Tax heist of the century?

UndercoverElephant

http://www.guardian.co.uk/commentisfree ... of-century

There needs to be some serious outcry about this. We are being properly shafted by this tax change.

rick_chasey

UndercoverElephant wrote:

http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

We are being properly shafted by this tax change.

Unless you work in the City...

bails87

Tories, innit..... :roll:

DonDaddyD

This Government needs to be stopped.

<< leaves >>

W1

Monibot in the Guardian - what a surpirse.

For balance, I'll try and dig something up from some idiot at the Daily Mail and we can then ooh and ahh about that too.

el_presidente

The "government" is irrelevant. The banks run the country now. Blair works for JP Morgan, Mandelson for Lazards. Guess who Cameron and Osborne will be working for when they leave government?

MonkeyMonster

W1 wrote:

Monibot in the Guardian - what a surpirse.

For balance, I'll try and dig something up from some idiot at the Daily Mail and we can then ooh and ahh about that too.

He's written the piece but the interpretation and understanding is by another ex-tax man. If this new law isn't going to be used like this then good. What balance can anyone give if he is however correct?

Sewinman

Brought to you by Lord Ashcroft.

UndercoverElephant

W1 wrote:

Monibot in the Guardian - what a surpirse.

For balance, I'll try and dig something up from some idiot at the Daily Mail and we can then ooh and ahh about that too.

Yes it's Monibot, yes it's the Guardian. However, is the legislation, as written going through?

rick_chasey

Osbourne just announced an £800 million tax banking profits.

bails87

Rick Chasey wrote:

Osbourne just announced an £800 million tax banking profits.

Has he got the bunting out for the announcement of this change too? I wonder what the net effect will be?

Stevo_666

Well of course on this forum, anything written by the Guardian is of course, gospel. And naturally they have no political bias, do they. :roll:

It's best to understand the issue first before getting your placards out. I think you'll find that all they are doing is aligning the treatment of overseas profits in branches of UK companies wth the treatment of overseas profits earned in companies owned by UK companies. And as for the statement that we are the only country apart from Switzerland to do this - simply not true.

As for the reduction in corporate tax rates - old news and playing catch up with many of our competitors. (A few examples: China 25%; Holland 25.5%). But there's so much more to it that the headline rate.

UndercoverElephant

Stevo 666 wrote:

Well of course on this forum, anything written by the Guardian is of course, gospel. And naturally they have no political bias, do they. :roll:

It's best to understand the issue first before getting your placards out. I think you'll find that all they are doing is aligning the treatment of overseas profits in branches of UK companies wth the treatment of overseas profits earned in companies owned by UK companies. And as for the statement that we are the only country apart from Switzerland to do this - simply not true.

As for the reduction in corporate tax rates - old news and playing catch up with many of our competitors. (A few examples: China 25%; Holland 25.5%). But there's so much more to it that the headline rate.

Switzerland and ourselves will be the only countries which allow money which has had no tax paid on it to come into the country tax-free. Thus, if you were to tunnel foreign earnings through a tax-haven subsidiary, you pay no tax at all. As such, what would be the point in doing anything in the UK, other than having a holding company?

Sure, the headline rate is not an issue, but the above most certainly should be.

This exemption applies solely to medium to large companies, of course.

kurako

Look on the bright side. The Inland Revenue will save money since they no longer have to go through the rigmarole of chasing large multinationals through the courts. Trebles all round as The Eye would say (but only if you're a corporate fat cat or tax consultant).

MonkeyMonster

Stevo 666 wrote:

Well of course on this forum, anything written by the Guardian is of course, gospel. And naturally they have no political bias, do they. :roll:

It's best to understand the issue first before getting your placards out. I think you'll find that all they are doing is aligning the treatment of overseas profits in branches of UK companies wth the treatment of overseas profits earned in companies owned by UK companies. And as for the statement that we are the only country apart from Switzerland to do this - simply not true.

As for the reduction in corporate tax rates - old news and playing catch up with many of our competitors. (A few examples: China 25%; Holland 25.5%). But there's so much more to it that the headline rate.

Heh heh, this place has more than a few placard waving members of all parties.

So you have no qualms about it and it won't mean a reduction in the amount of tax that goes into UK coffers? Who else does this?

I'm asking not poking know the answers btw. Seems to me its either basically true and if so wtf. Or its not and that guy will lose all credibility for such a piece [surely] and so why write it anyway?

Or am I being too hopeful of the human race again and I should take to wearing a cestus when cycling to hit all people who inconvenience me?

