Tax Break

Essential reading: RBC accused of tax scheme, Groupon hiring more auditors

April 3, 2012

Around 50 percent of Irish homeowners have boycotted a new tax. Here, an empty and unsold housing development in the village of Keshcarrigan, County Leitrim. REUTERS/Cathal McNaughton

Welcome to the top tax and accounting headlines from Reuters and other sources.

*U.S. regulator accuses RBC of massive trading scheme. Alexandra Alper – Reuters. The U.S. futures regulator accused the Royal Bank of Canada of running a “trading scheme of massive proportion” to gain lucrative Canadian tax benefits. The Commodity Futures Trading Commission’s civil lawsuit alleges RBC employees created and managed a “wash trading” strategy in which they improperly coordinated to buy and sell stock futures without taking a position in the market. RBC declined to comment on whether the trades in question were structured to realize Canadian tax credits, as alleged in the lawsuit. Link

*SEC probes Groupon. Shayndi Rice and Jean Eaglesham – The Wall Street Journal. The Securities and Exchange Commission is examining Groupon Inc’s revision of its first set of financial results as a public company, according to a person familiar with the situation. Groupon has hired a second accounting firm, KPMG, in addition to its current accountant Ernst & Young. KPMG’s role is to make Groupon compliant with Sarbanes-Oxley, federal regulations around accounting and disclosures of public companies. In addition, Groupon plans to hire more accounting and finance staff, said a person familiar with the matter. Link

*Obama to assail Republican budget plan as ‘social Darwinism.’ David Nakamura – The Washington Post. President Barack Obama on Tuesday plans to accuse Republicans of trying to impose a “radical vision” on the nation through a budget plan that would create a form of “social Darwinism” by pitting the poor against the wealthy. In prepared remarks, Obama aims to further accentuate the differences between the parties, using the Paul Ryan budget plan as a metaphor for a GOP vision for a country that is “antithetical to our entire history” as a land that promises the path to upward mobility for the middle class. Link

*Global business groups warn India over new tax plan. Henry Foy and Matthias Williams – Reuters. International trade groups representing more than 250,000 companies have told Prime Minister Manmohan Singh in a letter that his government’s new retrospective tax proposals have led foreign businesses to reconsider their investments in the country. The union federal budget last month outlined a proposal to enable the tax authorities to make retroactive claims on overseas corporate deals and bring in new anti-avoidance measures, moves that have been criticized for further denting investor sentiment. On Monday the UK’s finance minister George Osborne also raised his concerns over the issue with his Indian counterpart Pranab Mukherjee. Link

*Germany risks tax deal defeat after Swiss warrants. Annika Breidthardt – Reuters. The German government’s deal to stem tax evasion via Swiss bank accounts risks being defeated in the opposition-controlled upper house of parliament after Switzerland issued arrest warrants for three German tax inspectors. But an outcry over the warrants has emboldened the deal’s domestic critics who think it too soft on Switzerland, and opposition-led states have said the tax agreement is full of loopholes. Link

*Half of Irish homeowners join boycott of new tax that has symbolized fiscal woes. Douglas Dalby – The New York Times. Anti-austerity protesters are claiming victory after the government acknowledged that around 50 percent of Ireland’s estimated 1.6 million homeowners failed to pay a new, flat-rate $133 property tax by the March 31 deadline. Introduced on Jan. 1, the household charge was intended as a forerunner to a comprehensive property tax next year. It has become a lightning rod for widespread disenchantment on an assortment of issues like cuts to services political corruption and taxpayer liability for debts to private banks.Link

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