Paradise Papers (& Panama Papers)
Comments
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It doesn't, but tax collection costs money and is paid for from revenues so they should be tackling the issues where they get the greatest return on their efforts. 2 in 3 self-employed people under report on their self assessment, for example.Rick Chasey wrote:Not entirely sure the SME tax issue is relevant to the paradise papers and offshore tax avoidance.
And I don’t really see why one makes the other ok.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
Stevo 666 wrote:
It is perfectly acceptable for third parties to charge for IP so why would it not be valid tax deductible cost for intra group transactions provided it is done at arms length?john80 wrote:Maybe a change is required to tax law to remove IP costs as a cost for tax purposes. Sure allow companies to protect their IP from theft or copy in a legal sense. This is blatant profit shifting in the case of Starbucks. When your IP covers how you serve coffee from a machine that is not even your design you are taking the wee-wee.
The reality of Starbucks offer to the UK consumer sums up this thread. We all know they are not interested in Britain or its population through their tax structure but a significant number of idiots in Britain still spend their money there. Christ they could have Jimmy saville serving the customers and they would probably still line up for it whilst being all passive aggressive.
Also tax authorities are happy to tax IP income, so do you think it would be fair to deny a deduction for IP expenses?
There are cases where a party truly lends IP to an another party. An example of this is Ford licensing its heated windscreen to other car manufacturers to allow as an option in their cars. For this Ford receives a royalty payment and avoids legal disputes with other makers who would seek to circumvent their patent on this product. The difference with this is that Ford and Volkswagen are two corporations trading IP between themselves. In the case of Starbucks they are all the same entity and this brings the system into disrepute. It is this use of the rules as they stand that leads to the conclusion that it is not healthy for nation states to conduct this type of system. If it was removed as a tax deductible expense then genuine businesses could still trade IP however the national market in which the IP was used and therefore profit generated would gain accordingly. Do I support the view that company of X nation IP should allow it to make profits on the back of nation Y's population whilst minimising tax in this manner then the answer is no. A business could still deduct the costs of IP creation within their own nation for creating the product or service in the first place but when they license this across national borders then fees they choose to apply do not reduce the corporation tax payable in this separate national entity making the profit. In the grand scheme of things this is not a big deal to a corporation making profit given current low corporations tax levels in the UK anyway.0 -
https://ftalphaville.ft.com/2017/11/16/ ... -payments/The latest revelations about offshore tax havens have renewed the perception that the rich and powerful are able to avoid tax and escape scrutiny, but there is another problem: they distort the UK’s balance of payments data.
The UK ran a current account deficit of 5.9 per cent of gross domestic product in 2016, the biggest of any country in the G7. The next biggest deficit of 3.3 per cent of GDP belonged to Canada.
To fund this current account deficit the UK relies on inflows of investment. In effect, the UK sells assets to pay for the import of goods.
This means the UK, in Mark Carney’s memorable phrase, relies on the “kindness of strangers” to fund its current level of living standards. But just how strange are these strangers really?But Gabriel Zucman, an economist who specialises in offshore tax havens estimates that about half a trillion pounds of UK wealth, equivalent to 16.3 per cent of UK national income, are hidden in tax havens. Much of this, he believes, ends up in Luxembourg mutual funds via the Swiss bank accounts of Caribbean shell companies.
If this half a trillion pounds made the average return on UK investment abroad of 1.7 per cent, it would increase the UK’s foreign earnings by £8.5bn. If, in fact, it is invested in the UK and earns the 2.3 per cent average return on foreign investment into the country, it would increase them by £11.5bn.
Either way that would put a sizeable dent in the UK’s total primary income deficit of £51bn, and suggests that though the UK is dependent on strangers, some of them are closer to home than we think.0 -
Not sure I entirely follow that, but it would seem to be a separate issue from the tax gap.Rick Chasey wrote:https://ftalphaville.ft.com/2017/11/16/2195845/dont-be-a-stranger-offshore-finance-and-the-uks-balance-of-payments/The latest revelations about offshore tax havens have renewed the perception that the rich and powerful are able to avoid tax and escape scrutiny, but there is another problem: they distort the UK’s balance of payments data.
The UK ran a current account deficit of 5.9 per cent of gross domestic product in 2016, the biggest of any country in the G7. The next biggest deficit of 3.3 per cent of GDP belonged to Canada.
To fund this current account deficit the UK relies on inflows of investment. In effect, the UK sells assets to pay for the import of goods.
