Options arbitrage -- This means identifying mispriced options and then constructing market-neutral positions with related options to extract profits from the mispricing.
Merger arbitrage -- This is where you arbitrage various securities of companies that are involved in mergers and acquisitions.
Over the last few years, the market's started to lean much more to the arbitrage strategies.
By comparison, under the harnessing approach to international tax arbitrage, a U.
Taxpayers seeking such benefits could obtain them in full solely by forming their entities in these jurisdictions and consequently the international tax arbitrage transaction arising through the use of a hybrid entity would be explicitly permitted in eligible jurisdictions.
Instead, an existing arbitrage, already being used to manipulate the CEN rules of Subpart F, would be harnessed.
A significant benefit of this proposal, as opposed to traditional responses to international tax arbitrage, is the relative ease of implementation.
By permitting the check-the-box election and its use in international tax arbitrage in eligible jurisdictions, this uncertainty is removed.
The underlying premise of harnessing the costs of international tax arbitrage is that arbitrage transactions should be explicitly permitted in some jurisdictions.
One of the primary benefits of the proposal is that it can be adopted unilaterally; under the proposal, the United States would specifically incorporate the check-the-box arbitrage into its tax policy (costs already borne by the United States) to encourage investment in eligible jurisdictions.
146) At a minimum, such discussions would lead to the creation of a common "language" regarding entity classification issues and their use in international tax arbitrage transactions, (147) a discussion that is not currently being undertaken, especially with respect to developing countries.
Despite attention from governments, international organizations, and academics, the issue of international tax arbitrage has proven a difficult and at times intractable one.