Does the Tax Justice Network actually read the posts on the Tax Justice Network site?
I want to emphasise that these two examples come from the same post, not from different ones.
So: the transaction was an offshore sham, designed to avoid tax on the sale of real assets in India. The Indian authorities saw through the sham, and decided to act on what was happening in the real world.
Leahy has misunderstood the \”greater issue.\” Which is that companies ought to be taxed according to the substance of the economic transaction that has taken place, not whatever bizarre offshore manipulation the lawyers and accountants have hatched up. Now that is the greater issue.
For the moment, if you say so.
This concerns its $180bn purcase of Manesmann a decade ago, routed through a Luxembourg subsidiary called VIL. In what is surely the result of transfer pricing strategies, Vodafone has earned $15.5bn in that Luxembourg subsidiary up to March 2009, taxed at less than 1%. That, plus the income since them, has cost the British taxpayer some $5 billion.
So, taxes shoulod be paid where the economic substance of the transaction takes place.
So, capital gains tax on assets in India should be paid in India.
And further, profits tax on profits made in Germany should be paid in Britain.
I\’ll have to admit that there\’s a hop, skip and a jump there in the logic that I\’m unable to follow.
I could understand insisting that the tax system pierce the corporate hymen so as to look at the economic substance, just as I could understand a tax system which insisted that only place of incorporation is to be taken into account.
I do find it extremely difficult to follow why both should be true for the same company at the same time.