The FT has reported this afternoon:
The government moved a step closer to paying out up to £5bn of tax refunds to UK-headquartered multinationals, after the European Court of Justice ruled that the historic tax treatment of dividends paid by foreign subsidiaries breached EU anti-discrimination rules.
The European Court of Justice, based in Luxembourg, ruled that “unlawfully levied advance corporation tax must be repaid”, in the latest in a long series of court cases brought by a group of multinationals led by British American Tobacco.
Now I know this has been coming for a long time. I also happen to think the logic of this decision is absurd: the suggestion that within the EU there was no room for individual country tax policy is one now so long discredited when it is so obvious that tax is used as a form of abuse by so many EU member states (like the Netherlands as revealed in the case of Starbucks, yesterday) that this ruling is absurd in its logic.
Is there much the current government can do on this? As I understand it, this was caused by Brown when chancellor (who changed the rules) and the EU have found against it.
I suspect the appeals are over
The need is for EU reform
Taxpayers were being being double taxed on the same income. Where is the moral justification for that?
There is also no moral justification for discriminatory taxation against companies with foreign subsidiaries as opposed to local ones.
Those demanding taxpayer morality in taxation matters should require the same standard from the government and its agencies.
I see no reason why tax can’t have a national bias
Why not?
So have had a Tax Gap. And now we have a Tax Overlap.
HMRC have illegally taken £5bn too much from BAT, so the total Gap Overlap must be ten times that or more. £5bn here…£5bn there…pretty soon you are talking real money.
What is your estimate of the Tax Overlap? Just what is the scale of HMHRC’s illegal activities? How transparent should the State be on these matters?
Given that the Government is committed to reducing the defict – and by corollary reducing the corporate sector surplus – their only logical response would be to increase corporate taxation. On the other hand they could make the less well off pay through public expenditure cuts. Its a moments like this that you see their true colours.