

An expense that is common and accepted in a field of trade, business, or profession.

Ordinary shares (also known as common stock) are shares with an equal par value and bear equal rights and obligations such as the right to participate in the management of the company by voting at the shareholders' meeting and the right to receive dividends. The rights of ordinary shareholders to receive dividends are generally subordinate to the rights of bond holders and preference shareholders.

Principle under a VAT regime where goods are taxed in the country where they are produced, i.e., they are taxed on the basis of their place of production or origin.

A discount from par value at the time a bond is issued. The most extreme version of an OID is a zero-coupon bond, which is sold far below par value and pays no interest until it matures.

Income not otherwise mentioned in a tax treaty is frequently dealt with in a separate article, titled "other income".

Term which refers to the tax treatment of a country's residents doing business and investing abroad.

Term used in connection with VAT to denote the tax payable on the sales of goods or services by those who are subject to the tax and in contrast to the input tax for which a credit will be available.

The general expenses of a business as opposed to the direct cost of producing a good or service. "Overhead costs" is a term which may, in tax matters, also be used for costs incurred by the head office of a concern for the benefit of branches or subsidiaries.

The person whose name is listed as owner in official documents.