I\’m afraid you\’re wrong Danny

“Complying with the UK tax system is not an optional extra,” he says. “A multinational company can’t just decide whether or not to engage with the UK tax system. It’s an obligation. Companies need to pay the tax they are supposed to pay, full stop. End of story.”

A company has two entirely different ways in which it can choose to engage with the UK tax system or not.

The first, obviously, is whether to invest in the country at all. If they don\’t then obviously they don\’t engage with the tax system. Plus,. as we know, we don\’t get the lovely things they produce. Nor the investment, the jobs, Which means that all wages are that fraction lower. It\’s in this manner, the non-appearance of jobs and wages, that corporation tax lowers wages.

The second is by investing, selling here, and obeying the tax laws. For example, Amazon sells into the UK from Luxembourg. The double taxation treaty with that country, from 1968, says that even with all the warehouses etc in the UK, this does not lead to a corporation tax liability.

Similarly, if Google (I have no idea whether they do but if they did) Ireland charged Google UK a royalty then the EU says that it\’s illegal (yes, actually bans the very idea of) for the UK to try to tax that royalty stream. Or Boots and interest on corporate debt: OK, that goes to Switzerland but in many ways that counts as EU. It\’s illegal for us to tax that interest stream.

Companies can indeed decide whether to engage with the UK tax system or not. And even if they decide to they can decide how to so engage.

Just as an example, I\’ve a little adventure starting. And I can assure you that it\’s not going to be a UK corporation that houses that adventure. Not a fucking chance.

5 comments on “I\’m afraid you\’re wrong Danny

  1. I’m not sure why these companies ever showed up at the select committee. It was only ever going to be a piece of theatre by Hodge, that would then give some fuel to the news story.

  2. I think where people are struggling is that both Amazon and Starbucks have a physical presence in the UK and don’t understand what goes on behind the scenes, as it were.

    Now without the coffee shops, Starbucks doesn’t have a business but there’s no reason why Amazon couldn’t have a centralised distribution centre in Luxembourg for all of Europe, although it is likely that the customer would end up paying more for postage.

    For the likes of Google and eBay, they have no need of a presence in the UK at all. The UK entities provide services at a cost to their foreign parents, the latter being who trades with the public. Might be a bit of a ballache but there nothing stopping them from moving this function to another country.

    What we’re seeing a lot of at the moment are politicians trying to deflect attention from themselves and keep this so-called outrage at the door of the companies scapegoated. It’s rather convenient for them. As soon as more people start asking questions, the finger will be pointed at the politicians, who as we all know make the rules.

  3. I’m sure the all here are bored to sobs with the observation that BRITISH companies with large presences abroad repatriate their profits without a withholding tax in the country of origin. Nobody in the MSM seems to care that if country by country accounting was instituted, huge swathes of their pension funds would stay overseas. In many cases funding regimes they may not approve of! How much tax would we lose if the likes of BP, R-R. GSK, BAE, Etc. paid overseas tax?

  4. Amuses me, MPs showing moral outrage over companies behaving legally.

    How many of those MPs were behaving legally over expenses claims? I know its not all of them but does anyone have an idea how many were not acting legally?

  5. Martin

    I recall that Lord Deben forged expense claims on behalf of his estate workers who typically got paid in cash – thus putting himself on the wrong side of 2 laws (one a proper offence and the other – “paying cash” – a politician-defined offence)

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