Even yet more Ritchie

The FT has promoted the unitary model of taxation this week that I and others in the Tax Justice Network have long promoted. This allocates group profit to countries using a formula based on where the destination of sales is, where people are employed and where real physical assets are. These are the real and only drivers of economic value. This reform is now essential if we are to demand that global capital is to be accountable locally for tax.

And we must have country by country reporting in accounting as well. We have to know where corporations are and what they do, and how much tax they pay in each and every country in which they trade. Nothing else will also hold companies to account – and force them to change their behaviour under the glare of pubic, investor and regulator (including tax inspector) scrutiny.

If you have unitary taxation then you don\’t need country by country reporting of profit. For you\’re not going to be using country by country profit to allocate taxation, are you?

Tosspot.

8 thoughts on “Even yet more Ritchie”

  1. C-by-C reporting is, I think, about transparency.

    You can calculate the tax charges however you fancy.. but that doesn’t do anything to enhance the company disclosure.

    As a potential investor it’s actually something I’d be far more interested in seeing than most of the guff that currently goes into annual reports.

  2. The FT did NOT promote unitary taxation. It mentioned it as a possible alternative to taxing profits where they arise but pointed out various difficulties such as the total lack of agreement on the formulae to be used.

  3. it’s so tiresome…Corporation Tax is not a big earner for the Government approx £43bn out of the total tax receipts of £437bn fopr 2011-12; it is already ridiculously complicated and, every year, pages more legislation get added to the deadweight to clarify how to gouge companies that have overseas subsidiaries or holding companies. Yet numpties such as Murphy think that the solution is to add yet more administrative deadweight. Business rates collect almost as much tax, without all the tangled legislation and without the same potential for loopholes. Why not just simplify Corporation tax to, say, 10% of accounting profit and, thus make it worthwhile for multinational groups to stop their complex networks of overseas subsidiaries?

  4. @ diogenes
    Because you could not then use tweaks to the rules on corporation tax as an instrument of economic policy.
    It is impossible to persuade HM Treasury that this would be a good idea without putting every single mandarin in a padded cell and confiscating their belt, braces, pocket knives, pieces of string even shoelaces – and then you would be challenged by some mandarina who had made a tactical decision to wear tights without knickers that it was sexual assault to confiscate the tights .

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