This means the UK, in Mark Carney’s memorable phrase, relies on the “kindness of strangers” to fund its current level of living standards. But just how strange are these strangers really?But Gabriel Zucman, an economist who specialises in offshore tax havens estimates that about half a trillion pounds of UK wealth, equivalent to 16.3 per cent of UK national income, are hidden in tax havens. Much of this, he believes, ends up in Luxembourg mutual funds via the Swiss bank accounts of Caribbean shell companies.
If this half a trillion pounds made the average return on UK investment abroad of 1.7 per cent, it would increase the UK’s foreign earnings by £8.5bn. If, in fact, it is invested in the UK and earns the 2.3 per cent average return on foreign investment into the country, it would increase them by £11.5bn.
Either way that would put a sizeable dent in the UK’s total primary income deficit of £51bn, and suggests that though the UK is dependent on strangers, some of them are closer to home than we think.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
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Just because a transaction is intra-group does not mean that it is not valid or genuine: as I said above, what matters is that these are at arms length. We already have pretty extensive transfer pricing rules that allow UK and other tax authorities to deny part or even all of the cost of intra-group transactions of any type including IP if the price is not arms length or the transaction not genuine.john80 wrote:Stevo 666 wrote:
It is perfectly acceptable for third parties to charge for IP so why would it not be valid tax deductible cost for intra group transactions provided it is done at arms length?john80 wrote:Maybe a change is required to tax law to remove IP costs as a cost for tax purposes. Sure allow companies to protect their IP from theft or copy in a legal sense. This is blatant profit shifting in the case of Starbucks. When your IP covers how you serve coffee from a machine that is not even your design you are taking the wee-wee.
The reality of Starbucks offer to the UK consumer sums up this thread. We all know they are not interested in Britain or its population through their tax structure but a significant number of idiots in Britain still spend their money there. Christ they could have Jimmy saville serving the customers and they would probably still line up for it whilst being all passive aggressive.
Also tax authorities are happy to tax IP income, so do you think it would be fair to deny a deduction for IP expenses?
There are cases where a party truly lends IP to an another party. An example of this is Ford licensing its heated windscreen to other car manufacturers to allow as an option in their cars. For this Ford receives a royalty payment and avoids legal disputes with other makers who would seek to circumvent their patent on this product. The difference with this is that Ford and Volkswagen are two corporations trading IP between themselves. In the case of Starbucks they are all the same entity and this brings the system into disrepute. It is this use of the rules as they stand that leads to the conclusion that it is not healthy for nation states to conduct this type of system. If it was removed as a tax deductible expense then genuine businesses could still trade IP however the national market in which the IP was used and therefore profit generated would gain accordingly. Do I support the view that company of X nation IP should allow it to make profits on the back of nation Y's population whilst minimising tax in this manner then the answer is no. A business could still deduct the costs of IP creation within their own nation for creating the product or service in the first place but when they license this across national borders then fees they choose to apply do not reduce the corporation tax payable in this separate national entity making the profit. In the grand scheme of things this is not a big deal to a corporation making profit given current low corporations tax levels in the UK anyway.
Your proposal would distort tax across borders as groups would no charge across the group reasonable share IP - so locations where IP sits would pay too little tax and other places which escape a charge pay too much.
More than that however is the pretty fundamental principle (accepted in tax treaties all around the world) that there should not be double taxation of profits - so put simply, if something is taxable in one country, it should be deductible to the same extent in the other. Likewise, if not deductible in one country it should be tax free in the other. This is why the Mutual Agreement Procedure is made available by tax authorities in the vast majority of the world to ensure that there is symmetry of treatment.
So in short, your idea wouldn't work."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
You haven't commented yet on my Groups charging of IP out to overseas territories to improve the UK BOP (and tax revenues).Rick Chasey wrote:It is; it's looking at the BOP."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
In my experience they usually offer a discount for cash. I'm sure it's to do with cash flowrjsterry wrote:Stevo 666 wrote:
Pressuring? I don't remember ever paying anyone in cash and putting pressure on them not to declare the VAT.rjsterry wrote:
Sure, but pressuring someone else to commit tax fraud so that you can save some money is pretty low in my book.Stevo 666 wrote:Nothing wrong with paying your builder in cash - it's the builder not declaring the VAT that's the problem
Cash transactions are still pretty widespread. I went down to the local chippy the other day, bought fish and chips and paid cash - does make me an accessory to tax evasion? :roll:
It's not the paying cash itself, it's the telling a builder he needs to offer a substantial discount as he'll be paid in cash. I'm not suggesting this absolves the builder, but expecting it to be offered as an option is a bit much. "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
^^^rjsterry wrote:
It doesn't, but tax collection costs money and is paid for from revenues so they should be tackling the issues where they get the greatest return on their efforts. 2 in 3 self-employed people under report on their self assessment, for example.Rick Chasey wrote:Not entirely sure the SME tax issue is relevant to the paradise papers and offshore tax avoidance.
