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U.K. Election and Taxes • C Corp Conversion • Gig Work Defense

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This is a weekend roundup of Bloomberg Tax Insights, which are written by practitioners featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, and Daily Tax Report: International.

This week we look at what the U.K. election means for taxes, private equity fund entity choice, California’s new worker classification law, multilateral v. unilateral digital taxation, and good deeds with opportunity funds. We’ll hear from:

Paul Falvey of BDO U.K. on what the election means for U.K. taxes

Jeremy Swan, Jonathan R. Collett, and Robert Richardt of CohnReznick LLP on private equity C Corp conversion

Christopher Karachale and Nancy Dollar of Hanson Bridgett LLP on a potential defense to the California classification law

Duncan Edwards of BritishAmerican Business on unilateral v. multilateral digital services tax solutions

Christopher Hanewald of Wyatt, Tarrant & Combs LLP on finding the good in opportunity zones

Boris Johnson, U.K. prime minister, delivers a speech outside No. 10 Downing St. in London on Friday, Dec. 13, following the general election.

Photographer: Chris Ratcliffe/Bloomberg

The Conservative Party has won the 2019 general election. Paul Falvey of BDO U.K. discusses what this means for U.K. taxes. How bold will the new government be? Read: What the Election Result Means for U.K. Taxes

Since enactment of the 2017 tax law, some large private equity funds have converted from publicly traded partnerships to C corporations. Jeremy Swan, Jonathan R. Collett, and Robert Richardt of CohnReznick LLP look at whether conversion makes sense for middle-market funds. Read: What Middle-Market Private Equity Funds Should Know About C-Corp Conversions

California’s new worker classification law—intended to restrict the classification of workers as independent contractors—goes into effect on Jan. 1. Christopher Karachale and Nancy Dollar of Hanson Bridgett LLP analyze a potential defense raised by technology platform companies, which argue they are third-party payment intermediaries and not employers. Read: IRS Form 1099-K in the Technology Platform Defense to California AB 5

Several countries have enacted or proposed a digital services tax on such firms as Google and Apple. Duncan Edwards of BritishAmerican Business says these unilateral measures are the wrong solution to a genuine problem and stresses the need to pursue a multilateral agreement. Read: Taxing the 21st Century Economy—A Multilateral Approach?

The opportunity zone program has fans and critics. Many of those fans are among the affluent and their advisers. While the program has received some deserved criticism as a way to make the wealthy wealthier, it is also a significant opportunity for local nonprofits, economic development organizations, and local governments to shape an incomplete program into something transformational, writes Christopher Hanewald of Wyatt, Tarrant & Combs LLP. Read: Impact Investing and Finding the Good in Opportunity Zones

From the Archive

Bloomberg Tax contributors have stayed on top of the twisted tale of Brexit from the beginning.

With the U.K.’s departure from the EU having been postponed for a third time, until Jan. 31, 2020, James Ross, of McDermott Will & Emery, considered whether the Brexit fog is now finally about to lift.

Clive Jie-A-Joen and Monique van Herksen listed some transfer pricing aspects companies may want to consider while they are making (last-minute) Brexit-triggered decisions.

Beyond Tax

What’s happening outside the world of tax?

Litigators can learn about good legal writing from a recent New York Times review giving zero stars to Brooklyn’s Peter Luger Steak House. Boies Schiller Flexner LLP’s Evan North says litigators who contend with audiences ranging from neutral to hostile should take the same approach as the review and catch and release all but the most compelling legal arguments. Read: What a Peter Luger Steak House Review Can Teach Lawyers About Effective Legal Writing

The global growth of cryptocurrency paves the way for an expanding legal practice around regulatory and investigations work. FTI Consulting’s Steve McNew has seen the growth first hand and examines the most common types of legal cases, illicit activities, and other issues emerging around cryptocurrency. Read: Crypto Advancements Stir Legal Work in Investigations, Asset Tracing

Decades after their debut, MS Word and email are still used by law firms for contract management. Olga V. Mack, CEO of ParleyPro, explores the opportunities contract management software (CMS) can bring to law firms and legal departments willing to understand its core technologies enabling real-time access, artificial intelligence, and blockchain capabilities. Read: Beyond MS Word—Three Technologies Transforming Contract Management

Law firms need to protect against cyber attacks. OpenText legal and data experts offer steps to take and warn a key concern is that a breach may violate the professional and ethical obligations lawyers have to protect privileged client information from unwanted access and disclosure. Read: Four Steps Law Firms Should Take to Reduce Cybersecurity Risks

Jane Fogarty, vice president and global counsel at SYNNEX Corp., explains why it’s important to listen to and address whistleblower complaints, especially for global companies. She walks through some decisions SYNNEX made when upgrading its internal review program. Read: How a Global Company Embraces Internal Whistleblowers

