LEAVE the Conservative Party and save your country!

rjsterry

rick_chasey said:

Stevo_666 said:

rick_chasey said:

Stevo_666 said:

kingstongraham said:

I think the important bit isn't the minimum tax rate.

There is so much more to tax than rates, but it is rates which grab the headlines. That's why Rick is getting so excited.

What do you think the important part is?

I'm not getting excited about the rate mentioned.

I'm excited at the idea that big economies are working together to try and close the tax haven loophole, by making corporate tax about where the economic activity occurs and not where the corporation decides to book the profit.

You clearly don't understand the issue. Companies cannot just 'book the profit' wherever they choose and there are existing controlled Foreign Company (CFC) regs to deal with that which I've already referred to above, ones which specifically have substance tests/look at location of economic activity etc and impose tax on the shareholder where these are not met. On top of this there are the transfer pricing regs which impose arms length requirements on all intra-group transactions.

What do you think is new here?

That is entirely what happens in practice. Anyone off the top of their head can name a bunch of companies that do this.

For example:

https://www.euronews.com/2021/05/04/amazon-paid-no-corporation-tax-in-europe-last-year-despite-record-44bn-sales-income

I'm not sure this gets us any further forward. We all know the stories.

rick_chasey

rjsterry said:

rick_chasey said:

Stevo_666 said:

rick_chasey said:

Stevo_666 said:

kingstongraham said:

I think the important bit isn't the minimum tax rate.

There is so much more to tax than rates, but it is rates which grab the headlines. That's why Rick is getting so excited.

What do you think the important part is?

I'm not getting excited about the rate mentioned.

I'm excited at the idea that big economies are working together to try and close the tax haven loophole, by making corporate tax about where the economic activity occurs and not where the corporation decides to book the profit.

You clearly don't understand the issue. Companies cannot just 'book the profit' wherever they choose and there are existing controlled Foreign Company (CFC) regs to deal with that which I've already referred to above, ones which specifically have substance tests/look at location of economic activity etc and impose tax on the shareholder where these are not met. On top of this there are the transfer pricing regs which impose arms length requirements on all intra-group transactions.

What do you think is new here?

That is entirely what happens in practice. Anyone off the top of their head can name a bunch of companies that do this.

For example:

https://www.euronews.com/2021/05/04/amazon-paid-no-corporation-tax-in-europe-last-year-despite-record-44bn-sales-income

I'm not sure this gets us any further forward. We all know the stories.

Sure. We have Mr Accountant here telling us black is white here though.

Anyway, the proposal seems to aimed at closing the tax haven loophole, at least, that's how *all* the reporting has it.

kingstongraham

One group unlikely to be adversely affected are tax specialists.

I don't understand why it doesn't mean any company that can, moves to a 15% (or whatever it comes down to) jurisdiction. What's in it for the USA or the UK with higher rates? Or is it just the differential is reduced, so it is less worth it?

elbowloh

You have to pay taxes in each country in which you are making turnover / profits

kingstongraham

elbowloh said:

You have to pay taxes in each country in which you are making turnover / profits

I think that's where the two proposals intertwine to make that happen. Going to be complicated but there should be no sympathy as they already have made it complicated to ensure as low tax as feasible.

pblakeney

kingstongraham said:

One group unlikely to be adversely affected are tax specialists.

Busier and quite a bit more effort involved?

Stevo_666

rick_chasey said:

^^ yup.

Global companies need global rules.

What part of 'they already have them' in my post above didn't you understand?

Stevo_666

john80 said:

Stevo_666 said:

rick_chasey said:

Stevo_666 said:

kingstongraham said:

I think the important bit isn't the minimum tax rate.

There is so much more to tax than rates, but it is rates which grab the headlines. That's why Rick is getting so excited.

What do you think the important part is?

I'm not getting excited about the rate mentioned.

