The debate on country-by-country reporting rolls on in the comments section of this blog fuelled, at least in part, by my calculation of potential profit shifting by Barclays based on their figures published this week. The debate is, however, seemingly of little benefit since those who have commented are very obviously, and determinedly, sure that Barclays have done nothing wrong and, in their view, there is nothing their accounts might disclose that might even suggest they have questions to answer.
Those of that opinion are, of course, entitled to hold it. It does not, however, prove that I, and many others, are wrong to think that ,at the very least, Barclays' data does suggest it makes significant and deliberate use of tax havens.
I am encouraged in this view by a new blog on the TJN web site that I know to have been written by Prof Sol Picciotto, who I consider one of the foremost experts on this issue. I won't reproduce it here as I have not asked permission to do so, but would encourage you to click the link and carry on reading over at TJN.
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“The debate is, however, seemingly of little benefit since those who have commented are very obviously, and determinedly, sure that Barclays have done nothing wrong and, in their view, there is nothing their accounts might disclose that might even suggest they have questions to answer.”
I never said this. What I did say was that your CbC has given us no information to prove anything one way or the other. I also said that if they were shifting profits, why is their tax rate higher than expected, rather than lower?
You are making very serious allegations with only the most basic information to go on, yet you simply assume that you must be right and because they use tax havens they must be wrong.
If that is the case, why don’t you write a piece about Guardian Media Group, happily based in the Cayman Islands.
“I am encouraged in this view by a new blog on the TJN web site”
They quote your piece. You used to work there, and still regularly have contact if not work with them. You are basically saying “I’m right because my friends and I say I’m right.”
Pitiful.
I have criticised GMG, endlessly
And Barclays have saved tax: it would seem there true Dax rate should have been much higher
It is an issue I will look at
Criticised GMG? You mean like this?
http://www.taxresearch.org.uk/Blog/2009/02/02/the-guardians-tax-gap/
or this?
http://www.theguardian.com/money/tax-gap-blog/2009/feb/02/tax-gap-guardian
where you say there was “nothing abnormal”.
In fact, I can’t find a single occurrence where you have criticised GMG, though if you have I’m sure you can find a link and post it for us.
Indeed, GMG have used tax havens much like Barclays. For GMG you say it’s all fine, and no tax avoidance has taken place. Despite GMG’s assets being held in the Caymans and investing in tax haven based hedge funds.
Different story when Barclays do it though, isn’t it?
As for Barclays “saving tax”. I will repeat again, given you don’t seem to understand. Barclays paid 28.9%. UK corp tax rate is 23%. Where is the saving? This evidence alone suggests they have not saved anything. What factual, hard evidence do you have to show otherwise? Please give us data, facts and information, not rhetoric.
GMG have used tax havens for stamp duty avoidance. I gave condemned it, and do again
Barclays use it to save corporation tax
And if it so happens that Barclays’ rate should have been 35% overall because of where they are and their situation and they have paid 28.9% then they have definitely saved
But you still ignore the reality that actually the data mismatches and so you are comparing apples with oranges – and that is absurd
OK lets break this down.
I can’t find any reference to you condemning GMG. In fact, I can only find references of you supporting them.
GMG haven’t just used tax havens to avoid stamp duty. They did legally avoid tax in the sale of Autotrader, under the SSE scheme, but you have attacked Vodafone for doing the same thing.
Regardless, GMG is based in a tax haven, and invest heavily in tax haven based hedge funds. Unless the Guardian is the biggest newspaper in the Caymans, the economic activity you are so keen on for tax purposes is not happening there.
“And if it so happens that Barclays’ rate should have been 35% overall because of where they are and their situation and they have paid 28.9% then they have definitely saved”
Right. Make up implausible scenarios to justify yourself. Back in the real world, the UK corp tax rate was 23% for 2013, and tax havens a lot lower. So if they had done the great job of profit shifting you say they have, why have they ended up paying 28.9%?
“But you still ignore the reality that actually the data mismatches and so you are comparing apples with oranges — and that is absurd”
As I have said all along, the data produced for your CbC doesn’t tell you anything. For your CbC to work you would need more evidence and data – specifically all the underlying transactions. Last time I checked you didn’t have those.
Let me ask you for your input regarding a real world example – one where I worked on some of the legals.
An African country is buying new diesel electric locomotives.
The parts are manufactured in Europe, the US and China. These parts are then shipped to Africa and assembled locally. The part manufacturers also supply expertise and a maintenance plan/insurance. The deal is over 10 years, and finance is supplied from various sources – locally, from the US, Europe, China and Switzerland.
The banks that put the deal together for the African customer are based in the UK and US, but have operations in Africa. Their profits are from the advisory work and the deal hedging transactions.
Where should those profits be booked?
