UKC

Has anyone seen this?

http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-centu...

It seems like the most ridiculous idea I've ever heard as it basically reduces the tax take from corporations and actively encourages outsourcing of jobs.

Can someone please explain it to me? How is it even possible that this could be allowed?

In reply to Eagle River:

"In David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy"

That's as far as I read before I realised that rather than a report on a change of tax law it's just going to be some hippy moaning that life's not fair. Try getting your news from a less bias source before forming an opinion on it.

In reply to Lord_ash2000:

Like I said I'd appreciate someone explaining the tax changes to me because they appear to be ludicrous. Has the author made up the tax changes? because if they're true, however he has worded his argument, they still represent a massive tax break for corporations without giving them the incentive of increasing jobs.

In reply to Lord_ash2000:

It's a piece by George Monbiot published in the Guardian, what did you expect? Though the presentation and spin are obviously left wing, that doesn't mean the facts contained in the article are incorrect.

In reply to Eagle River:

Me too. I read that article and thought, "This can't be true!" I hope it isn't.

In reply to galpinos:

That's what I mean. I'm not naive enough to not appreciate people's political leanings but I was trying to ascertain whether the facts of the piece, that large corporations will not have to pay tax on money they bring into this country through foreign countries, are true.

In reply to Lord_ash2000:


Ah right, play the man, not the ball, eh?.

Is a tax change that actively encourages UK businesses to move offshore, where they will contribute much less to UK tax revenues, really a good thing for deficit reduction, or UK PLC in general?

In reply to Lord_ash2000:

Do you mean a source that agrees with your bias? All news has bias.

In reply to The New NickB:
All news has bias.

Some less bias than others.

In reply to Eagle River:

Okay, I'll give you another take on it. - it's just a first stab and not one I've mulled over.

It could, overall, increase the amount of money in the UK (some of which will end up as tax, some of which will end up flowing around the private sector) as companies will repatriate funds which otherwise would have been kept offshore due to the requirement to pay tax on them if you bring them into the UK.

In reply to ClimberEd:

I'm actually quite impressed that Monbiot has managed to put such a strong negative spin on it. He must have a very large chip on his shoulder, and an axe to grind it with.

In reply to ClimberEd:

Remember, this is a man who was anti fox hunting on the basis that he was bullied at public school by boys who later supported fox hunting and that it was the pastime of the Anglo Norman aristocracy.

In reply to ClimberEd:

I understand the repatriate funds idea but if they don't have to pay tax on that money (and everyone will usually find a way to pay the least amount of tax legally possible) then is there really a net benefit to the tax revenue?

And, correct me if I'm wrong, if the current changes go through a company with factories and staff in this country will pay 24% tax on their earnings but if they move that factory or call centre etc to another country and funnel the money back into a UK bank account they don't have to pay any tax to the UK treasury.

That's what has got me quite confused as it seems like an blatantly obvious net loss for the UK tax revenue.

In reply to Eagle River:


that would seem to be the key problem. The costs of setup can be written off against tax as opposed to the not taxing. Seems a rather large incentive to offshore.

Be interesting to see Private Eyes direct take on it rather than through Monbiot though.

In reply to Eagle River:
>

From cif

1. Foreign branch profits are currently subject to UK tax. In certain circumstances, foreign subsidiary profits are not. Most UK multinational businesses conduct their overseas operations through locally incorporated subsidiaries in the jurisdictions in which they wish to operate, so their overseas profits are for the most part exempt from UK tax. This was enacted by the previous Labour government.

2. There is a consultation to align the treatment of the taxation of foreign branches with the treatment of foreign subsidiaries, but as far as I am aware nothing has yet been decided. Again the discussions were initiated under the previous Labour administration.


Storm in teacup? Ed Balls completely silent on the subject-suggests so.

In reply to Eagle River:
>
>

Clearly. All you can focus on is the perception that companies interests will move overseas.

Why? You are jumping the gun and making lots of assumptions - I doubt you'll get much transfer tbh.

In reply to Postmanpat:

Come on man. They are both free market capitalist parties, it gets sold to the public in a different way, or ignored by either side of the house whenever is suits.

Regards

D

In reply to Postmanpat:

Thanks for that. As the first thing I saw about it was the guardian article I really wanted some clarification as the tax amendments described sounded so ludicrous.

So basically multinational corporations already pay very little tax and there are plans to make it slightly easier for them to do this but nothing has been decided yet?

In reply to Postmanpat:

Storm in a teacup indeed.

This has been a long standing tax issue. It's not something that has suddenly sprung into life since Cameron et al have come to power.

In reply to Eagle River:
Storm in a tea cup. What you have at the moment is big companies moving off shore anyway to avoid tax, because other countries will do it for less. by adjusting the tax, it means those companies stay here.

In reply to Dauphin:
I'm simply passing on an explanation of what is happening and why. What is clear is that Monbiot's targetting of the Tories on the topic is either ignorant or dishonest.

And neither party is "free market". It's a meaningless phrase.

In reply to neilh:

Thanks for the clarification. I wondered why more of a stink hadn't been made of this.

In reply to Eagle River:

ps Monbiot really should stick to the environment.