I'm excited at the idea that big economies are working together to try and close the tax haven loophole, by making corporate tax about where the economic activity occurs and not where the corporation decides to book the profit.

You clearly don't understand the issue. Companies cannot just 'book the profit' wherever they choose and there are existing controlled Foreign Company (CFC) regs to deal with that which I've already referred to above, ones which specifically have substance tests/look at location of economic activity etc and impose tax on the shareholder where these are not met. On top of this there are the transfer pricing regs which impose arms length requirements on all intra-group transactions.

What do you think is new here?

The problem is that you don't have to look very hard to find companies paying low single digit taxes compared to their profits in the countries in which they operate and generated those profits. So if the rules are working so well then why is there so many examples of companies paying 1-5% tax rates on the profits in countries such as the UK. My limited company does not pay such a low rate so why is your low tax rate related to scale of the business is what all small to medium enterprises in the UK are asking.

Give me some real examples and I'll comment on them.

Stevo_666

rick_chasey said:

Stevo_666 said:

rick_chasey said:

Stevo_666 said:

kingstongraham said:

I think the important bit isn't the minimum tax rate.

There is so much more to tax than rates, but it is rates which grab the headlines. That's why Rick is getting so excited.

What do you think the important part is?

I'm not getting excited about the rate mentioned.

I'm excited at the idea that big economies are working together to try and close the tax haven loophole, by making corporate tax about where the economic activity occurs and not where the corporation decides to book the profit.

You clearly don't understand the issue. Companies cannot just 'book the profit' wherever they choose and there are existing controlled Foreign Company (CFC) regs to deal with that which I've already referred to above, ones which specifically have substance tests/look at location of economic activity etc and impose tax on the shareholder where these are not met. On top of this there are the transfer pricing regs which impose arms length requirements on all intra-group transactions.

What do you think is new here?

That is entirely what happens in practice. Anyone off the top of their head can name a bunch of companies that do this.

For example:

https://www.euronews.com/2021/05/04/amazon-paid-no-corporation-tax-in-europe-last-year-despite-record-44bn-sales-income

Show me how that supports your statement that companies can book profits where they like. There will be reasons for what happened so you need to look at the facts rather than assuming what the reasons are.

Stevo_666

rick_chasey said:

rjsterry said:

rick_chasey said:

Stevo_666 said:

rick_chasey said:

Stevo_666 said:

kingstongraham said:

I think the important bit isn't the minimum tax rate.

There is so much more to tax than rates, but it is rates which grab the headlines. That's why Rick is getting so excited.

What do you think the important part is?

I'm not getting excited about the rate mentioned.

I'm excited at the idea that big economies are working together to try and close the tax haven loophole, by making corporate tax about where the economic activity occurs and not where the corporation decides to book the profit.

You clearly don't understand the issue. Companies cannot just 'book the profit' wherever they choose and there are existing controlled Foreign Company (CFC) regs to deal with that which I've already referred to above, ones which specifically have substance tests/look at location of economic activity etc and impose tax on the shareholder where these are not met. On top of this there are the transfer pricing regs which impose arms length requirements on all intra-group transactions.

What do you think is new here?

That is entirely what happens in practice. Anyone off the top of their head can name a bunch of companies that do this.

For example:

https://www.euronews.com/2021/05/04/amazon-paid-no-corporation-tax-in-europe-last-year-despite-record-44bn-sales-income

I'm not sure this gets us any further forward. We all know the stories.

Sure. We have Mr Accountant here telling us black is white here though.

Anyway, the proposal seems to aimed at closing the tax haven loophole, at least, that's how *all* the reporting has it.

Nope, I'm schooling you in a complex subject that you don't understand very well.

Stevo_666

Dorset_Boy said:

The likes of Starbucks / Costa use their Luxembourg (or other very low corporate tax located companies) comapnies to create loans to their UK companies so the repayment costs offset any profits they generate in the UK. They copy this across the globe so create artifically low profits or losses in the higher taxed regimes and increased profits in the low tax regimes.
That is what Rick and many others want prevented (and I'm firmly in Rick's camp on this one).

