Not all that surprising, Ritchie manages to misunderstand most things.
As a private Swiss-based company, the tax charges in the trading business are borne by its employees. The partners – about 485 employees – accumulate tax liabilities during their work career and pay them when they cash their shares at retirement as income tax.
So, the reason that Glencore doesn\’t pay much corporation tax is because it\’s not taxed as a corporation. It\’s taxed as a partnership, an LLP if you like, with a deferral available to the partners who are liable for the tax.
Absent that deferral part, it\’s taxed in exactly the same was that Murphy Deeks Nolan was when Ritchie was running it. Profits are assigned to the partners, the partners pay tax on those profits as if they are the partners\’ incomes.
All very simple and nothing to get upset about.
It was due to to the fact that Switzerland let them trade virtually tax free, providing a wholly artificial competitive advantage.
Oh, really? Did Murphy, Deeks, Nolan trade virtually tax free? Wouldn\’t be the first time Ritchie has ranted about tax rules that he himself has used of course but I rather think that wasn\’t the case. It\’s just that partnerships are not taxed as corporations, they\’re taxed as partnerships.
Who has suffered from this? Well, you have. Prices are too high as a result of the actions of this monopolist.
Gosh, that\’s innovative. The absence of taxation leads to higher prices to consumers? Can\’t quite see it myself I have to admit.
Who else has suffered? Undoubtedly the poorest countries in the world have, who have not enjoyed prices they should have been paid if a freeer market had existed.
My word, another innovative theory. That the absence of taxation leads to lower prices to producers.
And let’s note: this is not the result of free market action. This is the result of state subsidy. The Swiss state chose to subsidise Glencore by way of not charging it to tax that it would have been charged elsewhere.
No, Glencore itself is paying tax as if it were a small accounting partnership in Wandsworth. You know, it\’s the partners who pay the tax, not Glencore? Like Mr Murphy did at Murphy Deeks Nolan?
Agreed that the partners themselves are getting a deferral, but Glencore ain\’t.
The rest of Ritchie\’s rant is just that, a rant based on Our Favourite Retired Accountant not understanding the tax system he\’s complaining about.
BTW, I\’ve said this before: I hold no candle for Glencore, wouldn\’t trade with them if you paid me to do so. But that Ritchie can be wronger than Glencore is a surprising fact of life.