Big Companies Avoiding Tax

[Ozzie Osmond]

rohrl said:

UK politicians/HMRC - "How are you going to run a UK-wide distribution service from France? If you're deriving profits from your UK business then pay the tax due."

People are getting confused.

Let's say you are a UK company and build successful high tech products which initially sell only in UK but overseas sales start to grow.

Compare these two scenarios,

1. You licence the rights to make international sales to a foreign company to run the international sales in exchange for a payment of £1m p.a. It sets up local factories in various countries to make and sell the products. The business is a huge success. All that's taxable in UK is the £1m received.

2. You form a subsidiary company in a foreign country to run the international sales. You licence the rights to make international sales to that foreign subsidiary to run the international sales in exchange for a payment of £1m p.a. It sets up local factories in various countries to make and sell the products. The business is a huge success.

Why should the UK tax treatment of one be different from the other?






1. Mercedes make cars in Germany and sell them in UK. Do we expect Mercedes to pay UK taxes? No

2. Toyota is a Japanese company and makes cars in UK. Do we expect them to pay UK taxes? No

3. Rolls Royce makes cars in UK and sells them worldwide.

[anonymous-user]

rohrl said:

...they should pay their taxes like anyone else...

whenever this conversation comes up people always anthropomorphize companies. its not fair! i pay taxes why shouldn't they? companies are simply a legal construct; ultimately only people pay taxes. if amazon is ever forced to pay a comparable tax rate to domestic companies it doesn't come out of thin air it comes from customers, employees and shareholders.

if we look past the absurd spectical of politicians complaining about people obeying the rules they set up this is about leveling the tax playing field between domestic and international companies and by far the easiest way to do that is to lower them for both.

IroningMan said:

Are these corporations avoiding tax altogether - or just ensuring that they realize their liabilities in the most tax-efficient jurisdiction?

If it's the latter then the solution is for the UK to make itself the most tax-efficient jurisdiction...

exactly

Edited by fbrs on Friday 17th May 17:21

[pork911]

fbrs said:

rohrl said:

...they should pay their taxes like anyone else...

quite

they do so pay, all that they have to just like everyone else who isn't evading

[rohrl]

pork911 said:

fbrs said:

rohrl said:

...they should pay their taxes like anyone else...

quite

they do so pay, all that they have to just like everyone else who isn't evading

What is so strange about my wanting the likes of Google and Amazon to pay the same rate as small companies who don't have the clout to negotiate preferential terms with the revenue? If they're using loopholes to avoid tax then close the loopholes.

[pork911]

rohrl said:

pork911 said:

fbrs said:

rohrl said:

...they should pay their taxes like anyone else...

quite

they do so pay, all that they have to just like everyone else who isn't evading

What is so strange about my wanting the likes of Google and Amazon to pay the same rate as small companies who don't have the clout to negotiate preferential terms with the revenue? If they're using loopholes to avoid tax then close the loopholes.

until the loopholes are closed they are doing the same as those small business - paying their due

[SWH]

williamp said:

From today's CITY AM: a very good article in my opinion

Read that ambling to work this morning and was about to post the same, can't think of a better way of putting it really.

[turbobloke]

fbrs said:

IroningMan said:

Are these corporations avoiding tax altogether - or just ensuring that they realize their liabilities in the most tax-efficient jurisdiction?

If it's the latter then the solution is for the UK to make itself the most tax-efficient jurisdiction...

exactly

[rohrl]

IroningMan said:

Are these corporations avoiding tax altogether - or just ensuring that they realize their liabilities in the most tax-efficient jurisdiction?

If it's the latter then the solution is for the UK to make itself the most tax-efficient jurisdiction...

That's just a race to the bottom though in which the multinationals play countries off against each other, their profits ever increasing at the expense of those who can't do the same, like private individuals and small businesses who have to pick up the slack.

[ClaphamGT3]

rohrl said:

That's just a race to the bottom though in which the multinationals play countries off against each other, their profits ever increasing at the expense of those who can't do the same, like private individuals and small businesses who have to pick up the slack.

You fail to understand the basic principles of a sound economy. The issue is not that govts have to get the same amount of money from other sources; the issue is that they have to find ways to spend less.

[rohrl]

ClaphamGT3 said:

You fail to understand the basic principles of a sound economy. The issue is not that govts have to get the same amount of money from other sources; the issue is that they have to find ways to spend less.