Corporation tax works for national companies, but it doesn't work for global companies and as a result there isn't a level playing field.

As mentioned above the CFC and transfer pricing regs already cover the vast majority of this so it's hard to see how this will have a large impact beyond creating work for accountants. As I mentioned above, there a a fair bit of grandstanding and it was also tied up with the US/EU arguments over the EU pillar 1 proposals which the US felt was penalising the big tech companies (which are nearly all American).

It looks good for the headlines but a group of countries all of which have corporate tax rates above 15% agreeing that rates shouldn't be lower than 15% is not exactly a major achievement. Turning this into a Global cartel when quite a few smaller countries rely on tax competition so as not to be reliant on agriculture and tourism will be more interesting.

Stevo_666

kingstongraham said:

One group unlikely to be adversely affected are tax specialists.

I don't understand why it doesn't mean any company that can, moves to a 15% (or whatever it comes down to) jurisdiction. What's in it for the USA or the UK with higher rates? Or is it just the differential is reduced, so it is less worth it?

The rate differential is less but there will still be tax competition. And other taxes - CT is less that 10% of the total tax take but there is a disproportionate focus on it from the rule setters. Also there is more to it that the rate - the breadth of the base that is taxed for example, cash flow reliefs, credits for investment etc.

There are several factors in terms of where to locate operations, of which tax is often one.

rick_chasey

So Stevo is at odds with all reputable news outlets, and all the finance ministers of the G7?

https://www.ft.com/content/95dd0c00-7081-4890-bcef-b9642312db4d

https://www.bbc.co.uk/news/world-57368247

Why did they want to change the rules?
Governments have long grappled with the challenge of taxing global companies operating across many countries.

That challenge has grown with the boom in huge tech corporations like Amazon and Facebook.

At the moment companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.

That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere. This is legal and commonly done.

The deal aims to stop this from happening in two ways.

Firstly the G7 will aim to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

Secondly, they want a global minimum tax rate so as to avoid countries undercutting each other with low tax rates.

pangolin

We've entered a twilight zone where Rick is applauding the conservative chancellor and Stevo is coming dangerously close to criticising him.

rick_chasey

Stevo_666 said:

Dorset_Boy said:

The likes of Starbucks / Costa use their Luxembourg (or other very low corporate tax located companies) comapnies to create loans to their UK companies so the repayment costs offset any profits they generate in the UK. They copy this across the globe so create artifically low profits or losses in the higher taxed regimes and increased profits in the low tax regimes.
That is what Rick and many others want prevented (and I'm firmly in Rick's camp on this one).

Corporation tax works for national companies, but it doesn't work for global companies and as a result there isn't a level playing field.

As mentioned above the CFC and transfer pricing regs already cover the vast majority of this so it's hard to see how this will have a large impact beyond creating work for accountants. As I mentioned above, there a a fair bit of grandstanding and it was also tied up with the US/EU arguments over the EU pillar 1 proposals which the US felt was penalising the big tech companies (which are nearly all American).

It looks good for the headlines but a group of countries all of which have corporate tax rates above 15% agreeing that rates shouldn't be lower than 15% is not exactly a major achievement. Turning this into a Global cartel when quite a few smaller countries rely on tax competition so as not to be reliant on agriculture and tourism will be more interesting.

The thing is Stevo, we all can see what the firms are doing. SO when you say "transfer pricing regulations cover this" plainly they do not, as firms are paying zilch tax in countries where they have massive revenues.

rjsterry

rick_chasey said:

So Stevo is at odds with all reputable news outlets, and all the finance ministers of the G7?

https://www.ft.com/content/95dd0c00-7081-4890-bcef-b9642312db4d

https://www.bbc.co.uk/news/world-57368247

Why did they want to change the rules?
Governments have long grappled with the challenge of taxing global companies operating across many countries.

