The Parliamentary Accounts Committee is meeting today to discuss the problems multinational\u00a0companies\u00a0are creating by shifting their profits out of the UK.<\/p>\n
The mood for change in\u00a0corporation\u00a0tax is being created, and rightly so. Those who promote tax\u00a0competition\u00a0are worried. As the FT notes<\/a>\u00a0today, David Gauke said last week:<\/p>\n \u201cIf there is a perception that big business does not pay its fair share, that will make it all the harder for those of us advocating a competitive tax system.\u201d<\/p><\/blockquote>\n He's right, but since it is\u00a0now\u00a0glaringly\u00a0obvious\u00a0that big business is not paying its fair share I have as a result prepared a suggestion\u00a0for\u00a0an alternative tax to remedy the problem: I call this a fair international tax<\/a>. This is not a fully developed idea as yet, but when discussion of sales taxes instead of corporation tax <\/a>is taking place it is vital that all hats be\u00a0thrown\u00a0into the arena.<\/p>\n The FIT is what might be called an alternative minimum tax. What it does is look at the global profit of the company and then, using a formula based on where sales are and where people are\u00a0employed\u00a0 allocate a fair share of that\u00a0profit\u00a0to the UK. If the resulting profit is bigger than the profit the company declares on its accounts for the UK then the FUT\u00a0profit\u00a0is used for tax purposes and if the accounts profit is higher then that is\u00a0used\u00a0instead. I suspect a margin for error might be allowed e.g. 10%, but that's a nuance to be\u00a0considered\u00a0later.<\/p>\n What this suggestion does is reconcile the demand for a unitary tax -\u00a0explained\u00a0here<\/a> - which is undoubtedly\u00a0the\u00a0fairest way to tax\u00a0corporations\u00a0-\u00a0with\u00a0the local need to make\u00a0sure\u00a0things operate well now when the current system is failing badly. As a result FIT may only be appropriate whilst we move towards a full unitary tax, but since that will take some\u00a0time\u00a0it meets and urgent and pressing need now by providing an essential way of tackling the abuse companies are undertaking by shifting their profits out of the UK to\u00a0elsewhere\u00a0to avoid taxes in this country. And because it is simple, cheap to create,\u00a0incredibly\u00a0easy to operate. legal and cannot conflict with EU law it's ready to go right now.<\/p>\n I was challenged last week to think of a\u00a0solution\u00a0to our current tax problem. FIT is it, I suggest. Give it a read<\/a>.<\/p>\n PS\u00a0country-by-country r<\/a>eporting makes it work<\/p>\n","protected":false},"excerpt":{"rendered":" The Parliamentary Accounts Committee is meeting today to discuss the problems multinational\u00a0companies\u00a0are creating by shifting their profits out of the UK. The mood for change
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