Re: Greece - Rise of the left or rise of the young? : Mon Feb 02, 2015 1:33 pm  

Sal Paradise wrote:

That doesn't make any sense for the likes of Starbucks to pay CT at 35% on profits in the UK when it could pay CT at a much lower rate.

There has been much written about Apple and its tax avoidance strategy - perhaps all is not so great in US.

20% isn't preventing the likes of Vodafone and others paying, although it doesn't help when the likes of Brown bring in legislation to stop them paying tax on asset sales either.

The government should make sure its money is spent with companies that do pay their share, your example of Boots is a good one. Just make sure prescriptions are not valid at Boots. Government departments cannot get mobile phones from Vodafone etc.

The alternative being: transparent country-by-country reporting and paying taxes in the country the revenues (and profits) are generated.

HMRC should be allowed to present an estimated bill and then it would be up to the company to dispute the figure. It might go against natural justice (innocent until proven guilty) but it is the way HMRC currently operates with individuals and SMEs

Re: Greece - Rise of the left or rise of the young? : Mon Feb 02, 2015 2:11 pm  

cod'ead wrote:

The alternative being: transparent country-by-country reporting and paying taxes in the country the revenues (and profits) are generated.

HMRC should be allowed to present an estimated bill and then it would be up to the company to dispute the figure. It might go against natural justice (innocent until proven guilty) but it is the way HMRC currently operates with individuals and SMEs

Your first point would require an agreed method of allocating HO costs - Apple sell product via a website in the UK which is maintained and developed in the US where do the costs sit? This is one of the issues with Starbucks I think - the huge management charges applied by the US on its UK operation.

It would be easy to project a profit for Starbucks just compare their trading figures i.e. Sales less coffee, less labour to the likes of Costa etc and you will not be far wrong. Rent and rates should be easy they all seem to be on the same streets.

Re: Greece - Rise of the left or rise of the young? : Mon Feb 02, 2015 2:30 pm  

Sal Paradise wrote:

Your first point would require an agreed method of allocating HO costs - Apple sell product via a website in the UK which is maintained and developed in the US where do the costs sit? This is one of the issues with Starbucks I think - the huge management charges applied by the US on its UK operation.
...

You see this is precisely why they should just get a whopping great tax assessment and be obliged to pay it, same as would happen to typical UK businesses or taxpayers. With full appeal rights of course. the reason? Why, that simple starting proposition is that, if the "huge charges" or "licence fees" or whatever are not just a scam via associated companies, then why TF would a company invest millions in starting and continuing to operate and expand a gigantic UK business which never makes a profit? Occam declares this to be transparent bullcrap.

If, really, they do go to all this huge trouble in the UK despite never making a bean taxable profit, then I'm sure they'd be easily able to convince the authorities on appeal against their assessment.

I have no problem whatsoever with eg Starbucks paying a trillion in annual licence fees to Starbucks SARL (or whatever) to use the Starbucks name. So far as their accounts are concerned they can do what the hell they like. It's just that that payment, being the most obvious scam, simply shouldn't be allowed as a legitimate business expense for tax purposes. More to the point, while i'm no expert, I'm pretty damn sure it isn't, but so far as I can see, successive governments have never challenged these sort of scams in any way. They are therefore being allowed to sail through by a curious and totally unacceptable default.

What annoys me, and many others, is that the Luxembourg etc scams are so blatant and so obviously a scam, that surely the only reason they get away with it is because the government is determined that they can, or has absolutely zero appetite to make sure that they can't.

[DaveO]

Re: Greece - Rise of the left or rise of the young? : Mon Feb 02, 2015 4:50 pm  

Sal Paradise wrote:

On the second point its a cultural thing driven from the top - I wonder what CT rate we need to encourage all to pay? What is the rate where diminishing returns stops in this area 20% obviously isn't low enough.

There is no rate at which you can set it at that would encourage a company that can pay zero CT to start paying it. Why if you pay zero CT now, would you start paying it if the rate was set at 10% or whatever? Surely you would be taken to task by your shareholders for voluntary coughing up 10% of your profit when you didn't need to?

There is really only one solution which is to close the loopholes and have the companies pay whatever rate you deem fair. Trying to second guess what they would pay is simply a race to the bottom as that rate is bound to be 0% given the choice.

