Diageo, Unilever threaten to leave UK

blueboy43

Pennywise wrote: »

Some of the losses to the UK Treasury will be from the head office employment which will be shipped to another country. So that's employment tax of 40% - 50% of wages cost, and of course, those people are now abroad, so buying goods and services abroad (and paying local indirect taxes there instead of here).

The above is the real and genuine reason why it is a concern.

Pennywise wrote: »

Then, the company's "profit" made on sales to UK customers will be taxed in the other country, not the UK. It's not difficult to manipulate figures to show that the lion's share of profits arose in the head office country rather than each country where the sales are actually made by the use of management charges, apportionment of overheads, etc.

The above bit is a bit of a red herring. Aside from historic losses, generous rules on interest and numerous reliefs available that can be offset against tax, the biggest leakage is transferring intangible assets (trademarks, patents etc) to jurisdictions were the tax rate on royalties is zero.

How do you suggest we compete with zero and which taxes rise to make up the shortfall ?

blueboy43

Thrugelmir wrote: »

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What would the effect be if HSBC moved its HQ to Hong Kong?

Probably not that much, afterall they were HQ'd in Hong Kong until 1993 and their new chief exec. is moving to Hong Kong anyway.

It would be a different matter if they moved their European HQ to Frankfurt.

vivatifosi

I'm not really surprised at this and do think that there are two sides to this story.

First, the current government consistently meddles in the tax affairs of businesses and has made it harder/less attractive for companies to set up here. So in that respect Diageo and Unilever have a point. However their size and scope mean that they can avoid tax in a way that other indigenous companies just cannot.

Diageo pays an average of £43m in corporation tax on £2bn average annual profits - a rate of 2% - according to an article in the Guardian last year. http://www.guardian.co.uk/business/2009/feb/02/tax-gap-diageo-johnnie-walker

In terms of Unilever, its had a foot in two countries for all the time I've been watching it in much the same way that Shell has, so they do have a certain fluidity with which they move things around between the two countries. Having said that, I understand that, unless there have been rule changes there, it is very difficult for large employers to sack or lay off workers in the Netherlands, so it isn't as straightforward an issue as it may at first appear.

lostinrates

Rochdale_Pioneers wrote: »

Absolutely. Let them go.

The 50% tax line is cobblers. UK staff are not going to uproot themselves and their families just to save a few quid in tax. Its not that long ago since the basic rate was 33% !!!!!! - 50% on a six figure salary is hardly theft.

UK staff might not. Uk employers might. This leaves us in more of a mess.


I don't buy the line that no one that can cause significant harm will leave any more than I believe the every single person on higher tax rate will leave, but the risk is one to take seriously.

These are not banks, or city lawyers. This is industry saying they are unhappy. As much as we are customers of theirs, international business, as an employer, is our customer, we sell them a business environment and staff. we have to listen...we can conclude they are wrong, but to dismiss out of hand is arrogant and IMO, reckless.

vivatifosi

lostinrates wrote: »

we sell them a business environment and staff. we have to listen...we can conclude they are wrong, but to dismiss out of hand is arrogant and IMO, reckless.

Well said lir.

funguy

The UK's recent policy of increasing taxes on big business and high earners has only one outcome - they will leave the UK and leave everyone worse off! Its very easy to say to tax companies and the rich but remember that these people are the job creators and innovators. The UK will quickly become a country of benefit claimants and general workers with a plunging national wealth!