A representative from Ernst & Young came to the meeting I spoke at in the European Parliament last night on country-by-country reporting.
He was a very confused chap. I concentrated on EU related issues: Eurodad, as a development agency, unsurprisingly concentrated on developing country issues. And then up popped E & Y (and I paraphrase, but I hope accurately):
"I'm confused." he said, "You want to tackle corruption is developing countries and you want to help EU countries collect tax. What is it you really want?" The poor chap sounded so confused as if reconciling such aims was beyond his no doubt highly paid ken.
But is it really that hard? We want accounts that simply say where a multinational corporation operates, what it is called in each country it operates and a profit and loss account, limited balance sheet and even more limited cash flow data for each country (almost without exception) on a basis that also reveals intra-group trading and that therefore holds global capital to account locally, wherever local might be.
Is that so hard to understand? I beg to suggest it isn't, unless of course you're wilfully blind and a major representative of the 1%. Not that I'm suggesting such a thing of E & Y, of course.
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“We want accounts that simply say where a multinational corporation operates, what it is called in each country it operates and a profit and loss account, limited balance sheet and even more limited cash flow data for each country (almost without exception) on a basis that also reveals intra-group trading and that therefore holds global capital to account locally, wherever local might be.”
OK, fair enough!
So who is:
(a) liable for such reporting requirements?
(b) going to pick up the tab for this exercise, which I assume you want verified by auditors.
I assume no grant to companies will be forthcoming from the EU or Eurodad. Is it proposed that cost be either tax deductible (as in most countries it will not be an expense incurred in deriving taxable income or the like) or better still, let the taxpayer be allowed to deduct the cost of such reporting from any tax payable by any group company wherever situated.
Complying with company law is a cost of incorporation, voluntarily assumed. I is tax allowable
politely, your arguments are as astute as asking employees to pa their own sick pay
The fact is that there is a conflict of interest. This means as long as the British Public (Politicians) allow the masses to pay tax whilst corporation tax is not, nothing will change.
The Audit Office is for example having to investigate Hartnell at the Inland Revene. This is the best time to stop the tax havens, because Europe is bust and any money is wellcome. So why pay interest on debt if we can collect the unpaid taxes.
Please also note that the Big 4 are lobbying the EC to t5one down the break up of the Audit monopoly for listed companies.The report has been delayed by a week, let us hope that the Big 4 can be broken up and the conflict between tax advice and audit fees is investigated.
Again this is the best time to do this since the Big 4 have been signing off the Irish Bank audits, ignoring prudence. Have been signing off NI audit despite being alerted to risk. Olympus is another recent case documented on this blog. Please note that E&Y defends Olympus by saying we only joined the game in 2009. So you can see this a gravy train and does not matter who the Auditor is.
Charles Dickens wrote: – “Credit is a system whereby one person who cannot pay gets another person who cannot pay to guarantee that he can pay”.
But this only works when there is constant, sustainable, predictable economic progress ensuring that loans never actually need to be repaid; or by the time they do their value is reduced to a manageable amount.
Q: Who really rules the world?
A: The few who profit from the debt of the many
The bulk of the world’s wealth cake belongs to an elite 5%
The remaining tiny piece of the cake is shared amongst the remaining 95%
But the relative sizes of these pieces of cake are rarely shown in graph form.
And there are always howls of protest from “interested” parties (including tax havens) against any attempt to reduce the gigantic piece of cake the rich want for themselves. Clear evidence that the rich “own” politicians (and whole governments) as well as influential parts of the media.
Asphyxiate economic vermin, free capital and the economy will grow.
As for Ernst and Young ….
Sad thing is that greed destroys value, look at Olympus share price.
Our Auditors, for their future need to be counted upon to look at the substance not just the form. When there is no competition, as is the case with Big 4 shareholders will loose out.
Look how Andrew Bolton’s fund investment is employing 5 different firms of detectives because his fund has lost so much money to crooked managers in China. For capital markets to function in raising capital and preserving value, transparency and honesty is required.
Harish: We value your notes.
Particularly that about transparency and honesty in the business of raising capital.
Which rather rules out tax havens.
And recognition that the Big 4 are becoming too big for their err… boots?
The “Association of Institutions” is composed of numerous self serving institutions ready to incorporate most double dealing institutions. Join the “AOI” not.
Another example of vested groups lobying to water down rules to protect the economy from collapse,
Robert Jenkins, a member of the Bank of England’s Financial Policy Committee, said it’s “dishonest” of banks to argue that implementing tougher capital rules too quickly may harm the economy.
“The latest lobby tactic is to convince pundits, public and politicians that encouraging prudence too soon will hit the economy too hard,” Jenkins said in London late yesterday, according to the text of his remarks issued by the central bank. “This is no longer amusing. This strategy is intellectually dishonest and potentially damaging.”
The interim FPC, set up by the government to take over banking regulation, meets today in London to discuss ways to strengthen the financial system. Jenkins said lobbying by the financial industry led to “watered down” Basel capital rules, and that any moves to abandon them would further erode confidence in banks.
“The truth is that banks can strengthen their balance sheets without harming the economy,” Jenkins said. “They can do so by cutting bonuses, by curtailing intra-financial risk- taking and by raising term debt and equity.”
He also said that markets are “not closed to viable banks,” and the problem is that executives aren’t willing to pay the necessary price for funding.
“For the sound, well-run financial enterprise the money is there,” he said. “It is just not there at yesterday’s price.”
