Starbucks - UK tax 'avoiders'

[Weststander]

country reporting has been suggested. it comes with some side effects. first, a lot of UK listed Plc make an awful lot of money overseas, so the tax revenue here would drop. of course there could be counter examples, say VW would have to pay some of their profits here, which would be nice.

second, to work all this out you'd have to track where costs and revenues are realised. say a German company builds a car in Spain, with parts from other countries, and exports to UK, sold through a franchise. for tax purposes is the cost of the forecourt price, or the imported cost price, or the factory production cost? where does the cost of operating Spainsh factory, parts from Poland, count against revenues, are the profits at the sales, parent or manufacturing companies?

of course thats all possible to work out with a large volume of rules and guides, and army of accountants. which makes everything more expensive, no one really wants to do, and will probably end up with companies finding new ways to hide and mask profits.

Is anyone sensible arguing that CT is paid in every region of sales? That would be plain silly. A UK company that sells one item in each of several countries, paying their countries CT.

Instead, stick to what we have now, but limit the effect of group ‘franchise’ fees, so that profits aren’t shifted to tax havens.

 

[Herr Tubthumper]

Precisely. We were America’s voice in the EU, we had huge strategic value to them as an English speaking nation in the EU. Now they still own us, but we’re of little to no geopolitical value to them, and Ireland has taken our place as the geopolitical asset that can fight America’s corner from within the EU.

Those US firms who have their European HQ’s in Ireland will absolutely remain there.

Quite. It's perfect for US tech in quite a few ways irrespective of the tax break.

 

[Creaky]

Reading the above replies it appears that I am alone in thinking that corporation tax is a blight on the economy that reduces growth, employment, research and investment whilst at the same time reducing treasury income.

Taking 25% of a companies profit leaves them with less to invest in the above areas and if the profit is paid as dividends then the treasury apply a higher tax rate to that than the current CT for private investors and could do the same for institutional/corporate ones.

The main obstacle I see to abolishing CT altogether is the number of overseas investors in large companies and organisations in the UK. Whilst applying dividend tax prior to pay out, in the same way as PAYE, might solve the tax collection issue it would undoubtedly deter some foreign investments although zero corporation tax could well do the reverse.

 

[schmunk]

Reading the above replies it appears that I am alone in thinking that corporation tax is a blight on the economy that reduces growth, employment, research and investment whilst at the same time reducing treasury income.

Taking 25% of a companies profit leaves them with less to invest in the above areas

There are specific deductions from the income s/t corporation tax for both employee costs (full costs of pay, benefits, bonus etc. plus employer NI) and (partial) R&D costs.

 

[dsr-burnley]

Reading the above replies it appears that I am alone in thinking that corporation tax is a blight on the economy that reduces growth, employment, research and investment whilst at the same time reducing treasury income.

Taking 25% of a companies profit leaves them with less to invest in the above areas and if the profit is paid as dividends then the treasury apply a higher tax rate to that than the current CT for private investors and could do the same for institutional/corporate ones.

The main obstacle I see to abolishing CT altogether is the number of overseas investors in large companies and organisations in the UK. Whilst applying dividend tax prior to pay out, in the same way as PAYE, might solve the tax collection issue it would undoubtedly deter some foreign investments although zero corporation tax could well do the reverse.

There used to be a system called Advance Corporation Tax (ACT) whereby companies deducted tax at dividend income tax rates from their dividend payouts. The tax paid could be deducted from Corporation Tax, and pension companies would reclaim the tax from HMRC as a pension credit.

When ACT was abolished the pension credit was retained so that private pensions retained this uplift, but Gordon Brown abolished that in the 1990's (which is the primary reason why private pensions are now defined contribution while public pensions are still often based on percentage of salary).

Reintroducing something similar to that system would help solve the problems in your third paragraph.,

 

[Bob!]

Reading the above replies it appears that I am alone in thinking that corporation tax is a blight on the economy that reduces growth, employment, research and investment whilst at the same time reducing treasury income.

Taking 25% of a companies profit leaves them with less to invest

Taking 20% of my income as income tax leaves me with less to spend on the economy.

It also leaves the country with no money to spend on infrastructure, support for people, businesses.

 

[Creaky]

Taking 20% of my income as income tax leaves me with less to spend on the economy.

It also leaves the country with no money to spend on infrastructure, support for people, businesses.

It can be equally argued that your NI and tax payments are a cost on companies employing you. Your pre tax income is a notional figure, the take home amount is your real income - the difference is paid to HMRC by the employer.

In the same way that it can be argued that tax credits are subsidising employers who without these would have to increase their pay rates.