Lloyds shares offer to the public

kinger101

Thrugelmir wrote: »

Neither Company has broken any tax laws though. For the Companies concerned it's as much about PR as anything else. I'm not personally happy with the way corporations transact their business. But that's life. At least the likes of Starbucks will need to rise their wage rates to meet the requirements on the new MW and also contribute to their employees pension schemes. Best way to react is not to buy or use a Company's products. Buy British, buy from fro independents instead.

I'm not sure they are acting fully within the law. The problem is transfer pricing on intellectual property is so nebulous that HMRC don't have the confidence to risk taking this even through civil courts. It's certainly not as black as white as the corporations would have as believe.

grey_gym_sock

Thrugelmir wrote: »

Neither Company has broken any tax laws though.

that's very debatable. HMRC could argue that google UK is in reality doing what most ppl would think they're doing, i.e. selling advertizing in the UK. they might always have been able to argue this, but their hand would be much stronger using the "diverted profit tax" provisions, introduced last year, which AFAIR was colloquially known as the "google tax". instead, HMRC have caved in, and accepted a fraction of the tax they'd collect if they successfully applied the diverted profit tax to google.

this is part of a pattern of HMRC giving sweetheart deals to big companies. presumably because
(a) HMRC's funding has been continually cut, with more cuts planned, so they don't have the resources to pursue tax cheats properly (this started under the last labour government, BTW, so not a party-political point); and
(b) the top management, and non-executive board, of HMRC, and government ministers, aren't really interested in making big companies pay their fair share of tax.

kinger101

grey_gym_sock wrote: »

that's very debatable. HMRC could argue that google UK is in reality doing what most ppl would think they're doing, i.e. selling advertizing in the UK. they might always have been able to argue this, but their hand would be much stronger using the "diverted profit tax" provisions, introduced last year, which AFAIR was colloquially known as the "google tax". instead, HMRC have caved in, and accepted a fraction of the tax they'd collect if they successfully applied the diverted profit tax to google.

this is part of a pattern of HMRC giving sweetheart deals to big companies. presumably because
(a) HMRC's funding has been continually cut, with more cuts planned, so they don't have the resources to pursue tax cheats properly (this started under the last labour government, BTW, so not a party-political point); and
(b) the top management, and non-executive board, of HMRC, and government ministers, aren't really interested in making big companies pay their fair share of tax.

DPT is a farce. The non-discrimination rules in tax treaties mean it will probably crumble the moment some company decides to challenge its legitimacy. When it does, a judge will probably decide a tax on a corporation's profits is corporation tax, and not whatever name someone decides to give it, DPT fails.

If DPT is the success that it is claimed to be, why didn't Google decide to pay 20% tax instead of 3 % tax.

gadgetmind

kinger101 wrote: »

The problem is transfer pricing on intellectual property is so nebulous that HMRC don't have the confidence to risk taking this even through civil courts.

Taxation where IP created would make sense. Dunno how to enforce, but it's the way we (my company) plays the game.

kinger101

gadgetmind wrote: »

Taxation where IP created would make sense. Dunno how to enforce, but it's the way we (my company) plays the game.

Personally, I would favour where it's exploited. If you take patents as an example, the IP is issued by the local jurisdiction, so I don't think it's beyond legislators to say IP issued here is taxed here.

Also, with patents, the inventor and owner are not necessary the same, even a filing stage.

grey_gym_sock

kinger101 wrote: »

DPT is a farce. The non-discrimination rules in tax treaties mean it will probably crumble the moment some company decides to challenge its legitimacy. When it does, a judge will probably decide a tax on a corporation's profits is corporation tax, and not whatever name someone decides to give it, DPT fails.

interesting.

If DPT is the success that it is claimed to be, why didn't Google decide to pay 20% tax instead of 3 % tax.

well, quite. success would be for google to decide to make its corporate structure more straightforward, i.e. book all its UK advertizing revenue as turnover of google UK, in order to avoid the DPT being applied.

amazon UK did decide to do that (last year, IIRC), but was it the DPT they were afraid of? it could be various things - OECD BEPS process, reputational damage, etc.

grey_gym_sock

gadgetmind wrote: »

Taxation where IP created would make sense. Dunno how to enforce, but it's the way we (my company) plays the game.

well, that's certainly more honest than putting all your IP in a tax haven

but i think the bigger problem is not forcing the correct location to be used, it's the price for the transfer pricing. in many (presumably: most) cases, the IP used in a group of companies is not also licensed outside the group. how is the market price to be determined, when there is no market? even with expertise in the area, there's no real answer to the question. and there's no way that HMRC, or other tax authorities, can be expected to have that expertise, anyway.

the long-term answer is to scrap the transfer pricing model, and instead have unitary taxation for corporate groups.

i.e. work out the group's global profits, and divide them up among countries using a formula. the formula could include:
a) location of sales
b) location of employees
c) location of physical assets

i wouldn't include location of IP itself. the above does include it indirectly, in that a company will have employees, research facilities, etc, where it develops IP.

(1 reason not to include IP in the formula is that it's difficult to determine how much of a company's profits is due to its IP. and using some fixed proportion doesn't sound very good, when for some companies there is no significant IP.)

Thrugelmir

grey_gym_sock wrote: »

that's very debatable. HMRC could argue that google UK is in reality doing what most ppl would think they're doing, i.e. selling advertizing in the UK.

That's very simplistic view. Google have a variety of income steams and related outgoings. .

Like the EU are doing. Investigating Eire and it's tax practices will ultimately yield a better return.

redux

gadgetmind wrote: »

Taxation where IP created would make sense. Dunno how to enforce, but it's the way we (my company) plays the game.

very creative, those post office boxes on Cayman or Turks and Caicos Islands, I wonder how they fit so many people into such a small space

gadgetmind

That's why I said "where IP created".