I rarely mention my day's events on this blog: it happens around them in most cases, not because of them. Today is likely to be an exception as I am in Paris to attend an OECD consultation. There are two subjects for discussion.
The first is transfer pricing documentation in which country-by-country reporting will feature quite significantly. That's the focus for today. The second issue is the tax treatment of intangible assets which are extensively used to shift profits, mainly into tax havens.
I am speaking in the session on country-by-country reporting, not surprisingly perhaps. The aim of my intervention will be simple: it will to argue that the purpose of transfer pricing is to evidence that a multinational corporation has made an appropriate apportionment of its taxable profits between the various states in which it operates.
You would have thought that such an apparently obvious remark would be uncontentious, but far from it. The big firms of accountants, the CBI and many others are lined up to argue otherwise. Their argument is that a country has no reason to know about the group as a whole of which a particular company is a member. Amongst the more absurd comments I have seen (from KPMG) is that a subsidiary company should not be required to submit information about its parent group as it would be onerous for it to have to ask for that information from that parent entity.
There is in such commentary a hint of desperation - rather as there was in Ernst & Young's report earlier this year that sought to hold back the floodgates against country-by-country reporting. I suspect that this sentiment will be rampant today.
I'll take mild pleasure from it: to witness such anxiety about an idea I had ten years ago will be a cause for amusement, but it will not be the purpose of the day. That purpose is to argue for real change that ensures that the right amount of tax (but no more) is paid in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.
Business wants to seek to subvert that goal and are assembling large battalions in support of their position today. Civil society is, on the other hand fielding a small team. That I know of there are just Sol Picciotto and me present. This is one way in which business does, of course, get its own way so often, as George Monbiot argues this morning. Our job is to give them more than a run for their money, quite literally.
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Yes to me too as an Accountant who has worked for a multi national, Country by Country reporting is an obvious step for taxation fairness between nations. And of course it is inextricably linked with transfer pricing. I have only queried with you before that policing of Implementation is vital otherwise it is gesture politics. The only worry I have with what you say is that you say Civil society fields a small team at the OECD.
I have implored you in the past to make the fair tax campaign a broad church and not an exclusively left wing approach. Otherwise I think the campaign e.g. at the OECD and elsewhere,will mean that you and colleagues are just going to be invited as a sop i.e.” look, we are being fair, we have invited the weirdos (!)”.
We’re not a left wing concern
Oxfam, Christian Aid and Action Aid – all of them members of the group I represent today at the OECD – cannot be categorised as such unless concern for the poorest in society is inherently left wing
Nor are we the weirdos – we set the country-by-country reporting agenda. We’re dragging the rest behind us
I may have put my comment badly, you may not be a solely left wing concern but you will certainly be portrayed that way. And then you will be marginalised- it is a classic ploy as old as the hills. I don’t want to be picky,but the leadership of these Charities, as far as their political activities are concerned,may not necessarily represent the views of their donors-they do not have an elected mandate. Is not the big picture that Tax is only effectively collected with the consent of taxpayers, and tax payers represent all shades of political opinion.
It is a risk
But then it has to be asked why the ICAEW aren’t saying anything here
I can tell you exactly why ICAEW are not saying anything here………………
But they are not the power brokers, that role is carried by the Big 4.
As was very apparent at the OECD where the reason for the ICAEW’s presence was hard to discern