Jay dubbleU

I can't understand why people are surprised at this - we all knew Cameron was more right wing than Thatcher but people still voted for him - he and his cronies are going to look after themselves

Initialised

UndercoverElephant wrote:

Stevo 666 wrote:

Well of course on this forum, anything written by the Guardian is of course, gospel. And naturally they have no political bias, do they. :roll:

It's best to understand the issue first before getting your placards out. I think you'll find that all they are doing is aligning the treatment of overseas profits in branches of UK companies wth the treatment of overseas profits earned in companies owned by UK companies. And as for the statement that we are the only country apart from Switzerland to do this - simply not true.

As for the reduction in corporate tax rates - old news and playing catch up with many of our competitors. (A few examples: China 25%; Holland 25.5%). But there's so much more to it that the headline rate.

Switzerland and ourselves will be the only countries which allow money which has had no tax paid on it to come into the country tax-free. Thus, if you were to tunnel foreign earnings through a tax-haven subsidiary, you pay no tax at all. As such, what would be the point in doing anything in the UK, other than having a holding company?

Sure, the headline rate is not an issue, but the above most certainly should be.

This exemption applies solely to medium to large companies, of course.

Placards, how about petrol bombs?

Stevo_666

UndercoverElephant wrote:

Stevo 666 wrote:

Well of course on this forum, anything written by the Guardian is of course, gospel. And naturally they have no political bias, do they. :roll:

It's best to understand the issue first before getting your placards out. I think you'll find that all they are doing is aligning the treatment of overseas profits in branches of UK companies wth the treatment of overseas profits earned in companies owned by UK companies. And as for the statement that we are the only country apart from Switzerland to do this - simply not true.

As for the reduction in corporate tax rates - old news and playing catch up with many of our competitors. (A few examples: China 25%; Holland 25.5%). But there's so much more to it that the headline rate.

Switzerland and ourselves will be the only countries which allow money which has had no tax paid on it to come into the country tax-free. Thus, if you were to tunnel foreign earnings through a tax-haven subsidiary, you pay no tax at all. As such, what would be the point in doing anything in the UK, other than having a holding company?

Sure, the headline rate is not an issue, but the above most certainly should be.

This exemption applies solely to medium to large companies, of course.

Tax haven does not mean no tax - not in UK law anyway. The threshold for the UK is 3/4 of the UK statutory rate (currently 28%) so at the moment 21%. There are quite a few countries that are not your sunny tropical island type places that have rates below 21% - such as Taiwan or Russia.

Also there are the usual anti-abuse safeguard which will continuie to be in place to stop the usual rubbish like stuffing a 'brass plaque' branch in the Cayman Islands full of cash.

There seems not a lot wrong to me that as long as you are not artificially diverting profits from the UK (that what the CFC rules are there to stop), then there's nothing wrong in the principle that you only get taxed on your profits once.

They have also at least with the rates change recognised that some multinationals do base investment decisions partly on tax and that a lower % of something is better than a higher % of nothing...the Guardian has never 'got' that.

As usual, you can't expect journos to do a detailed analysis - even if they did understand it, they've got a story to sell.

CiB

Good to see the comments under that Grauniad piece are as mad as any pile of anti-cycling equivalents. Why bother investigating facts, or the underlying reasoning for the change? Shucks - a nice neutral friendly journo has laid out all the facts, no ommisions or slants on it, just the facts, for the flaming torches & pitch-forks brigade to charge in with their mindless hang-the-govt viewpoints. They're welcome to them.

Marvellous.

dhope

Initialised wrote:

UndercoverElephant wrote:

Stevo 666 wrote:

Well of course on this forum, anything written by the Guardian is of course, gospel. And naturally they have no political bias, do they. :roll:

It's best to understand the issue first before getting your placards out. I think you'll find that all they are doing is aligning the treatment of overseas profits in branches of UK companies wth the treatment of overseas profits earned in companies owned by UK companies. And as for the statement that we are the only country apart from Switzerland to do this - simply not true.

As for the reduction in corporate tax rates - old news and playing catch up with many of our competitors. (A few examples: China 25%; Holland 25.5%). But there's so much more to it that the headline rate.

Switzerland and ourselves will be the only countries which allow money which has had no tax paid on it to come into the country tax-free. Thus, if you were to tunnel foreign earnings through a tax-haven subsidiary, you pay no tax at all. As such, what would be the point in doing anything in the UK, other than having a holding company?

Sure, the headline rate is not an issue, but the above most certainly should be.

This exemption applies solely to medium to large companies, of course.

Placards, how about petrol bombs?

Have you seen the price of petrol lately :shock: Can't even stage a good old fashioned riot on the cheap these days...

UndercoverElephant

Stevo 666 wrote:

Tax haven does not mean no tax - not in UK law anyway. The threshold for the UK is 3/4 of the UK statutory rate (currently 28%) so at the moment 21%. There are quite a few countries that are not your sunny tropical island type places that have rates below 21% - such as Taiwan or Russia.

Also there are the usual anti-abuse safeguard which will continuie to be in place to stop the usual rubbish like stuffing a 'brass plaque' branch in the Cayman Islands full of cash.

