This afternoon, Parliament’s Public Accounts Committee (PAC) will be discussing “Taxation of Multinational Corporations” with Matt Brittin, Chief Executive Officer of Google UK, Troy Alstead, Starbucks Global Chief Financial Officer and Andrew Cecil, Director of Public Policy at Amazon. The Guardian reports that Starbucks may already have sustained lasting damage to its brand image from… Continue reading Questions for the Public Accounts Committee today
Category: Transfer pricing
The death of corporation tax?
With all the recent scandals involving internet companies, it seems quite reasonable to assert that corporation tax as we know it is in a crisis, and it’s time for fundamental reform of the way we tax multinational companies. The very low overall effective tax rates of the internet giants do suggest that today’s biggest companies… Continue reading The death of corporation tax?
Is it time to tax companies on the basis of sales, not profits?
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?
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”
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.
Martin Hearson 