Why is it apparently so difficult to get the big corporations to pay more tax?

Kennyboy66

ILW wrote: »

These companies do pay tax though, just not here.

spectacularly naive.

Companies use the royalty payments / debt interest / management charges ruse to move profits to countries where no tax at all might be payable.

chewmylegoff

ILW wrote: »

How could that be legislated for?

By passing a law which said that payments to an overseas group company in respect of brand rights are not deductible for UK corporation tax. Not rocket science.

Linton

drc wrote: »

In the news this week - Starbucks, Ebay, Ikea etc all paying very little tax by offshoring their companies subsidiaries in places like Luxembourg. The UK is missing out on hundreds of millions in tax that these companies would be paying if they weren't using elaborate accounting practices to get around paying it.

Why is this loophole so hard to close? Surely the government could close it if they wanted? What are these companies going to do if they were told they had to pay corporation tax on all profits made in the UK - close all their stores in spite and lose all the money they make from the UK? The government should call their bluff.

The reason why it is so hard to close is that a company can choose to adjust its internal pricing and rates of interest on money movements so that it can make the profits appear wherever in the world it wants. There is no one correct answer to the question of where the profits of a multi-national are made. And if there is a government with the global clout to impose standards beneficial to the UK on US companies it certainly isnt the UK.

ILW

chewmylegoff wrote: »

By passing a law which said that payments to an overseas group company in respect of brand rights are not deductible for UK corporation tax. Not rocket science.

They would just either route through a 3rd party, or simply find another invoicable expense.

ILW

Kennyboy66 wrote: »

spectacularly naive.

Companies use the royalty payments / debt interest / management charges ruse to move profits to countries where no tax at all might be payable.

They do tend to pay some, but generally in lower tax regimes than the UK.

chewmylegoff

If it was that easy to avoid tax then there wouldn't be any point in having corporation tax at all.

ILW

chewmylegoff wrote: »

If it was that easy to avoid tax then there wouldn't be any point in having corporation tax at all.

The majority of companies are not international so cannot shift liabilities.

chewmylegoff

ILW wrote: »

The majority of companies are not international so cannot shift liabilities.

Yes but shifting profits to another jurisdiction isn't the only way of avoiding tax - you seem to think it's not worth having tax rules because companies will simply devise a work around. The fact that companies do pay tax suggests that is incorrect.

HAMISH_MCTAVISH

the_flying_pig wrote: »

if government charges me a tax of £2 per shine.

Then all the obfuscation in the world won't change the fact that some of that will come from increasing prices to consumers, and the rest will come from decreased profits to the shareholders. In other words, ordinary people, their pension funds, their share ISA's, etc.

You simply cannot argue otherwise.

There is nowhere else for it to come from. Consumers, or shareholders.

Businesses are owned by people. Taking money from businesses is taking money from people. Increasing taxes on business is increasing tax on ordinary people.

ILW

The vast majority of UK companies do pay corporation tax.

Different matter with multinationals who just happen to do some of their business in the UK.