There seems not a lot wrong to me that as long as you are not artificially diverting profits from the UK (that what the CFC rules are there to stop), then there's nothing wrong in the principle that you only get taxed on your profits once.

They have also at least with the rates change recognised that some multinationals do base investment decisions partly on tax and that a lower % of something is better than a higher % of nothing...the Guardian has never 'got' that.

As usual, you can't expect journos to do a detailed analysis - even if they did understand it, they've got a story to sell.

from the draft proposal itself:

Da Government wrote:

2.16 The Government will extend the opt-in exemption regime for large and medium companies to all countries and territories, including those with which the UK has no tax treaty. The Government notes that this goes beyond the foreign branch exemption regimes of many other countries.

http://www.hm-treasury.gov.uk/d/corpora ... xation.pdf

Current rules may have a lower limit...

Sewinman

So it is basically true then?

unscarred

Absolutely useless article.

I read it this morning, and as an accountant I can honestly say it makes no sense to me. I really don't understand what he's saying is going to happen - he seems to be confusing at least three different types of tax and putting them together with a barrel load of outrage. I'm hoping Private Eye explain it better.

I would take it a lot more seriously if he'd posted a link to the proposed changes, but as it is it sounds more like "I don't understand all this finance stuff, but a bloke in the pub told me..."

UndercoverElephant

He has references on his website:

http://www.monbiot.com/archives/2011/02 ... oup-detat/

benpinnick

This sounds like a good plan to me. If you want to attract business, you need to be competitive. Companies like Google and Microsoft have been offshoring their profits using the double irish or dutch sandwich schemes (i.e. foreign branches as referred to in the Gruadnian) for years now, and its about time the UK got real.

We are a financial & intellectual services based economy, and we need to protect that. By lowering our domestic rates and cutting out the offshore rates the UK becomes a far more competitive place to be. Imagine you're company x saying where shall we be? In the UK where we get stung for 28% AND the difference on any overseas operations, or a UK where its 24% and we can keep our offshore benefits?

The whole theory of losing jobs is based on some whimsical notion that companies simply move to save money. Not true - some of the biggest corporations in the world do already do this and still keep huge, highly paid and highly skilled workforces in their domestic locations because of the skills, heritage and benefits that brings.

unscarred

Ah, UndercoverElephant posted a link, thank you!

a foreign branch is established by a UK company if it carries on part of its trade in another jurisdiction without establishing a separate trading subsidiary company there.

In contrast to the current rules for foreign branch taxation, dividend income from the foreign subsidiaries of a UK parent company is generally exempt from UK corporation tax (CT), following a change to the rules in 2009. As a result of this, exempting foreign branch profits will ensure greater alignment between the taxation of foreign branches and foreign subsidiaries.

So it's just bringing branches in line with subsidiaries, recognising a change made by Labour in 2009. It wasn't the end of the universe then, it won't be now.[/quote]

rjsterry

As a confirmed lefty Guardian reader, even I take Monbiot's stuff with a pinch of salt. Bottom line is what net effect will it have on UK tax receipts from medium-sized and large corporations - i.e. will we the government be even more short of money than they were? As Stevo 666 has some knowledge of this part of the world IIRC, what does he think?

rjsterry

Oops. Double post.

UndercoverElephant

@Unscarred - Except there's a lower limit with subsidiaries, to try to avoid tax havens being used. Not in this legislation.

unscarred

But there are specific anti-tax-avoidance clauses - 2.21 to 2.24.

The net result is this will probably result in a reduction in CT income, probably quite a small one (not many companies use branches) at least in the short term. Hawks would say it will increase income in the long-term by providing an impetus for growth, but that's really just conjecture.

Anyone know if Monbiot has ever criticised the way Guardian Media Group use Caymans based companies to avoid paying UK Corporation Tax? I'm fairly sure his mate at Private Eye could help him with that one, they've been covering it for ages!

Adlerhorst

I'll be brief on this (and I did not want my first post to be about tax), but suffice to say I know a fair bit about the topic as I have worked in the CT area for ten years now, and this article is without question the worst researched article I have ever read on the topic. It is actually worse than the private eye stuff on Vodafone (which missed the point massively as well).

All the branch exemption is doing is putting companies with overseas branches in the same place as had they had an overseas subsidiary. (i.e Dividends can be repatriated to the UK and not suffer additional tax in the UK), and also putting us in line with most of the rest of Europe who have a branch exemption.

Also, as ever, anti-avoidance legislation is in place to stop any flagrant abuse.

Also whilst I am not it any way a tory voter in any way shape or form, it should be noted that CT reform (which the branch exemption is a part of) was originally started under the last government, and the branch exemption idea has been kicking around for about two / three years now. To try and say this is a tory thing is utterly utterly wrong. Both parties were / are behind it.