The director of the U.K.’s Serious Fraud Office, Lisa Osofsky, has made clear her goal of increasing U.S.-U.K. cooperation in investigating and prosecuting complex international financial crimes. Timothy J. Coley, counsel with Buckley LLP, says increased cooperation between the SFO and U.S. law enforcement agencies like the Justice Department and the SEC’s Division of Enforcement would be mutually beneficial. Read: Stronger Transatlantic Cooperation Could Be Boon for DOJ, Ailing U.K. Serious Fraud Office

Public comments on proposed CFIUS regulations are in, and final regulations must take effect by Feb. 13, 2020. Kirkland & Ellis attorneys look at the issues raised by industry trade groups, foreign government agencies, and law firms about their potential breadth, perceived ambiguities, and gaps, and highlight areas where more clarification and guidance is needed. Read: Proposed CFIUS Regs Draw Questions on Foreign Investment Definitions, Enforcement

Exclusive Content for Bloomberg Tax Subscribers

(*Note: Your Bloomberg Tax login will be required to read the following content.)

Kim Blanchard of Weil, Gotshal & Manges looks at whether treating a domestic partnership as an aggregate causes small U.S. partners to become subject to the passive foreign investment company (PFIC) regime.

The weekend roundup of Bloomberg Tax Insights will take a break for the holidays and return Jan. 4.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute please contact Erin McManus at emcmanus@bloombergtax.com.

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Workers

‘Many workers in gig economy earn less than minimum wage’

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A study published by the Institute of Public Policy (IPP) of the National Law School of India University (NLSIU) on jobs in platform economy or gig economy has documented below the minimum wage earning, despite working beyond eight hours a day.

The study ‘Is Platform Work Decent Work? A Case of Food Delivery Workers in Karnataka’ also said that none of the workers in the sample set of the study earned their base wage.

During the course of the study, which spanned over a year from March last year, the researchers spoke to workers engaged with various food delivery platforms in Karnataka.

Taking into consideration the current COVID-19 pandemic and its impact on the industry, the study said, “The employers took advantage of widespread urban unemployment to force workers to accept lower earning rates for their work.”

Hence the study recommended that the government should recognise gig employees as workers and bring the sector within the ambit of labour laws and that there was a need to prescribe a minimum standard for earnings.

“The situation of the gig workers during the pandemic gives lie to the myth perpetuated by industry that these workers are independent contractors. The dependent and unequal relationship is patent in the unilateral behaviour of the employers to drive down working conditions,” the study observed.

Problem with incentives

Workers also claimed that they were not given the incentive despite reaching targets, even if they were a minute late. Workers also lost on the incentives part if they had technical glitches and network issues, even if they were in the basements or elevators for delivery.

According to the study, one of the food delivery platform did not pay incentives if workers “denied” more than one order a day and denials due to the fault of customers or the platform itself is not taken into consideration.

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SEC Proposes Gig Workers Get Paid In Equity, Unacademy Valued At $2B In New Round, And More – Crunchbase News

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Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

Subscribe to the Crunchbase Daily

SEC proposes paying gig workers in equity

The U.S. Securities and Exchange Commission has proposed a pilot program to allow tech companies like Uber and Lyft to pay gig workers a portion of their annual compensation in equity rather than cash.

The agency says the proposal is intended to modernize the system for compensation, in an effort to provide workers an opportunity to share in the growth of the business. Until now, SEC rules have not allowed companies to pay gig workers in equity.

Under the proposed rules, equity pay for gig workers would be capped at 15 percent of annual compensation or $75,000 in three years.

Funding rounds

  • India’s Unacademy raises round at $2B valuation: India-based online learning platform Unacademy has reportedly raised a funding round of between $75 million and $100 million at a valuation of $2 billion, with backing from Tiger Global.
  • RevLifter secures 3.3 million euros for e-commerce platform: RevLifter raised 3.3 million euros in a Series A round led by Gresham House Ventures and Maven Capital Partners. The London-based company is developing an e-commerce deals personalization platform that is poised for global scale.

Public offerings

  • Metromile to go public via SPAC: Metromile, the pay-per-mile auto insurer, announced that it plans to go public on Nasdaq through a merger with INSU Acquisition Corp. II, a publicly-traded special purpose acquisition company, or SPAC.

Illustration: Dom Guzman

 

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Some CA Gig Workers May Owe EDD Overpaid Benefits

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The Conversation

Muslims have visualized Prophet Muhammad in words and calligraphic art for centuries

