Question: Compare it with the definitions adopted in other countries such as the US, UK and New Zealand (868 words)
Countries have residence tests for companies. The tests can be based on legal form and/or economic form (substance).
The tax residence of companies (where companies are established or carry on business) is usually based on either:
* place of incorporation,
* location of management, or a combination of the two.
Residency rules are important to tax treaties as they clarify the right to tax and assist in the avoidance of double taxation.
The OECD Model Tax convention is a template tax treaty which is there to alleviate international double taxation. This is the imposition of similar taxes, by two or more States on the same taxpayer in respect of the same subject matter for identical periods. The Tiebreaker Test operates to determine the company’s residence status. Most of the OECD-10, including Australia, complement their residence tests for companies with substance-based tests.
For companies, only the United States relies solely on the incorporation test to establish residence. All other countries in the OECD-10, including Australia, have some form of management or control test as a part of their company residence test.
Below shows the residence test for companies for the OECD-10:
Australia:
According to the Australian Tax Office website, a company is a resident of Australia either if it is incorporated in Australia or if it is not incorporated in Australia, it carries on business in Australia and has either its central management or control in Australia or its voting power controlled by shareholders who are residents of Australia.
Canada:
A corporation is a Canadian resident if it is either:
* managed and controlled, or
* incorporated, in Canada.
Ireland:
A company is an Irish resident if it is managed and controlled in Ireland.
All new companies incorporated in Ireland are regarded as a resident for tax purposes, however...