According to the Guardian:
Luxembourg must move away from its reliance on hosting internal financing functions for multinational businesses if it wants to guard against the impact of a G20-led crackdown on international tax avoidance, the Organisation for Economic Co-operation and Development (OECD) has warned.
Gurría was speaking as the OECD published its 115-page economic survey of Luxembourg. The survey found: “There is a risk that in the near future Luxembourg could face lower revenues from multinational enterprises as a consequence of the ongoing evolution of international tax regulations that necessarily trigger changes of tax rulings.”
He is right, of course.
The OECD BEPS programme is meaningless if it does not impact on the states that set out to be the recipients of shifted profits. Luxembourg is high on that list. It is time they realised that the writing is on the wall for their abuse.
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I hope that it is but I would bank on them tryng out some evasive manouvres first.
“It is time they realised that the writing is on the wall for their abuse.”
Luxembourg is a sovereign state, free to make its own tax laws. BEPS and other reforms will certainly strike out some artificial and abusive practices but at the end of the day, there is nothing to stop a country making itself a more attaractive country to do business in by keeping its tax rates low. I am sure Luxembourg will continue to do so.
The OECD itself, in commenting on BEPS states “Non- or low-taxation is not itself the concern”.
You may think everything belongs to the state and only by its good grace does the state allow us to keep some of what we earn but (thankfully) few of those in influence agree.
I am sure you can think that
But it’s not the way the world works
You need to smell the coffee too
Their tax law is one thing. Their company law enacted as recently as 2013 when the BEPS work already was well under way is something else. Designed in order to make it as easy possible to hide beneficial owners.
“You may think everything belongs to the state and only by its good grace does the state allow us to keep some of what we earn but (thankfully) few of those in influence agree.”
Which is why perhaps Amazon graciously contribute tax at 0.1%, Apple at 1% and I get to pay a basic rate of 20%.
Bill
The latest figures show that Apple paid around $4.5bn in tax in the US at a rate of c24%.
They are an American company and you would expect them to pay most of their tax there. I could ask you how much tax you paid in America and try and draw conclusions from that but that would be as pointless as your comments.
Those who clamour that because Apple sell goods here they should pay tax here seem to forget that we have many UK businesses which export to the US but are currently paying tax here. If we go down the route of paying tax where the customer is, it would create chaos and we wouldn’t get the tax bonanza everyone thinks we would.
As for Amazon, it’s well known that their business model is expansionist. Look at their world-wide accounts and you’ll see they don’t make much profit as they reinvest to grow market share. It’s not actually illegal to not make a profit, you know, and if you don’t make much profit only an idiot would be expecting you to pay much tax.
This is a very tired argument known about for years
They pay almost no tax anywhere else
And how do you think they are a U.S. company when their. Product is sold worldwide? From companies based worldwide?
Stop excusing abuse
As to my tax position, I was subject to the other set of rules,you know PAYE. I had no say in what I paid and it was deducted at source week by week. I was not allowed to withhold any financial information. If my bank account were ever to reach £10k the bank would inform HMRC. I could not deduct anything if a change in circumstances increased my costs. If I chose to buy new tools to do my work better that was down to me. There is no basis for any comparison to the situation applying to any trans-national corporation.
I saw, and still see, my tax bill as my investment in the UK, my shareholding if you like. Had I worked and been paid in the US I would have no problem paying tax to US authorities for the same reason. My taxes (and the taxes of the millions like me) provided the human and material infrastructure essential to business but too long term an investment for business to fund. Like the, minimum, 18 years of health and education support to produce healthy, literate, numerate candidates as a pool of potential employees. Like the transport system to enable goods to be shifted. Like the judicial system to protect intellectual property rights. Like the police and fire services to protect business premises. In return for this investment I ask for a contribution, not the total cost, and honesty a quality I feel can be legitimately demanded from anybody living or working in the society the UK electorate determine is appropriate.
I am not seeking to tax twice, I am seeking a contribution to the cost of providing a business environment from the profits of goods sold in the UK, by UK staff, from UK premises to UK customers. If a simpler example is needed I would pick, from a large number of possibles, Thames Water. Being handed a state protected monopoly and the right to increase charges at will is not enough for them. They demanded that their backers, Abu Dhabi and China, be absolved of all risk in the construction of the super sewer by the imposition of an 11% levy on all customers for 10 years. That on top of the insurance provided by the state for cost overruns and delay costs. Which is on top of the above inflation hikes in bills they are allowed to make but have made little difference to the leakage rates in water supplies. The super sewer deal ensures there is no call on Thames Water’s own resources.
All of which annoys me but, fair enough, the governments we elected allowed it. What I cannot accept is that in return for running a risk free, guaranteed return, monopoly selling a UK product with little investment in technical innovation to a guaranteed market they run their accounts through Luxembourg and the Cayman Islands. Result, they pay 6% tax. They are extracting the Michael. The governments we elected set a tax rate, we are entitled to expect that to be honoured. If the exo-national corporations don’t like it they can leave. In a capitalist world if a market opens up someone will step in to supply it.
Then Bill, let me ask you, if you went on-line and ordered a computer from Apple Inc which they made in the US and posted to you in the UK how much tax would you expect Apple to pay in the UK on the profits of that computer?
Apple has relied entirely on US “human and material infrastructure” to develop and make that computer, the UK has provided nothing of that and so you must admit deserves no share in the profits.
If instead Apple posted that computer to a UK shop which sold it to you then you might expect the shop to pay UK tax on its mark-up. And that applies whether the shop is an Apple shop or an independent retailer and on the same terms. that’s what happens and that’s the purpose of transfer pricing rules.
And remember the same is happening to a UK manufacturer selling goods to the US. They pay tax here not in the US for the same valid reasons.
Don’t be fooled by the simplistic notion that we in the UK should be able to charge tax on both UK manufacturers exporting AND on overseas manufacturers whose goods we import.
But Alan, that’s not how Apple works
So you are making all that up
I own 2 Apple computers both built in China and supplied via the Apple Irish subsidiary both were at least 30% higher cost than other products on the market. A due reward for innovative design if not for the welfare concerns shown to the workforce who produced them. They could have been built in Mongolia, Taiwan or Korea where similar operations are run.
Apple only declared 1/3 of its profits as American, the other 2/3 flow through the Irish subsidiary based in Knocknaheeny, Cork. After being taxed at rates as low as 2% the profits join the $137bn (Sept 2014) being held offshore and managed by Braeburn Capital of Reno Nevada (an Apple hedge fund). The cash is described as ‘indefinitely reinvested’ in the annual report. No further tax has been paid to Ireland, the US or anywhere else on the planet.
Quite so