Use unitary taxation
Problem solved
There is no other way to adequately answer your question
I assume when you refer to unitary taxation you are talking about my example?
You’ll get some very funny numbers coming out of it though – like the numbers you get from Barclays. A couple of Swiss lenders showing huge profits and banks showing profits in places where they aren’t actually based, and have no staff.
Are you going to comment on GMG’s use of tax havens? It looks like you are just ignoring the question I put to you. For someone who claims to try and shine the light of truth on the facts, you seem pretty unwilling to give GMG thee same treatment you gave Barclays.
The Swiss lenders are entirely separate from the equation on constructing the loco
They’re not in the same group
I have commented on GMG’s use of tax havens. How many times do I need to repeat myself? In addition they do not use them for the same purpose as Barlcays
Ed note:
I have answered every reasonable question this commentator has asked several times over
This and other comments are now being deleted as they repeat issues already resolved
You commented on GMG by saying they have done nothing wrong! I can’t find anything on the internet where you criticise them at all – instead you defend them.
I’ll second DennisL here – post a link to something you wrote attacking them! The internet is full of your articles, so it should be easy for you!
Barclays and GMG are in different lines of business, but why is OK for GMG to use tax havens and Barclays not to? It looks like you are being very hypocritical here.
OK forget the Swiss lenders. How about the manufacturers and the banks. Where should they be paying their tax? All the banking work was done in the UK, but the deal was done in Africa.
I can’t find the articles because if you search tax research guardian tax havens you will get many hundreds of results
There are 11,000 blogs on here
But I have said it time and again and you are simply wasting my time
So this is the last comment you will be making because you are very clearly a dedicated troll
And bankers and manufacturers are never taxed as one. Your tax knowledge is clearly very, very basic or maybe non-existent. They are independent third parties. Why demand they be taxed together?
Bravo!
You are now accusing me of trolling because I am exposing you as a liar and a hypocrite. You attack Barclays but defend GMG when they use tax havens. Using google I can find lots of articles where you defend GMG, not one where you attack their behaviour or use of tax havens.
I never asked you to treat Bankers and manufacturers as one. I simply asked you where each one should be taxed.
Judging by what you have written over the last few days, I’m pretty sure you have no idea about tax either. You just make things up as you go along.
Read what I wrote
I condemned GMG
How more clear can I be
Your are now straightforwardly blocked
It did not take me very long to search this website to find a piece where Mr Murphy criticises GMG plc http://www.taxresearch.org.uk/Blog/2008/03/07/the-guardian-is-wriggling/
Mr Murphy has every right to block you for repeating the same inane question.
The question of tax is opaque; the mainstay of what Mr Murphy is campaigning for is greater transparency. At least GMG plc are transparent about what they do, even if it isn’t ethical.
Thanks
I did not find it!
“Use unitary taxation
Problem solved”
That is very much begging the question. Quite apart from the fact that we’re talking about multiple independent businesses here, no-one has yet come up with a way to sensibly allocate profits under UT – at least, not in any worthwhile detail.
Michael Durst comes close, but his model seems to boil down to allocating profits based on where your payroll cost lands, which is a long way from the sort of unitary taxation you and Sol Picciotto are advocating. CCCTB is of course looking at entity-level tax, not unitary, which puts a whole different complexion on things; and the US state tax system is widely regarded as a kludge which would be unacceptable were the amounts involved any larger.
I’m working on the problem, but it’s a very slow process as the issues are very complex and it’s mostly untrodden ground.
At the moment, suggesting that someone use UT to allocate profits is like telling someone in 1900 that the best way to cross the Atlantic is to fly – the ideas exist, but no-one has worked out whether they’re feasible in practice, much less a way to make them work.
I think you’ll find Mike and Sol are closer than you think
I am moving away from asset base for many reasons – paper to come
And of course the question I responded to was nonsense, as I said
I prefer a mixed sales formula – origin and destination
But the big problem is accounting and UT – which is an issue Prem Sikka and I are working on
I’ve been focusing on the assets side lately. It does seem to have a lot of problems.
Mind you, so does allocating sales, which is why Durst has to throw so much of his sales allocation round to splitting it by compensation.
If anything, the asset factor seems to have fewer problems than sales in implementation, although of course the policy merits need to be taken into account. Compensation is maybe the simplest of the three factors – though I’ve not looked at it in detail yet, so maybe I’m just not seeing the complexity at present.
In accounting terms I think assets possible major difficulties
I am not convinced sales poses as many
Labour creates the problem of outsourcing
Yes, outsourcing is top of my list of things to look at when I get round to Labour. The whole employment/self-employment question does suggest it could get complex.
When you say “I prefer a mixed sales formula — origin and destination”, can you elucidate? Or is that coming in a future paper?