That challenge has grown with the boom in huge tech corporations like Amazon and Facebook.

At the moment companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.

That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere. This is legal and commonly done.

The deal aims to stop this from happening in two ways.

Firstly the G7 will aim to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

Secondly, they want a global minimum tax rate so as to avoid countries undercutting each other with low tax rates.

The first point is something other than corporation tax if it is being levied on something other than declared profit. I've not followed it in detail, but if it's a digital sales tax then is it not functionally the same as VAT, and thus effectively paid by the consumer.

kingstongraham

Stevo_666 said:

kingstongraham said:

One group unlikely to be adversely affected are tax specialists.

I don't understand why it doesn't mean any company that can, moves to a 15% (or whatever it comes down to) jurisdiction. What's in it for the USA or the UK with higher rates? Or is it just the differential is reduced, so it is less worth it?

The rate differential is less but there will still be tax competition. And other taxes - CT is less that 10% of the total tax take but there is a disproportionate focus on it from the rule setters. Also there is more to it that the rate - the breadth of the base that is taxed for example, cash flow reliefs, credits for investment etc.

There are several factors in terms of where to locate operations, of which tax is often one.

Doesn't answer my question.

And you seem to be missing the point that the whole aim of this is to reduce the effect tax rates have on where to locate "operations".

Surely it doesn't matter to you what the rules are, as long as you know what they are. If more tax comes to the UK rather than Ireland, all good right?

john80

Stevo_666 said:

john80 said:

Stevo_666 said:

rick_chasey said:

Stevo_666 said:

kingstongraham said:

I think the important bit isn't the minimum tax rate.

There is so much more to tax than rates, but it is rates which grab the headlines. That's why Rick is getting so excited.

What do you think the important part is?

I'm not getting excited about the rate mentioned.

I'm excited at the idea that big economies are working together to try and close the tax haven loophole, by making corporate tax about where the economic activity occurs and not where the corporation decides to book the profit.

You clearly don't understand the issue. Companies cannot just 'book the profit' wherever they choose and there are existing controlled Foreign Company (CFC) regs to deal with that which I've already referred to above, ones which specifically have substance tests/look at location of economic activity etc and impose tax on the shareholder where these are not met. On top of this there are the transfer pricing regs which impose arms length requirements on all intra-group transactions.

What do you think is new here?

The problem is that you don't have to look very hard to find companies paying low single digit taxes compared to their profits in the countries in which they operate and generated those profits. So if the rules are working so well then why is there so many examples of companies paying 1-5% tax rates on the profits in countries such as the UK. My limited company does not pay such a low rate so why is your low tax rate related to scale of the business is what all small to medium enterprises in the UK are asking.

Give me some real examples and I'll comment on them.

Starbucks is a good one. Little to no intellectual property of note and leverages a lot of bull about trademarks such as the manner in which they give you coffee to reduce their UK tax liability to pretty much naff all. It's not great is it for society.

briantrumpet

On a different note, the Daily Telegraph is waging all-out war on 'woke' at the moment. They do seem to find it terribly offensive.

ballysmate

On the subject of wokery, I'm just getting around to accept my white 'privilege', now I've got to work on my white 'fragility'.
Can't keep up.

pblakeney

ballysmate said:

On the subject of wokery, I'm just getting around to accept my white 'privilege', now I've got to work on my white 'fragility'.
Can't keep up.

Revert to type and don't give a flying...

ballysmate

pblakeney said:

ballysmate said:

On the subject of wokery, I'm just getting around to accept my white 'privilege', now I've got to work on my white 'fragility'.
Can't keep up.

Revert to type and don't give a flying...

Ah, sage advice as always.

