corporation tax is paid on profits, not sales, for a start. That KPMG’s Chris Morgan felt the need to clarify this point in Tax Journal got me thinking. It seems that, in the wake of the recent spate of corporate tax scandals, there’s a confluence of opinion between the general public and many tax scholars.… Continue reading Is it time to tax companies on the basis of sales, not profits?
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Paper review: “How Nations Share”
In the case of international income, it is the disputes and their resolutions, and not the law on the books, that constitute the international tax regime. Yet it is all but impossible for citizens to observe exactly how, or how well, their governments navigate this aspect of economic globalization. This is Alison Christians’ contention in a… Continue reading Paper review: “How Nations Share”
Is eBay avoiding tax? (In which I endeavour to improve on a post by Mr Tim Worstall)
On Monday I discussed how I think most of the real debate about corporate tax scandals is about people’s normative interpretations of the tax system, not the technicalities of the particular structures. Then I read this: Another day, another report of an internet company avoiding taxes in the UK. This time it’s eBay, to follow… Continue reading Is eBay avoiding tax? (In which I endeavour to improve on a post by Mr Tim Worstall)
On the contribution of corporate tax scandals to debate
My post last Tuesday provoked a disgruntled email from a tax academic. “I do not feel qualified to say whether the Starbucks royalty is excessive or not,” wrote my correspondent. “I think that is HMRC’s job. Do you feel qualified to say it is excessive? If so, on what evidence?” This is a fair question,… Continue reading On the contribution of corporate tax scandals to debate
Is international tax like open source software?
Adapted from some comments I made on an academic paper (unpublished, so I can’t link). What has international tax got to do with “open source” software? Well, maybe nothing, but let’s run with it for a minute.
A great letter in this morning’s FT from a tax lawyer demonstrates not one but two points about the transfer pricing of royalty fees. The first is the way in which companies game the system:
The role of the tax expert was to identify the highest level of royalty that could be defended in attritional correspondence with the Inland Revenue. The lawyer’s role was to reach for the intellectual property precedents and draft licensing agreements, which bore the imprimatur of arms-length contracts although they were in reality no such thing.
Sometimes discussion of transfer pricing by campaigners obscures the difference between the blatent use of prices that are much lower or higher than should be permitted (this is true ‘transfer mispricing’, which is more akin to fraud) and the more common manipulation of prices to get the best tax position possible within the ‘arm’s length’ range.
Martin Hearson 