The FT has just reported that:
Apple has been forced to pay ¥12bn of back taxes to the Japanese authorities in a new controversy over the US technology group's international tax arrangements.
According to local media, the Japanese tax authorities ruled that Apple was liable for withholding tax on royalties paid from a local subsidiary to an Irish holding company.
I reckon that's about £90 million.
Is this the future? I mentioned the need for tax withholding from payments to tax havens this morning: here Japan is enforcing them.
Withholding can lead to double taxation, of course. I am not a fan of that. But in the face of no taxation its appeal is all too obvious. Companies need to take rapid note and change their structures in something of a hurry, I suggest.
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I like this, http://www.salon.com/2016/09/14/robert-reich-corporate-tax-deserters-should-not-get-the-benefits-of-being-american-corporations_partner/.
I look forward to your renunciation of wealth taxes when said wealth is a result of accumulated income on which income tax has already been paid.
I won’t be doing so
Because a) the situation is rare and b) wealth tax is then a component of progressive taxation on excessive income
Withholding taxes are more effective as a threat than as a weapon: but the case for them is now compelling.
I expect that you’ll hear the counter-argument about the current regine of negotiated reciprocity retaliatory action and double taxation. It’s a good argument, and there are real examples of economic damage.
But it’s argument describing one end of a spectrum, and we’re at the other end, where inaction leads to artificial profit-shifting and zero tax collected…
…And the killer argument – “Look what happened to Eurobond trading when New York tried withholding taxes, all the trading went to London and New York got nothing!” – runs up against the reality of selling a physical object in a defined geographic area.
The question is whether any government has the stones to call out the USA on failing to keep up their end of the reciprocity – actually collecting the taxes – instead of acting as a tax haven and depriving other nation states of taxes due on economic activity within their borders.
Other countries – Ireland and the UK – are equally culpable: but today it’s Applle in the spotlight.
I agree: the US issue is the big one and I think the EU is up for it