And I don’t really see why one makes the other ok.
Agree completely. It's about prioritisation of limited resources, not moralising."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
They aren't but the end effect is the same - reduced tax revenue. Except that failure to take reasonable care, legal interpretation, black economy etc cause materially larger tax revenue losses than avoidance - see my comment above about prioritisation and limited resources.mamba80 wrote:rjsterry wrote:A bit of a review of the criticism of the HMRC's figures here
https://fullfact.org/economy/tax-gap/
The hidden economy seems to be the biggest area of contention (perhaps not surprisingly), and as you might expect, Mr Murphy thinks that multi nationals are avoiding a lot more than the HMRC estimate.
Did think the same when i first read the HMRCs figures, public body charged with collecting tax, says its doing a good job...... also, when does "failure to take reasonable care" or "legal interpretation" became Avoidance? and would nt a properly funded and staffed HMRC be more able to check things like this a little better?"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Stevo 666 wrote:
^^^rjsterry wrote:
It doesn't, but tax collection costs money and is paid for from revenues so they should be tackling the issues where they get the greatest return on their efforts. 2 in 3 self-employed people under report on their self assessment, for example.Rick Chasey wrote:Not entirely sure the SME tax issue is relevant to the paradise papers and offshore tax avoidance.
And I don’t really see why one makes the other ok.
Agree completely. It's about prioritisation of limited resources, not moralising.
It's not mutually exclusive.
It's not like you can look at one without the other.
Pure whataboutism.0 -
Rick Chasey wrote:Stevo 666 wrote:
^^^rjsterry wrote:
It doesn't, but tax collection costs money and is paid for from revenues so they should be tackling the issues where they get the greatest return on their efforts. 2 in 3 self-employed people under report on their self assessment, for example.Rick Chasey wrote:Not entirely sure the SME tax issue is relevant to the paradise papers and offshore tax avoidance.
And I don’t really see why one makes the other ok.
Agree completely. It's about prioritisation of limited resources, not moralising.
It's not mutually exclusive.
It's not like you can look at one without the other.
Pure whataboutism.
Who said they were mutually exclusive? I'm sure there's an offshore team at HMRC. But I'd hope there is a bigger team chasing dodged payroll taxes.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
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Stevo 666 wrote:
Just because a transaction is intra-group does not mean that it is not valid or genuine: as I said above, what matters is that these are at arms length. We already have pretty extensive transfer pricing rules that allow UK and other tax authorities to deny part or even all of the cost of intra-group transactions of any type including IP if the price is not arms length or the transaction not genuine.john80 wrote:Stevo 666 wrote:
It is perfectly acceptable for third parties to charge for IP so why would it not be valid tax deductible cost for intra group transactions provided it is done at arms length?john80 wrote:Maybe a change is required to tax law to remove IP costs as a cost for tax purposes. Sure allow companies to protect their IP from theft or copy in a legal sense. This is blatant profit shifting in the case of Starbucks. When your IP covers how you serve coffee from a machine that is not even your design you are taking the wee-wee.
The reality of Starbucks offer to the UK consumer sums up this thread. We all know they are not interested in Britain or its population through their tax structure but a significant number of idiots in Britain still spend their money there. Christ they could have Jimmy saville serving the customers and they would probably still line up for it whilst being all passive aggressive.
Also tax authorities are happy to tax IP income, so do you think it would be fair to deny a deduction for IP expenses?
