Tax Break

Essential reading: U.S. House passes small business tax cut, New York sues Sprint, more

April 20, 2012

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

* House passes Republican business tax cut. Kim Dixon – Reuters. The Republican-controlled House of Representatives on Thursday passed a tax break for small businesses, giving voters a stark alternative to President Barack Obama’s politically popular “Buffett Rule” surtax on the wealthy. In an escalating election-year war of words over taxes, the Republican measure, like the Buffett Rule, is not expected to become law. It is opposed by Democrats, who control the Senate, where the bill was expected to die. Link

* Olympus eyes fresh start, ex-CEO mulls legal threat. Tim Kelly and Yoko Kubota – Reuters. Shareholders of Olympus Corp approved a new board on Friday, hoping for a fresh start at the camera and medical device maker that hid $1.7 billion of investment losses in Japan’s biggest corporate scandal in decades. While Olympus will hope the vote draws a line under a scandal that has wiped more than $4 billion off its market value, its former CEO and foreign investors, who own 25-30 percent of the company, have sought a change in a deep-rooted culture of cross-shareholdings and cozy ties between banks and boardrooms. Link

* State tax collections pass peak from recession’s start. Michael Cooper – The New York Times. State tax collections, which during the recession  experienced their steepest and longest drop since at least the Great Depression, have been climbing back for the last two years and finally surpassed their previous peaks as 2011 drew to a close, according to a report issued on Thursday. But huge challenges remain, as their populations and the cost of providing services have continued to rise, and the growth in tax collections has begun to soften. Link

* India May Change Tax Anti-Avoidance Rule. Khushita Vasant – the Wall Street Journal. India Thursday made an attempt to clear the air on a new rule for going after companies set up for the sole purpose of avoiding taxes, saying it is considering putting the onus on the authorities to prove any wrongdoing. Foreign investors have been concerned about the proposed anti-avoidance rule as it could override India’s tax treaty with Mauritius which exempts capital gains from being doubly taxed. Most foreign funds invest in Indian stocks and bonds through Mauritius. Link

* Noda says Japan running out of time to hike taxes, restart reactors. Chico Harlan – The Washington Post. Japanese Prime Minister Yoshihiko Noda said Thursday that he faces policymaking challenges “weightier” than those of his predecessors, adding that the country can no longer afford to delay decisions about its most divisive issues, including a tax hike and the restarting of its nuclear reactors. Link

* Sprint is sued by New York over taxes. Reed Albergotti – The New York Times. New York’s attorney general sued Sprint Nextel Corp on Thursday, seeking $300 million for the carrier’s alleged failure to pay sales taxes due on some of its wireless plans over the past seven years. Sprint denied the state’s claims in the suit, which takes advantage of new legislation making it easier for the state to pursue whistle-blower lawsuits in tax cases. Link

* Regulator weakens audit tendering reform. Adam Jones – The Financial Times. The UK’s accounting and corporate governance regulator has diluted a proposed reform of audit tendering that was already much less aggressive than changes put forward elsewhere in Europe. The Financial Reporting Council said that only the FTSE 100 and FTSE 250 would initially be affected by its plan to ask companies to put their audit contract out to tender at least once a decade or explain to shareholders why they did not. Link

* The fog of bank accounting adjustments. Peter Eavis – The New York Times DealBook. Many banks are flagging adjustments this quarter that stem from the bank’s own debt securities falling in price. That effectively means its liabilities – the amount it owes — are worth less. The debt accounting adjustments may not reflect what is going on in the real world – and may divert investors from more meaningful measures of creditworthiness. Link

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