The glory of Ritchibollocks

From the FT:

The best G8 outcome would be an international agreement on how to link tax bases to real economic activity and limit the creation of letterbox subsidiaries whose sole purpose is to locate the most profitable parts of businesses in low-tax jurisdictions – or in no jurisdiction at all.

In the short run, the UK could provide real leadership by backing a push for a common consolidated corporate tax base across the EU. Far from a thin end of the wedge of tax rate harmonisation, CCCTB can protect legitimate tax competition against claims of unfairness. The G8 should also advance the cause of the automatic exchange of tax information between governments, an essential tool for tax authorities to verify that democratically chosen tax structures are working.

Ritchie then tells us:

Spot on: unitary tax has to be the direction of travel.

Someone really ought to tell one of the UK\’s leading tax experts that a common consolidated corporate tax base across the EU is not the same thing as unitary taxation.


11 thoughts on “The glory of Ritchibollocks”

  1. Tim – why is it not unitary taxation? The EU CCCTB proposals were just that more or less. UK ha also had elements of unitary tax in the past, albeit pre 90s – for example we used to allocate investment income to UK branches of overseas life insurers on the basis of UK actuarial liabilities over worldwide actuarial liabilities (now replaced with an arm’s length basis).

    Tim adds: Because the CCCTB is a common method of working out what is a profit. Unitary taxation is a common way of allocating that profit to different tax jurisdictions. They are indeed different things.

  2. I think you may be confusing the Common Corporate Tax Base (CCTB) and the Common Consolidated Corporate Tax Base (CCCTB).

    The original CCTB proposal a few years ago was just to align how profits are calculated, but this then got expanded to the CCCTB, which adds the formulaic apportionment of the profits to the different jurisdictions.

    So to that extent the CCCTB a unitary tax, or at least as much of one as any regime that only applies to a small part of the world can be. CCTB isn’t.

  3. Of course, it doesn’t address minor things like how to deal with non-EU countries (for which we’d have to keep the current regime) or related parties which are not subsidiaries (for which we’d have to keep the current regime), or minority interests…

    Basically the proposal is to keep the transfer pricing model for dealing with people outside the EU and/or outside a group, and then layer a whole different regime over certain companies but not others. I can’t see how bringing in a whole new set of major mismatches in treatment is going to reduce tax avoidance, I have to say.

  4. And Unitary Taxation is not the same – very, very different in fact – as country-by-country reporting. I do like it when Ritchie is really on form and talks total, as opposed to partial, bollocks .

  5. the trouble is the our leaders – both PM and Chancellor – have no idea where this might go. Gordy and Balls wanted it to go into neo-Stalinism (they probably want to be humped by Putin). The whole panoply is scary. i want a currency where I can hold my wealth free from self-serving morons.

  6. Oh dear! leader of Conservative Party is tending to the Murphy side of the argument in big international conference ,despite all Timmy’s efforts to put the big corporations’ point of view on (not paying) tax. As a PAYEr , I am beginning to feels some schadenfreude, at long last.

  7. As a PAYEr , I am beginning to feels some schadenfreude, at long last.

    WTF has being a PAYer got to do with this? You get a regular income and have set allowances and these are reckoned up every month and tax paid in arrears. At the end of the year, or anytime if you so wish, you can declare any other income and/or allowances and pay more or get a tax refund. Generally speaking a PAYer has simple affairs and a simple life when it comes to tax.

    As a company you don’t have a regular income and settling the books every month would be a right nightmare as well as costing a small fortune to the company and tax man. Anyway, it wouldn’t make any difference as those allowances and other rules being complained about are still there so companies still wouldn’t make a profit if they don’t on an annual basis. Those companies that do make a regular profit pay ACT so they aren’t sitting on a year’s untaxed profits either.

    Furthermore PAYers don’t have the problem of being unpaid VAT collectors and settling that every 3 months.

  8. DCB Reed

    Actually our PM was talking on Sunday of having highly competitive tax rates. That is a million miles from thefuckwit position you and Ritchie have adopted.

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