Every company is required to file accounts with the tax authorities in every country where it operates. Publishing in the UK this data will cost a moderate sum in audit fees and (for the banks and BP and Shell and ….) a vast amount in paper and printing costs for the extra 10-50 pages in their annual reports. In order to justify this , you argue what? That the tax officials in many countries are taking bribes and that this will be exposed by country-by-country reporting? Or, if not, what?
Country by country reporting is not just tax, although you are wrong that all countries require tax returns. many tax havens do not and submitting a tax return in the UK is for all practical purposes entirely volunteer by a company
CBC is about accountability, governance, risk, obligation to shareholders, ensuring the best allocation of resources, the effective operation of markets and holding people to account for corruption.
None of those matter to you?
Shame on you is all I can say if that is true
If it isn,t, what’s your problem – especially as we only ask for the extra data on the net? Precisely because we’re green as well.
You seem to think that you can ask for accounting data to be available only on the internet. You need to change the laws of this country and those of France, Germany, …. the USA, first.
I agree that “CBC is about accountability” but reporting stuff to you adds *nothing* to any of the other things you mention, which *do* matter to me.
CBC will require a change in the law…that’s why the EU is promoting it
So what is your problem with my suggesting the law might be changed?
As for your final comment – unless you speak plainly I will not post comments and that’s incomprehensible unless you’re saying all that matters in the world is you. Have I got you right?
Of course I am not saying “all that matters in the world is you.” I was replying to *your* question “None of those matter to you?”
“So what is your problem with my suggesting the law might be changed?” – that you cannot demand that other people ignore the laws of their own countries as part of your campaign to introduce a new law in this one.
I am campaigning worldwide
And you’re just trolling and wasting my time
Please don’t do so again
“Every company is required to file accounts with the tax authorities in every country”
It is this kind of naivety which allows tax havens to continue their anti-social and predatory activities.
Try obtaining the accounts of (for example) a company registered in the British Virgin Island and then try and find out who the directors and beneficial owners are. And if by some miracle you do get close (without having your kneecaps blown-off) be assured that the company would take flight to another tax haven within minutes.
And there aren’t any tax officials to take bribes!
as you are so keen on transparency – perhaps you would like to enlighten us as to what the premier shareholders group is and what its aims are?
a google search only throws up contributions to this blog.
how do I join you guys?
@Stevet. How does one join the PSG?
Quite simple. Just believe misleading claims by Isle of Man fund operators/managers; such as “Guaranteed Capital” and “Secure Capital” and accept that “professional” has an entirely different meaning on this dark and impenetrable tax haven island.
In short accept that the Isle of Man dictionary defines white as black.
Oh! … almost forgot. Then you are required to rapidly loose over forty five years hard work and prudent saving by having faith in fairy tales — and spend the rest of what remains of your life in penury.
The PSG exists to warn others and prevent this happening again …
And sincerely hopes that there will not be any new members in the future.
NEVER BANK/INVERST A SINGLE CENT ON THE ISLE OF MAN!
you havent really answered my question – you describe yourself as a group so i was wondering how someone sympathetic to your views could join and help – do you have a website I could visit?
thanks
The PSG appreciates your empathy in the public interest campaign originated to discourage tax haven based financial product providers from using misleading documents and unqualified “introducers” to retail complex “investments” to innocent, elderly people living in honest jurisdictions.
In recent years the PSG has also publicised the wider extent of international tax haven abuse.
At present the PSG has no website preferring to position observations on third party web pages. Currently it posts in three different languages across the world in countries as diverse as South Africa, Scandinavia, the UAE and Japan.
Although some of the PSG originators have now died the function of the group is restricted to those who suffer as a result of tax haven activities.
Thanks for the reply – could you point me to your research or publicity material you refer to?
who is a member of the PSG currently:
Just like the Banks argue that change must happen very slowly, if at all, when the change may effect their Profits in the short term and hence effect their bonuses based on short term Profits.
In the same way Corporates will allways argue to stop change happening to tax havens like Caymen. We should all learn from the arguments being put up by the banks to fight these status quo merchants. How is it fair, for the small businesses to pay taxes but the MNC’s to use tax havens and not do so. If your customers are paying taxes then you as the sellar must also, in the same country as your customer, this will support local institutions like the NHS. The customer is only able to afford to buy because they have the rightful gurantee to free health care and hence no private care costs.
Surely all we humble tax collectors need from UK PlC is the following:
UK Caymen
Sales 1000 0
Profit 100 500
Tax 21 0
Now we know that the customer spent £1000K with UK PLC who made only £100K Profit on which it paid £21K Tax. In Caymen they sold nothing but made £500K Profit and no tax was paid on this Profit.
We can see from this example the UK customers are spending the money but not collecting the tax because Cayman has 5 times the Profit. So guess what the NHS has to loose costs as the tax revenue is down. Blame it on the EC shall we or the Banks. No silly collect the tax on Profits where customer spends the money.
What is difficult in giving us the numbers on Excel, we can cope.
It seems to me that the proposed country-by-country reporting requiremed, once enacted, will merely require companies to publish certain sections of their transfer pricing documentation reports. MNCs that are and that have been _compliant_ with transfer pricing documentation rules that have existed in many countries for at least five years (more like 10 and 15 years) already have this information in hand, on a country by country basis. So I would not worry about CBC reporting costing the MNCs’ bottom line.