I took part in an exchange of views in City AM this morning under the title Is Sir Martin Sorrell right that corporation tax payments are a “question of judgement”?
Steve Barclay, the Conservative MP for North East Cambridgeshire and a member of the Public Accounts Committee, said he was. I disagreed, sating:
I disagree with Sir Martin Sorrell’s claim, which is based on the perception that capital can locate where it wishes and can move at will. Three things perpetuate this myth. The first is that tax havens (and low-tax jurisdictions), whose opacity allows much of the supposed mobility of capital, obscure the reality that often nothing moves bar the ink on a contract. The second is a financial sector that promotes and services this myth. The third is that tax authorities are unwilling – as the Public Accounts Committee has suggested – to tackle tax avoidance. Multinational companies cannot make money without engaging customers, staff, and by employing assets. Paying tax in the right place at the right time is not a moral obligation. The right place is where the customers, staff and assets are. The right time is when the law of the land dictates. It is not “a matter of judgment”; it is a legal obligation.
Sorrell said the tax structures deployed by Starbucks, far from being exotic, were accepted practice for multinational firms.
“You can have a procurement department in an offshore base; you can have a brand operation in an offshore base. And the criticism of some companies – Google is an example, Starbucks and Amazon – have done just that. Companies even based in the UK can do that.”
All of which, as I noted above, is just playing a game of make-believe behind a veil of secrecy to relocate profits for tax. And as for the fact that this is no moral judgement, but a legal obligation that is being avoided the Guardian also note
Asked how the rules should be improved to ensure multinationals delivered a fair contribution to local exchequers, Sorrell said:
“I hate the term ‘corporate social responsibility’ but all of those contributions you make … are a question of judgment. There are the rules, if then companies choose just as they chose … to make a contribution to all the stakeholders on a long-term basis all credit to them.”