And I\’ve left a comment there but shall add it here:
“That foreign capital was not used to invest in Boots. It was used to acquire Boots. That is something fundamentally different of course. Investment requires the creation of new assets generating a tangible rate of return.”
Yes, I know that’s the definition you like but I’m afraid that it’s not the standard definition.
“Investment is putting money into something with the hope of profit. More specifically, investment is the commitment of money or capital to the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest, income (dividends), or appreciation (capital gains) of the value of the instrument.”
I’ll stick with the language as it is currently understood if you don’t mind.
Secondly, although I don’t actually use the phrase in that post I am of course pointing to the use of “thin capitalisation” as the source of the reduced corporation tax bill. Not the move to Switzerland, but the loading up with debt.
“The Mail looks at the case of Alliance Boots, which was bought up by a private equity firm in 2008 and shifted (at least its legal base) to a nondescript building, 94 Baarerstrasse in Zug, Switzerland. A company which had a tax bill of £89 million in the last year it was quoted on the stock exchange cut its tax bill to a tenth of that amount now – even though sales and trading profits have consistently grown. The trick it used was an abusive transfer pricing trick known as ‘thin capitalisation.’ It’s a horrible name, but the Mail explains it very simply, and very clearly.
As part of the takeover, Alliance Boots borrowed almost £9billion from various banks. That debt incurs interest, and interest payments can be offset against profits when calculating the company’s taxable income. A higher interest bill means lower profits — and less tax to pay.”
I’m using your own organisation as my source.
It comes to something when quoting the Great Man\’s own organisation means that I am \”so clearly wrong\”.
And Richard has responded!
That’s as lame as your original post
a) Your definition of investment is unrelated to tax – I sued a tax definition
b) Sure TJN can say thin capitalisation – which is widely acknowledged as tax abuse. But that’s avoidance which can legitimately be protested against – but you argue otherwise
You are, as usual, way out of your depth – and offered gratuitous abuse as a result aimed at those who clearly know a lot more than you
That was my point and you have proved it for me
Please don’t bother to comment again – my usual policy of blocking your comments precisely because of that abuse you promote will apply
I guess I should ask those who know more than I do then: is that the definition of investment in tax? Is thin capitalisation widely acknowledged as tax abuse? (GM traded for a number of years with a negative equity didn\’t it? Is that tax abuse? What about commercial or rental property where only a 10-20% deposit is used?) And isn\’t it just great that I\’m banned from commenting further on a post which is actually about me?