There are cases where a party truly lends IP to an another party. An example of this is Ford licensing its heated windscreen to other car manufacturers to allow as an option in their cars. For this Ford receives a royalty payment and avoids legal disputes with other makers who would seek to circumvent their patent on this product. The difference with this is that Ford and Volkswagen are two corporations trading IP between themselves. In the case of Starbucks they are all the same entity and this brings the system into disrepute. It is this use of the rules as they stand that leads to the conclusion that it is not healthy for nation states to conduct this type of system. If it was removed as a tax deductible expense then genuine businesses could still trade IP however the national market in which the IP was used and therefore profit generated would gain accordingly. Do I support the view that company of X nation IP should allow it to make profits on the back of nation Y's population whilst minimising tax in this manner then the answer is no. A business could still deduct the costs of IP creation within their own nation for creating the product or service in the first place but when they license this across national borders then fees they choose to apply do not reduce the corporation tax payable in this separate national entity making the profit. In the grand scheme of things this is not a big deal to a corporation making profit given current low corporations tax levels in the UK anyway.
Your proposal would distort tax across borders as groups would no charge across the group reasonable share IP - so locations where IP sits would pay too little tax and other places which escape a charge pay too much.
More than that however is the pretty fundamental principle (accepted in tax treaties all around the world) that there should not be double taxation of profits - so put simply, if something is taxable in one country, it should be deductible to the same extent in the other. Likewise, if not deductible in one country it should be tax free in the other. This is why the Mutual Agreement Procedure is made available by tax authorities in the vast majority of the world to ensure that there is symmetry of treatment.
So in short, your idea wouldn't work.
Isn't Germany about to disallow it?0 -
Rick Chasey wrote:It's not relevant to the discussion, really/.
Eh? The OP and various other posts have suggested that the existence of tax havens is responsible vast losses to the exchequer in tax revenue and increasing global and national inequality. If the amount of tax revenue lost through offshore accounting is actually relatively small (as a proportion of the tax gap) and other things are far more significantly depriving the exchequer, then that is completely relevant.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
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Do we need to talk to Rick about proportions?rjsterry wrote:Rick Chasey wrote:It's not relevant to the discussion, really/.
Eh? The OP and various other posts have suggested that the existence of tax havens is responsible vast losses to the exchequer in tax revenue and increasing global and national inequality. If the amount of tax revenue lost through offshore accounting is actually relatively small (as a proportion of the tax gap) and other things are far more significantly depriving the exchequer, then that is completely relevant.
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
No general disallowance. Rules only bite in specific circumstances and on a sliding scale.TheBigBean wrote:Isn't Germany about to disallow it?"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
There are teams handling both areas. Prioritisation is not black and white as most people know.rjsterry wrote:Rick Chasey wrote:Stevo 666 wrote:
^^^rjsterry wrote:
It doesn't, but tax collection costs money and is paid for from revenues so they should be tackling the issues where they get the greatest return on their efforts. 2 in 3 self-employed people under report on their self assessment, for example.Rick Chasey wrote:Not entirely sure the SME tax issue is relevant to the paradise papers and offshore tax avoidance.
And I don’t really see why one makes the other ok.
Agree completely. It's about prioritisation of limited resources, not moralising.
It's not mutually exclusive.
It's not like you can look at one without the other.
Pure whataboutism.
Who said they were mutually exclusive? I'm sure there's an offshore team at HMRC. But I'd hope there is a bigger team chasing dodged payroll taxes."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Stevo 666 wrote:
Do we need to talk to Rick about proportions?rjsterry wrote:Rick Chasey wrote:It's not relevant to the discussion, really/.
Eh? The OP and various other posts have suggested that the existence of tax havens is responsible vast losses to the exchequer in tax revenue and increasing global and national inequality. If the amount of tax revenue lost through offshore accounting is actually relatively small (as a proportion of the tax gap) and other things are far more significantly depriving the exchequer, then that is completely relevant.
Sure, but one is a discussion about tax havens, which is what the panama papers are about.
They're not really about builders being paid cash-in-hand to dodge tax are they?0 -
Rick Chasey wrote:https://www.bloomberg.com/news/features/2017-11-15/the-final-days-of-a-tax-haven
bloomberg feature on a smaller tax haven.
Only skimmed a bit of that on my phone, but I posted before that I was sceptical about what the small island havens got out of the deal. You have to wonder why they have no IT or CT at all, when if they were merely low rates, they cold still attract business, but also have better public finances.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
No, its about the proportions of HMRC resources going to address different areas of tax loss, which as I and RJS have patiently explained already, should really be in proportion to the expected yield. As explained before, avoidance is a relatively small part of that loss and bigger yields can be had in the other areas in the graphic that was posted above.Rick Chasey wrote:Stevo 666 wrote:
Do we need to talk to Rick about proportions?rjsterry wrote:Rick Chasey wrote:It's not relevant to the discussion, really/.
