It’s often said that tax havens are a part of life and there’s nothing we can do about them. That’s not true, as a new series on the Tax Justice Network’s Tackle Tax Havens web site shows.
Thanks to some clever wizardry, the company’s advisors claim that most of its business takes place in the Cayman Islands.
Ah, the Cayman Islands. Fantastic climate, awesome watersports and lovely fresh seafood.
Plus a tax rate that’s close to zero.
So the company’s nifty footwork means that it avoids paying vast amounts of tax in Sweden and France, which means less money for public services in those countries.
Now, enter Unitary Tax!
Unitary tax involves taxing multinational corporations according to the real economic substance of where they actually do business.
Where is their workforce based? Where are their assets actually held? In which country do they really make their sales?
Under unitary taxation, France and Sweden would get to tax (almost) half of the corporation’s overall profits at their own tax rates, and only tiny weeny amounts of its profits would be allocated to Cayman to be taxed at its zero percent rate.
And that’s exactly what the UK needs right now to beat multinational corporations who’d rather not pay tax here.