That's not a basic principle, it's an opinion.

[ClaphamGT3]

rohrl said:

ClaphamGT3 said:

You fail to understand the basic principles of a sound economy. The issue is not that govts have to get the same amount of money from other sources; the issue is that they have to find ways to spend less.

That's not a basic principle, it's an opinion.

then we'll need to agree to differ but I think you'll find that the weight of economic 'opinion' is with me

[turbobloke]

rohrl said:

ClaphamGT3 said:

You fail to understand the basic principles of a sound economy. The issue is not that govts have to get the same amount of money from other sources; the issue is that they have to find ways to spend less.

That's not a basic principle, it's an opinion.

In context for the UK it's a basic principle given that the position in question is a 'sound economy'.

With total spending exceeding total receipts, and no guarantee that increasing tbe rate or scope of corporate taxation will lead to an increased tax take, spending less to arrive at a position where that spending is within the country's means is a basic principle. Governments have flouted it (but that's not the point) and with spending 'increasing but less fast' here we are up the proverbial creek.

Some way to go...scroll down for the graphic

[anonymous-user]

rohrl said:

That's just a race to the bottom though in which the multinationals play countries off against each other, their profits ever increasing at the expense of those who can't do the same, like private individuals and small businesses who have to pick up the slack.

Just the opposite. Reduce corp tax to the point the playing field is level for large and small. You don't seem to understand that corp tax doesn't come from a magic money tree it comes from us too, regardless of whether we are customers, employees or shareholders. You call it a race to the bottom I call it a race to the top of places companies want to do business. Income tax and ni dwarf corp tax.

It such a good stealth tax the hard of thinking unwittingly want to pay more!

Edited by fbrs on Friday 17th May 20:45

[Eric Mc]

Zero percent Corporation Tax for all incorporated businesses. Problem solved completely.

[johnfm]

Eric has it.

What is the point of Corp tax?

The owners of the corporations ultimately pay tax on their earnings. It will end pointless tax planning schemes etc.

It will even the playing field for big and small business.

[Eric Mc]

Yes - tax the people - not the enterprise.

[sfp]

Couldn't agree more.

[speedy_thrills]

Great.

So we're agreed then, we'll just cut £40bn in CT taxes. Literally our flawless plan is genius, it's hard to think why anyone hasn't thought of this already.

So we just need to find an additional £40bn that can be cut without causing voters to flee...or find a way to increase taxes equivalent to about 40% of the total VAT take without making voter flee...or simply add it to the outstanding debt every year adding about 4% of the current 8% deficit.

I can't imagine why we haven't made it in politics .

[98elise]

speedy_thrills said:

Great.

So we're agreed then, we'll just cut £40bn in CT taxes. Literally our flawless plan is genius, it's hard to think why anyone hasn't thought of this already.

So we just need to find an additional £40bn that can be cut without causing voters to flee...or find a way to increase taxes equivalent to about 40% of the total VAT take without making voter flee...or simply add it to the outstanding debt every year adding about 4% of the current 8% deficit.

I can't imagine why we haven't made it in politics .

The money will go somewhere (owners pockets, employees, equipment, shareholders etc) and will be taxed then. Instead its taken out before anything good can be done with it.

[Eric Mc]

speedy_thrills said:

Great.

So we're agreed then, we'll just cut £40bn in CT taxes. Literally our flawless plan is genius, it's hard to think why anyone hasn't thought of this already.

So we just need to find an additional £40bn that can be cut without causing voters to flee...or find a way to increase taxes equivalent to about 40% of the total VAT take without making voter flee...or simply add it to the outstanding debt every year adding about 4% of the current 8% deficit.

I can't imagine why we haven't made it in politics .

No - lost Corporation Tax would have to be made up in some other ares of taxation. It would be recovered through the increase in other taxes that flow from higher employment and more consumer spending..

The main point of Zero (or very) low Corporation Tax is that the effort to grow and expand the ENTERPRISE is not stifled by government. Instead, those who use their (or other peoples') businesses to make themselves wealthy rather than ploughing the money back into the business get penalised.

And, so as not to disadvantage non limited company businesses (sole traderships and partnerships)I would switch the taxation of these from the current system of taxing the business profits to instead taxing the proprietor's/partners' drawings.

With expanding businesses you get higher employment - and that in turn would help generate additional taxes through the PAYE system and increased taxes through more consumer spending.