Eh? The OP and various other posts have suggested that the existence of tax havens is responsible vast losses to the exchequer in tax revenue and increasing global and national inequality. If the amount of tax revenue lost through offshore accounting is actually relatively small (as a proportion of the tax gap) and other things are far more significantly depriving the exchequer, then that is completely relevant.
Sure, but one is a discussion about tax havens, which is what the panama papers are about.
They're not really about builders being paid cash-in-hand to dodge tax are they?
Just because you have a chip on your shoulder about big corporates etc doesn't mean that HMRC should prioritise them above other areas."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Stevo 666 wrote:
No general disallowance. Rules only bite in specific circumstances and on a sliding scale.TheBigBean wrote:Isn't Germany about to disallow it?
Which means it is possible without revisiting 100+ double tax treaties.0 -
They can do it without revisiting double tax treaties, but related companies that receive the IP income in their tax treaty partner countries will have valid claims under the avoidance of double taxation clauses in the tax treaties.TheBigBean wrote:Stevo 666 wrote:
No general disallowance. Rules only bite in specific circumstances and on a sliding scale.TheBigBean wrote:Isn't Germany about to disallow it?
Which means it is possible without revisiting 100+ double tax treaties."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Stevo 666 wrote:
They can do it without revisiting double tax treaties, but related companies that receive the IP income in their tax treaty partner countries will have valid claims under the avoidance of double taxation clauses in the tax treaties.TheBigBean wrote:Stevo 666 wrote:
No general disallowance. Rules only bite in specific circumstances and on a sliding scale.TheBigBean wrote:Isn't Germany about to disallow it?
Which means it is possible without revisiting 100+ double tax treaties.
The point is that some half-baked ideas dreamt up whilst in the bath can work.0 -
Stevo 666 wrote:
No, its about the proportions of HMRC resources going to address different areas of tax loss, which as I and RJS have patiently explained already, should really be in proportion to the expected yield. As explained before, avoidance is a relatively small part of that loss and bigger yields can be had in the other areas in the graphic that was posted above.Rick Chasey wrote:Stevo 666 wrote:
Do we need to talk to Rick about proportions?rjsterry wrote:Rick Chasey wrote:It's not relevant to the discussion, really/.
Eh? The OP and various other posts have suggested that the existence of tax havens is responsible vast losses to the exchequer in tax revenue and increasing global and national inequality. If the amount of tax revenue lost through offshore accounting is actually relatively small (as a proportion of the tax gap) and other things are far more significantly depriving the exchequer, then that is completely relevant.
Sure, but one is a discussion about tax havens, which is what the panama papers are about.
They're not really about builders being paid cash-in-hand to dodge tax are they?
Just because you have a chip on your shoulder about big corporates etc doesn't mean that HMRC should prioritise them above other areas.
The panama papers are about the proportions of HMRC resources going to address different tax areas?
WTF? News to me.0 -
The success rate is low, as demonstrated by this thread.TheBigBean wrote:Stevo 666 wrote:
They can do it without revisiting double tax treaties, but related companies that receive the IP income in their tax treaty partner countries will have valid claims under the avoidance of double taxation clauses in the tax treaties.TheBigBean wrote:Stevo 666 wrote:
No general disallowance. Rules only bite in specific circumstances and on a sliding scale.TheBigBean wrote:Isn't Germany about to disallow it?
Which means it is possible without revisiting 100+ double tax treaties.
The point is that some half-baked ideas dreamt up whilst in the bath can work.
As for the German plan, its nothing new - countries including the UK have been applying withholding taxes to payments to non-treaty countries on things like royalties, interest and dividends for years. As that generally isn't fully creditable in low tax jurisdictions, it ends up being a tax on this income. I mentioned this several pages back as one of the protection mechanisms used, together with disclosures, information exchange, extra-territorial taxation etc which some on here seem unable to grasp."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
OECD has just given Jersey the top ranking for tax transparency - better than that of the US, uk, most of Europe.Postby team47b » Sun Jun 28, 2015 11:53 am
De Sisti wrote:
This is one of the silliest threads I've come across.
Recognition at last Matthew, well done!, a justified honoursmithy21 wrote:
He's right you know.0 -
Pah, away with you and your factsMatthewfalle wrote:OECD has just given Jersey the top ranking for tax transparency - better than that of the US, uk, most of Europe. "I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0