The republication of caricatures depicting the Prophet Muhammad by French satirical magazine Charlie Hebdo in September 2020 led to protests in several Muslim-majority countries. It also resulted in disturbing acts of violence: In the weeks that followed, two people were stabbed near the former headquarters of the magazine and a teacher was beheaded after he showed the cartoons during a classroom lesson. Visual depiction of Muhammad is a sensitive issue for a number of reasons: Islam’s early stance against idolatry led to a general disapproval for images of living beings throughout Islamic history. Muslims seldom produced or circulated images of Muhammad or other notable early Muslims. The recent caricatures have offended many Muslims around the world. This focus on the reactions to the images of Muhammad drowns out an important question: How did Muslims imagine him for centuries in the near total absence of icons and images? Picturing Muhammad without imagesIn my courses on early Islam and the life of Muhammad, I teach to the amazement of my students that there are few pre-modern historical figures that we know more about than we do about Muhammad. The respect and devotion that the first generations of Muslims accorded to him led to an abundance of textual materials that provided rich details about every aspect of his life. The prophet’s earliest surviving biography, written a century after his death, runs into hundreds of pages in English. His final 10 years are so well-documented that some episodes of his life during this period can be tracked day by day.Even more detailed are books from the early Islamic period dedicated specifically to the description of Muhammad’s body, character and manners. From a very popular ninth-century book on the subject titled “Shama’il al-Muhammadiyya” or The Sublime Qualities of Muhammad, Muslims learned everything from Muhammad’s height and body hair to his sleep habits, clothing preferences and favorite food. No single piece of information was seen too mundane or irrelevant when it concerned the prophet. The way he walked and sat is recorded in this book alongside the approximate amount of white hair on his temples in old age. These meticulous textual descriptions have functioned for Muslims throughout centuries as an alternative for visual representations. Most Muslims pictured Muhammad as described by his cousin and son-in-law Ali in a famous passage contained in the Shama’il al-Muhammadiyya: a broad-shouldered man of medium height, with black, wavy hair and a rosy complexion, walking with a slight downward lean. The second half of the description focused on his character: a humble man that inspired awe and respect in everyone that met him. Textual portraits of MuhammadThat said, figurative portrayals of Muhammad were not entirely unheard of in the Islamic world. In fact, manuscripts from the 13th century onward did contain scenes from the prophet’s life, showing him in full figure initially and with a veiled face later on. The majority of Muslims, however, would not have access to the manuscripts that contained these images of the prophet. For those who wanted to visualize Muhammad, there were nonpictorial, textual alternatives. There was an artistic tradition that was particularly popular among Turkish- and Persian-speaking Muslims. Ornamented and gilded edgings on a single page were filled with a masterfully calligraphed text of Muhammad’s description by Ali in the Shama’il. The center of the page featured a famous verse from the Quran: “We only sent you (Muhammad) as a mercy to the worlds.”These textual portraits, called “hilya” in Arabic, were the closest that one would get to an “image” of Muhammad in most of the Muslim world. Some hilyas were strictly without any figural representation, while others contained a drawing of the Kaaba, the holy shrine in Mecca, or a rose that symbolized the beauty of the prophet. Framed hilyas graced mosques and private houses well into the 20th century. Smaller specimens were carried in bottles or the pockets of those who believed in the spiritual power of the prophet’s description for good health and against evil. Hilyas kept the memory of Muhammad fresh for those who wanted to imagine him from mere words. Different interpretationsThe Islamic legal basis for banning images, including Muhammad’s, is less than straightforward and there are variations across denominations and legal schools. It appears, for instance, that Shiite communities have been more accepting of visual representations for devotional purposes than Sunni ones. Pictures of Muhammad, Ali and other family members of the prophet have some circulation in the popular religious culture of Shiite-majority countries, such as Iran. Sunni Islam, on the other hand, has largely shunned religious iconography.Outside the Islamic world, Muhammad was regularly fictionalized in literature and was depicted in images in medieval and early modern Christendom. But this was often in less than sympathetic forms. Dante’s “Inferno,” most famously, had the prophet and Ali suffering in hell, and the scene inspired many drawings. These depictions, however, hardly ever received any attention from the Muslim world, as they were produced for and consumed within the Christian world. Offensive caricatures and colonial pastProviding historical precedents for the visual depictions of Muhammad adds much-needed nuance to a complex and potentially incendiary issue, but it helps explain only part of the picture. Equally important for understanding the reactions to the images of Muhammad are developments from more recent history. Europe now has a large Muslim minority, and fictionalized depictions of Muhammad, visual or otherwise, do not go unnoticed.With advances in mass communication and social media, the spread of the images is swift, and so is the mobilization for reactions to them. Most importantly, many Muslims find the caricatures offensive for its Islamophobic content. Some of the caricatures draw a coarse equation of Islam with violence or debauchery through Muhammad’s image, a pervasive theme in the colonial European scholarship on Muhammad. Anthropologist Saba Mahmood has argued that such depictions can cause “moral injury” for Muslims, an emotional pain due to the special relation that they have with the prophet. Political scientist Andrew March sees the caricatures as “a political act” that could cause harm to the efforts of creating a “public space where Muslims feel safe, valued, and equal.” Even without images, Muslims have cultivated a vivid mental picture of Muhammad, not just of his appearance but of his entire persona. The crudeness of some of the caricatures of Muhammad is worth a moment of thought.[Insight, in your inbox each day. You can get it with The Conversation’s email newsletter.]This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Suleyman Dost, Brandeis University.Read more: * Muslim schools are allies in France’s fight against radicalization – not the cause * Why there’s opposition to images of MuhammadSuleyman Dost does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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