{"id":19428,"date":"2013-03-05T16:15:29","date_gmt":"2013-03-05T16:15:29","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=19428"},"modified":"2013-03-05T16:15:29","modified_gmt":"2013-03-05T16:15:29","slug":"the-oecd-say-the-integrity-of-the-corporate-tax-system-is-under-threat-and-im-allowed-to-evidence-it","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2013\/03\/05\/the-oecd-say-the-integrity-of-the-corporate-tax-system-is-under-threat-and-im-allowed-to-evidence-it\/","title":{"rendered":"The OECD say the integrity of the corporate tax system is under threat, and I’m allowed to evidence it"},"content":{"rendered":"

There has been a lot of reaction to my comments on HSBC<\/a> and Rolls Royce<\/a>. Some agree with my sentiments; a great many do not. The lines those who disagree appear to be taking seem to fall into one of four camps.<\/p>\n

First there is the \"it's legal, so what are you worried about?' camp.<\/p>\n

The second is the \"what do you want, a voluntary contribution?\" argument.<\/p>\n

The third might be called the \"they'll leave if\u00a0you\u00a0tax them\" brigade.<\/p>\n

The last is \"but the accounts show the profit wasn't made here, so what's the problem?\" school of thought<\/p>\n

The\u00a0first group clearly have no idea of the difference between legality and ethics.<\/p>\n

The second ignore Starbucks, but leaving that aside my answer is, of course not: what I want is a tax system that ensures tax is paid in the right place at the right time, and we clearly haven't got it.<\/p>\n

The third are just tedious; this argument has been offered for decades and the reality is that people do not leave. They try to shift functions to tax havens but as has been shown time and again companies who \"leave\" the UK mysteriously keep their head offices and everything that goes with them right here in the UK, so this argument is just nonsense. The \"move\" is almost invariably a tax planning exercise and nothing more.<\/p>\n

The last show a complete lack of\u00a0understanding\u00a0of international tax, where under\u00a0current tax rules \u00a0the right to re-write the accounts always rests with a tax authority and rightly so because every tax authority knows what is\u00a0presented\u00a0to them need not have much relationship with economic\u00a0reality. The trouble, of course, is lack of resources to do just that.<\/p>\n

The result is that as it stands the international tax system is arbitrary at best and open to so many\u00a0choices\u00a0that the UK tax system is now basically a voluntary payment system. And you don't have to believe me when I say this. Take this form Martin Sorrell of WPP, speaking last December<\/a>:<\/p>\n

\"You can have a procurement department in an offshore base; you can have a brand operation in an offshore base. And the criticism of some companies \u2014 Google is an example, Starbucks and Amazon \u2014 have done just that. Companies even based in the UK can do that.\"<\/p>\n

Asked how the rules should be improved to ensure multinationals delivered a fair contribution to local exchequers, Sorrell said:<\/p>\n

\"I hate the term 'corporate social responsibility' but all of those contributions you make ... are a question of judgment. There are the rules, if then companies choose just as they chose ... to make a contribution to all the stakeholders on a long-term basis all credit to them.\"<\/p><\/blockquote>\n

In other words, if anyone pays tax in the Uk is pretty much down to the option of the company. I don't accept that as a basis for taxation.<\/p>\n

I am suggesting that tax should be based on clear economic indicators<\/a>: where sales are made, where people are employed and where\u00a0tangible\u00a0assets are. I did that for HSBC and showed more profit would be\u00a0declared\u00a0here on that basis. I believe that would reflect economic\u00a0reality. I like that. I don't want\u00a0companies\u00a0to decide when to donate or not; I want them to pay what they owe.<\/p>\n

I'm not blaming HSBC or Rolls Royce or accusing them of\u00a0anything. But I am saying that their results and tax paid do not seem to reflect\u00a0those\u00a0economic indicators, and using accounts to suggest that is a perfectly\u00a0reasonable\u00a0use of public\u00a0domain\u00a0data. And I intend to keep doing it because even the OECD now recognise that this may well be the direction of travel that is\u00a0required\u00a0for international taxation because as they note in their\u00a0February\u00a0report on profit shifting:<\/p>\n

\u201c[tax] base erosion constitutes a serious risk to tax revenues, tax sovereignty and tax fairness for OECD member countries and non-members alike\u201d and that \u201cwhat is at stake is the integrity of the corporate income tax\u201d.<\/p><\/blockquote>\n

That's my concern too, and I'm evidencing why it is an issue. That's all. But the vehemence of the response suggests I'm clearly hitting a target. So I'll keep doing so.<\/p>\n","protected":false},"excerpt":{"rendered":"

There has been a lot of reaction to my comments on HSBC and Rolls Royce. Some agree with my sentiments; a great many do not.
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[64,1],"tags":[],"class_list":["post-19428","post","type-post","status-publish","format-standard","hentry","category-corporation-tax","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/19428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=19428"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/19428\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=19428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=19428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=19428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}