Taxing multinational companies – Page 10

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

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.

Two big disputes – Vodafone and Glaxo – in the news

Despite some of the headlines, Glaxo hasn’t won its transfer pricing court case in Canada. The judgement is worth reading: it’s not too technical and sets out the issues well. See also Alison Christians’ summary of the issues.

Has Starbucks dragged Fairtrade into a tax avoidance scheme?

In the aftermath of the excellent Reuters story about Starbucks’ tax dodging in the UK, some columnists (best pun: ‘Starbucks makes a mochary of tax law’) have picked up on the apparent hypocrisy of the biggest buyer of Fairtrade coffee in the world also employing tax avoidance schemes. Take note, however, that the link is… Continue reading Has Starbucks dragged Fairtrade into a tax avoidance scheme?

Would a new article in the UN model tax treaty be a ‘fundamental change’ to international tax?

The most lively debate in the first two days of the UN tax committee meeting ended with the decision to start work on a new article for the UN’s model tax treaty that would allow developing countries to levy a tax on payments made to overseas providers of ‘technical services’. The advocates of this position… Continue reading Would a new article in the UN model tax treaty be a ‘fundamental change’ to international tax?

Why I love the United Nations tax committee, part 2

An interesting exchange at the United Nations tax committee on Monday, tinged with a certain irony. In the run up to the meeting, the United States Council for International Business had written a pretty angry letter to the Committee, copying in half the US Treasury, complaining about the committee’s new practical manual on transfer pricing… Continue reading Why I love the United Nations tax committee, part 2