Toby Quantrill of Christian Aid had an article in the New Statesman today that celebrates this weeks step forward on country-by-country reporting. In it he says:
[T]his week's breakthrough has been many years in the making. It has taken a mixture of dedicated research and campaigning, painstaking legal arguments as well as scandalous revelations and public outrage to make it happen.
The inventor of Monday night's reform, irrepressible accountant Richard Murphy, first suggested country-by-country reporting (CBCR) back in 2003. The same year, he and John Christensen set up the UK's Tax Justice Network, which has campaigned for the reform ever since.
He's right - even if that's the first time that I know I have been described as 'irrepressible'. And there's a massive thanks due to the NGOS who have supported this.
What remains utterly bizarre, given their public duty mandate inherent in their charters, is why the accounting institutes have worked so hard to avoid this issue.
It's time they engaged with it, openly and publicly. It's staggering that the biggest issue in accounting is now being around them because they refuse to take part.
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I’m hoping you can clarify a few points for me on the CBCR, as the link to the tax justice network has 6 points, though they are rather brief and ambiguous. Let us say, for example, that a UK company raises debt (via a Private Placement) from a US bank to purchase a subsidiary in Brazil, which itself exports to various other South American countries.
1. There might not be, say, a subsidiary or affiliate in Uruguay, but there are exports there. In this case, would you count the revenue of those sales in Uruguay or Brazil?
2. In which country would you classify the debt and the interest on the PP loan? Is it for where the 3rd party bank is based (US), where the legal entity who took out the loan is (UK), or the location where the subsidiary was based (Brazil)?
3. Let us also say, as might be quite usual, that there is also a Shared Service Centre in India which services the Asian businesses but where the revenues earned in India are minimal. If their Singapore operation exports to Australia and the Indian SSC which does the accounting holds the debt on their balance sheet, do their debtors count a) in India, b) in Singapore or c) in Australia?
I’m trying to get a picture here of what criteria you’re aiming for and how much additional work (and infrastructure) would be needed for the additional reporting.
The answer is simply in the case of country-by-country reporting
It is simply a question of where did the company record the transaction
Next?
(And I suggest you stop making up fatuous arguments: this is a risk assessment tool, not as basis for tax assessment)
Microsoft, Google, Dell, Amazon, LinkedIn, Intel, Pfizer, Apple, Oracle, Salesforce etc all in Ireland to cheat the taxman?
What patronising nonsense.
How many business-friendly English-speaking countries with a highly educated workforce with deep cultural to the US ties are there in the a) the EU and b) the Eurozone? How many after Brexit?
Apple didn’t come to Ireland and nor did any other US company simply to avoid taxes. It came to to do business in the single market.
http://www.taxjustice.net/2015/03/12/did-irelands-12-5-percent-corporate-tax-rate-create-the-celtic-tiger
And it would have done so if the US had not allowed in repatriated profits to go untaxed. What has happened since is not unique to Ireland: gamesmanship with transfer pricing by multinationals and an unfair distribution of profits away from citizens via taxes to shareholders. Ireland is not remotely unique in that, nor Apple. What is unique is the scale of the profit that was effectively untaxed because of the scale of Apple’s business success. The Irish decision not to seek to tax profits earned elsewhere is hardly unreasonable. Indeed every actor involved has behaved rationally and reasonably and, as far as we know, in the belief their actions were legal. So unless the confidential documents from the commission reveal proof of cupidity by the Irish revenue authority that has not been alleged this far the case for the EU is, I would guess, far from a home run, and it will take years.
In the meantime, the Irish will be staying in the EU single market and in the Eurozone, and Irish corporation tax will remain competitive.
The contents of Irish data centers will continue to be subject to existing and developing EU privacy legislation, something that cannot be said of data centres in the UK after Brexit.
The only patronising thing is to pretend this is not the case
There is a good workforce in Ireland, but to pretend they would earn anything like the profits they do for their companies but for the Irish tax rate and lax tax regime is utter nonsense and please don’t make yourself look stupid by saying so