I've been asked to suggest how we could stop Google, Amazon and others beating the UK tax system, as they beat many of the tax systems around the world. One answer is unitary taxation.
In December the Tax Justice Network published a paper by Sol Picciotto explaining unitary taxation. Amid rising public concern at how multinational firms ride roughshod over international tax rules, the paper advocated a shift to a system unitary tax system because under this approach the global profits of a multinational are ‘apportioned out' to countries according to the genuine economic substance of what it does in each place. Each country can then tax its share of global profits at its own rate.
Not everyone agrees, of course, so another paper, also written by Prof. Picciotto has answered ten criticisms of the approach.
What's important about all this? Well, it shows we don't have to put up with corporate tax abuse. There are alternatives. And the fact is, those alternatives would work. That's why we promote them.
The question is, why isn't the idea getting the support it deserves?
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I am intrigued. Are you really suggesting that Amazon and Google are engaging in “corporate tax abuse”?
Yes
If what Amazon and Google is doing is illegal – rather than just immoral – why haven’t any of their staff rocked up in court yet in the bracelets provided by the Police.
It’s abusive
Not illegal
No one has said it is illegal – yet, that I’ve heard
If major economies like the US don’t sign up to it then unitary taxation is a non-starter; and the US won’t sign up to it. So other solutions are required.
Unitary can be done in isolation
Then you just create tax avoidance opportunities and/or double taxation. For some reason the Professor only considers the latter… he ignores the fact that arbitrage between different tax systems is what got us into this mess. He also takes double taxation too lightly – the last unilateral attempt to introduce unitary taxation caused a small-scale trade war.
There are other, better, simpler solutions to the problems with the current system. Focusing on something unachievable is a dangerous distraction.
You are wrong
It is wholly achievable within the existing OECD framework – and we are working in showing how
But trite dismissal of the only theoretical alternative to the existing mess is absurd
Tom, it’s no use to anyone to simply write off a well-considered alternative to the ridiculous system we have currently by saying “other alternatives are required” without offering such an alternative. It’s just hopeless to say “this won’t work” and then leave it to others to propose alternatives that you’ll doubtless write off in exactly the same way.
Nick
I will be on this theme later today or tomorrow
R
As Amazon made a $39 million loss globally in 2012 I’m not sure how unitary taxation will get more out of them than the several million £ they did pay in the UK.
In 2012 maybe
But you also ignore the fact that accounting profit may not be the same as taxable profit
Are you being a little forgetful of one of your favourite themes here Tim? Surely not choosing facts selectively, are you?
For the full extent of TW’s knowledge of Corporation Tax, have you seen his blog today http://timworstall.com/2013/05/18/please-help-me-out-here-about-corporation-tax/today? Dear oh dear.
Yes, this is interesting, isn’t it?
“For the full extent of TW’s knowledge of Corporation Tax, have you seen his blog today http://timworstall.com/2013/05/18/please-help-me-out-here-about-corporation-tax/today? Dear oh dear.”
When I don’t know I ask people who do. How terrible of me.
Listening to the answers would help
What is amazing is how many decades out you knowledge is
A bit like your economics is from another era