Re: Greece - Rise of the left or rise of the young? : Mon Feb 02, 2015 7:56 pm  

DaveO wrote:

There is no rate at which you can set it at that would encourage a company that can pay zero CT to start paying it. Why if you pay zero CT now, would you start paying it if the rate was set at 10% or whatever? Surely you would be taken to task by your shareholders for voluntary coughing up 10% of your profit when you didn't need to?

There is really only one solution which is to close the loopholes and have the companies pay whatever rate you deem fair. Trying to second guess what they would pay is simply a race to the bottom as that rate is bound to be 0% given the choice.

It is impossible to close the loopholes its unrealistic to think any government can do that where global companies are concerned.

You have to shame them as they did with Starbucks but create a rate that encourages them to contribute. Companies do not trade in isolation and their reputation/brand is worth a lot culturally they will not want to damage that so perhaps to maintain that reputation then they will have to contribute. Also government could ensure no tax payers monies are spent with them unless they pay as the should.

Re: Greece - Rise of the left or rise of the young? : Mon Feb 02, 2015 10:20 pm  

Sal Paradise wrote:

It is impossible to close the loopholes its unrealistic to think any government can do that where global companies are concerned.

You have to shame them as they did with Starbucks but create a rate that encourages them to contribute. Companies do not trade in isolation and their reputation/brand is worth a lot culturally they will not want to damage that so perhaps to maintain that reputation then they will have to contribute. Also government could ensure no tax payers monies are spent with them unless they pay as the should.

It is quite simple provided there is global co-operation. Tax should be levied relative to turnover in a jurisdiction.

Re: Greece - Rise of the left or rise of the young? : Mon Feb 02, 2015 11:43 pm  

cod'ead wrote:

May I suggest you read "The Entrepreneurial State" by Mariana Mazzucato (it is available as a free pdf download). You'll find that many of today's "finest advances" have in fact been initially funded by the state. Could you seriously imagine private enterprise would've funded the technology required to allow the creation of the World Wide Web?

Tim Berners-Lee the inventor of the World Wide Web worked as an engineer for Plessey the telecoms company which later became GEC and then BAE. He first came up with the Hypertext concept while working at CERN as an independent contractor in 1980 and built a prototype system called Esquire. He then returned to the UK to work for a computer company where he gained 3 years experience in computer networking. He then returned to CERN and developed the WWW from his Esquire model to link up the private networks . As a precursor to this was the important work done by Paul Baran of the Rand corporation on packet switching and various other firms developing computers.

Private enterprise has played the major role in inventing, developing and manufacturing products and services that touch every area of our lives. Be it transport: the motor car, the railway, air travel or the industrial revolution with the steam engine transforming manufacturing and agriculture or communications with the telegraph, telephone and TV, or the phonograph, motion pictures and the electric light bulb.

Of course state funded Universities played key roles in inventing and creating important ideas but the state relies on the private sector to supply the major funds via taxes for this to happen. It then needs the private sector to commercially develop the idea and then produce it for the public to buy.

Re: Greece - Rise of the left or rise of the young? : Tue Feb 03, 2015 8:13 am  

Dally wrote:

It is quite simple provided there is global co-operation. Tax should be levied relative to turnover in a jurisdiction.

That is the issue, whilst ever you have countries competing over tax revenues you will always have disparity in rates and taxation policy. Also the economic state of a country will also dictate its fiscal policy - as no two countries are the same then taxation parity is a non starter.

Re: Greece - Rise of the left or rise of the young? : Tue Feb 03, 2015 12:30 pm  

Sal Paradise wrote:

That is the issue, whilst ever you have countries competing over tax revenues you will always have disparity in rates and taxation policy. Also the economic state of a country will also dictate its fiscal policy - as no two countries are the same then taxation parity is a non starter.

So, you simply prevent them offshoring revenues.

Hardly rocket science

Re: Greece - Rise of the left or rise of the young? : Tue Feb 03, 2015 3:32 pm  

cod'ead wrote:

So, you simply prevent them offshoring revenues.

Hardly rocket science

Most of these offshore centres are British dependencies / British overseas territories.. How would we fund them if we stopped it?