In reply to ClimberEd:

No, this is better, I'm bored with the environmental stuff. To be fair, although I now rarely read the paper (once a week) he froths about the labour party as much as the tories.

Regards

D

In reply to The New NickB:

I said a "less bias source" No ones perfect but I'm sure this guy isn't exactly focusing on any benefits this law could have. I don't know anything about it myself either but I'm sure it was done for a reason.

In reply to Eagle River:
It's about time the mega rich got some benefits. The Num Nums have been getting them for years.

In reply to Eagle River:

Basically, if I my multinational enterprise (PP enterprise PLC) wants to do business in Japan I can do two things:

1) I can set up a wholly owned subsidiary (PP Japan) to do do business and pay only Japanese corporate tax on the profits.


2) Do business in the name of PP enterprises UK through a Japanese branch office and pay Japanese corporate tax + any difference between the Japanese tax rate and the UK tax rate (paid to the UK)

The suggestion is simply that "b" should be brought into line with "a"

In reply to Postmanpat:

Thanks for that. I am a sucker for a layman's terms explanation.

In reply to Postmanpat:


ermm how is he targeting them?
They are the ones currently in power and hence with the choice to change it. If you read the article it does clearly mention Blairs government as being an active participant.



so not like left vs right wing?

In reply to Eagle River:

the bit that is missing is a)what happens in other countries eg should 2 be brought into line with 1 or should it be the other way round.

In reply to Lord_ash2000:

- ????? Do you read the Daily Mail?

In reply to dissonance:

How on earth could that happen? Other countries aren't going to align their corporate tax rates with ours, just because they ask them to.

In reply to ClimberEd:


but then i didnt say that and indeed the point of the article is around it being a race to the bottom.
Considering one of the already happening changes is cutting corporate tax to the lowest in any major western economy (according to the tory rep)it is mainly going to leave the tax havens as the ones who pay twice in case 2 anyway.

In reply to dissonance:
Diss,You used to be better than this. Any unprejudiced reader of the article would think that the Tories were initiating a major change of tax laws in direct contradiction to their avowed intent. In reality they are probably going to carry through the correction of a minor anomaly in tax treatment as initiated by the Labour government.

Please don't start playing silly Hookerish games.

Just like left wing and right wing.Meaningless and misleading labels.

In reply to Postmanpat:


my vote is still out until i see something more detailed.
if Monbiot is correct in that in that it would be an approach no other country supports then there is something to the argument. Even if inherited from Labour, since after all they are binning off enough labour policies that a claim it came from them doesnt really hold water.

In reply to PeterM:

No I don't.

What I'm saying is I don't know the details of corporate tax changes and its effects and I suspect neither do most people. Do you?

However I've faith that whichever tax experts working for the government who have decided this needs to change will have a better idea about it than we do. So I'd side with them.

In reply to Lord_ash2000:

Would you like to buy some magic beans?

In reply to Lord_ash2000:


problem here is that private eye and others report that the tax experts have been somewhat sidelined. Instead getting input from business reps who unsurprising suggest that reducing tax for them is best.

In reply to neilh:

Nail and head. Subsequently the EU and other large nations have been leaning on offshore jurisdictions to make their tax system homogenous ie. tax on non redients equal to residents. Instead of increasing the non-resident tax do discourage offshoring they've all reduced their resident tax instead!
Eventually taxes will be the same everywhere in the world.

The other countries you speak of are cayman, bermuda,bvi, jersey, guernsey, isle of man etc. Perhaps you see a connection? British crown indepandacies, soveriegn vehicles for money laundering and corporate tax avoidance. During the banking crisis of 2008 the G20 said it was all going to end. Guess what happened?

Regards

D

In reply to dissonance:
Well fair enough but the point is that the major change, that which was out of step with most countries, was made several years ago when overseas subsidiaries were exempted from paying UK tax. The bringing of branches into line is not really part of the so called race to the bottom.It is tidying up an anomaly. Monbiot doesn't seem to acknowledge this.

There is a debate to be had benefits or otherwise of racing to the bottom but this is quite a bizarre measure through which to kick it off.

In reply to Postmanpat:


it isnt the best written article in the world but the last part does seem fairly clear it is an ongoing problem.
Also i cant help but feel it isnt quite as simple an anomaly as you make up, otherwise the companies would have switched and no one would be complaining. I am guessing what got mixed is the tax deductions aint so useful when running a separate subsidary, could be wrong hence why i would like to see a private eye write up as a starting point.

the overall point still stands in his article though. If the talk is that taxes cant be cut then the logical thing to do is to resolve the anomaly the other way, particularly since it aint the norm.

In reply to dissonance:

The last part just read like a bog standard anti capitalist rant.

>
There will be other reasons why branch status may be attractive to some companies. The tax anomaly is probably distorting business decisions.


But that is not the point he makes not is it the logical outcome of the Tories' declared preference for lower taxes.

In reply to Postmanpat:


not the last couple of paragraphs but the ones prior which seem fairly even handed in the blame.


apart from Cameron states taxes cant be cut at present, and indeed for most of us have gone up. So it is reasonable to be unimpressed that the only tax cuts going in suit large businesses (it isnt as if the small business the tories bang on about are actually being supported by this).