Stevo_666

rick_chasey said:

So Stevo is at odds with all reputable news outlets, and all the finance ministers of the G7?

https://www.ft.com/content/95dd0c00-7081-4890-bcef-b9642312db4d

https://www.bbc.co.uk/news/world-57368247

Why did they want to change the rules?
Governments have long grappled with the challenge of taxing global companies operating across many countries.

That challenge has grown with the boom in huge tech corporations like Amazon and Facebook.

At the moment companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.

That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere. This is legal and commonly done.

The deal aims to stop this from happening in two ways.

Firstly the G7 will aim to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

Secondly, they want a global minimum tax rate so as to avoid countries undercutting each other with low tax rates.

You've just demonstrated that journos know roughly as much about international tax as you do.

Now answer my question above if you can.

Stevo_666

john80 said:

Stevo_666 said:

john80 said:

Stevo_666 said:

rick_chasey said:

Stevo_666 said:

kingstongraham said:

I think the important bit isn't the minimum tax rate.

There is so much more to tax than rates, but it is rates which grab the headlines. That's why Rick is getting so excited.

What do you think the important part is?

I'm not getting excited about the rate mentioned.

I'm excited at the idea that big economies are working together to try and close the tax haven loophole, by making corporate tax about where the economic activity occurs and not where the corporation decides to book the profit.

You clearly don't understand the issue. Companies cannot just 'book the profit' wherever they choose and there are existing controlled Foreign Company (CFC) regs to deal with that which I've already referred to above, ones which specifically have substance tests/look at location of economic activity etc and impose tax on the shareholder where these are not met. On top of this there are the transfer pricing regs which impose arms length requirements on all intra-group transactions.

What do you think is new here?

The problem is that you don't have to look very hard to find companies paying low single digit taxes compared to their profits in the countries in which they operate and generated those profits. So if the rules are working so well then why is there so many examples of companies paying 1-5% tax rates on the profits in countries such as the UK. My limited company does not pay such a low rate so why is your low tax rate related to scale of the business is what all small to medium enterprises in the UK are asking.

Give me some real examples and I'll comment on them.

Starbucks is a good one. Little to no intellectual property of note and leverages a lot of bull about trademarks such as the manner in which they give you coffee to reduce their UK tax liability to pretty much naff all. It's not great is it for society.

That's the one where HMRC investigated their transfer pricing arrangements and found nothing wrong, so not a good example. So that does imply that their IP has a value in line with what was being charged. Or maybe that they just didn't make as much profit from their operations as everyone assumed they should?

Stevo_666

briantrumpet said:

On a different note, the Daily Telegraph is waging all-out war on 'woke' at the moment. They do seem to find it terribly offensive.

Personally I'm waiting for GB News to start and do their 'Wokewatch' feature. Should be a good laugh and get some defensive responses on here.

ballysmate

pangolin said:

We've entered a twilight zone where Rick is applauding the conservative chancellor and Stevo is coming dangerously close to criticising him.

Tbf Stevo seems to be criticising posters on here rather than anyone else.

Stevo_666

kingstongraham said:

Stevo_666 said:

kingstongraham said:

One group unlikely to be adversely affected are tax specialists.

I don't understand why it doesn't mean any company that can, moves to a 15% (or whatever it comes down to) jurisdiction. What's in it for the USA or the UK with higher rates? Or is it just the differential is reduced, so it is less worth it?

The rate differential is less but there will still be tax competition. And other taxes - CT is less that 10% of the total tax take but there is a disproportionate focus on it from the rule setters. Also there is more to it that the rate - the breadth of the base that is taxed for example, cash flow reliefs, credits for investment etc.

There are several factors in terms of where to locate operations, of which tax is often one.

Doesn't answer my question.

And you seem to be missing the point that the whole aim of this is to reduce the effect tax rates have on where to locate "operations".

Surely it doesn't matter to you what the rules are, as long as you know what they are. If more tax comes to the UK rather than Ireland, all good right?

Your question wasn't clear and tbh it still isn't that clear.

