Offshore abuse

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The FT has reported:

Hutchison Telecommunications International, the Hong Kong-based company, has booked a tax-free windfall of HK$69.3bn (US$8.9bn) from the sale of its Indian mobile phone arm to Vodafone.

Tim Pennington, HTIL chief financial officer, said because the transaction involved the sale of "one off-shore vehicle to another off-shore vehicle", the company was advised it did not have to make any provisions for capital gains tax.

The one-off gain accounted for almost all of HTIL's first-half net profit of HK$70.1bn, compared with HK$2m in the same period last year.

Someone, somewhere will, I hope, have noted that India is not offshore. The value in this gain arose in the Indian economy, and that economy has a right to benefit from tax due on this sale. Under my definition of tax compliance that would be required.

It is a pernicious company that denies income to a state where almost a quarter of the 1.1 billion people live on less than $1 a day; 700 million more live on less than $2 a day.

If you want evidence that offshore tax abuse facilitates poverty, then this is it.