Oh, well done Richard!

The change that is very obviously needed is that a company must be considered resident where the economic substance of its management is located. And yes, that can be determined. It’s where a majority of the board and their senior management team work day in day out.

OK. So, say, BP, board and management all work in London (just as an example). So, BP is UK resident.

OK. Clearly, it should be paying tax where it is resident. OK.

So, err, BP shouldn\’t be paying tax in Angola, should it? BP\’s management and board aren\’t in Angola, so the company isn\’t resident in Angloa so BP shouldn\’t be taxed in Angola.

Which leaves your country by country reporting crusade looking a little threadbare, doesn\’t it?

4 thoughts on “Oh, well done Richard!”

  1. Christ but the man’s a complete numpty.

    Rule 1: Incentives matter
    In this case, if this is the rule you set, BP’s board and mgmt will decamp to Irleand or Switzerland pronto. They can and they sure as shit will

    rule 2: TANSTAAFL
    Particularly not for those who wish to raise revenue from taxes.

    WGCE

  2. There’s an obvious solution to this problem:
    1) ensure that companies pay tax in the countries where they have local operations
    2) ensure that if companies don’t do so, or if the tax rates in those countries are comedically low, then tax the parent company for the difference in its home jurisdiction as calculated by Richie’s formula.

    What kind of nutjob would want to impose such a thing? Oh, wait, it’s *what UK tax law says*…

  3. Pingback: FCAblog » Wolseley and moving tax base

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