It still won't stop tax competition for the reasons explained above.

Also think about the places that have rates below 15% - they tend to be pretty small/out of the way and in most cases not the sort of places suited to large scale operations that would generate those sort of profits that would make a difference. (Ireland is probably the largest example). Hence my point that this is more about grandstanding than substance.

Why do you put the word operations in speech marks?

kingstongraham

Stevo_666 said:

kingstongraham said:

Stevo_666 said:

kingstongraham said:

One group unlikely to be adversely affected are tax specialists.

I don't understand why it doesn't mean any company that can, moves to a 15% (or whatever it comes down to) jurisdiction. What's in it for the USA or the UK with higher rates? Or is it just the differential is reduced, so it is less worth it?

The rate differential is less but there will still be tax competition. And other taxes - CT is less that 10% of the total tax take but there is a disproportionate focus on it from the rule setters. Also there is more to it that the rate - the breadth of the base that is taxed for example, cash flow reliefs, credits for investment etc.

There are several factors in terms of where to locate operations, of which tax is often one.

Doesn't answer my question.

And you seem to be missing the point that the whole aim of this is to reduce the effect tax rates have on where to locate "operations".

Surely it doesn't matter to you what the rules are, as long as you know what they are. If more tax comes to the UK rather than Ireland, all good right?

Your question wasn't clear and tbh it still isn't that clear.

It still won't stop tax competition for the reasons explained above.

Also think about the places that have rates below 15% - they tend to be pretty small/out of the way and in most cases not the sort of places suited to large scale operations that would generate those sort of profits that would make a difference. (Ireland is probably the largest example). Hence my point that this is more about grandstanding than substance.

Why do you put the word operations in speech marks?

I'll try again.

Tax competition will still exist because the 15% minimum is lower than the UK, US etc rate.

In what way will it benefit the US or the UK if companies have their taxable location somewhere with 15% tax rate, rather than somewhere with a 9% rate?

rick_chasey

Stevo_666 said:

rick_chasey said:

So Stevo is at odds with all reputable news outlets, and all the finance ministers of the G7?

https://www.ft.com/content/95dd0c00-7081-4890-bcef-b9642312db4d

https://www.bbc.co.uk/news/world-57368247

Why did they want to change the rules?
Governments have long grappled with the challenge of taxing global companies operating across many countries.

That challenge has grown with the boom in huge tech corporations like Amazon and Facebook.

At the moment companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.

That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere. This is legal and commonly done.

The deal aims to stop this from happening in two ways.

Firstly the G7 will aim to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

Secondly, they want a global minimum tax rate so as to avoid countries undercutting each other with low tax rates.

You've just demonstrated that journos know roughly as much about international tax as you do.

Now answer my question above if you can.

It’s not changing rules it’s adding new ones.

So if your tax bill for the economic activity in said country is less than 15% of what you’re declaring in that country (as you are using tricks to declare it elsewhere with a lower tax rate) said country can charge them the difference.

If transfer pricing etc worked we wouldn’t see multiple firms play f@ck all tax nor would the leaders of the G7 spend the vast majority of their time at the summit agreeing this.

A federal reserve study into transfer pricing and tax avoidance

https://www.federalreserve.gov/econres/ifdp/files/ifdp1214.pdf

This paper employs unique data on export transactions and corporate tax returns of UK multinational firms and finds that firms manipulate their transfer prices to shift profits to lower-taxed destinations

It’s just another Stevo Merry go round.

We can all see firms paying far less tax on their economic activity than the base rate, and they are declaring this in low tax areas.

Stevo says this cannot happen because existing rules cover it. But it is. We all see it.

kingstongraham

Does it deal with situations like the Microsoft one where it has a company that is nominally Irish but tax resident in Bermuda (whatever that means), so pays zero tax on hundreds of billions of profit.

That is why "operations" was in quotes. It does not mostly operate in Bermuda or Ireland by any reasonable definition.