Tax haven bleating

From The Mirror:

Big companies are avoiding an estimated £100billion a year in tax thanks to Britain’s “spider’s web” of offshore tax havens.

There are growing calls to clamp down on firms that, through clever accounting, deprive countries of tax.

There are two sides to this – the tax havens, and the countries out of which profits are siphoned. Any country out of which profits are siphoned only has itself to blame and is complicit in the whole scam.

A non-tax haven merely has to tweak its tax rules to ensure that a company cannot claim a tax deduction for money paid to a company in a tax haven, in other words, treat such payments as dividend payments, which are paid out of after tax income.

With the really big corporations, the sensible thing to do is to find out (or estimate) their global profits, find out (or estimate) what share of those profits are derived from customers in your own country and then charge them to tax on that element of their global profits derived from your own country.

This is standard practice in countries which have different rates of corporation tax in different regions/states, for example Germany, Switzerland, USA etc. It’s not reinventing the wheel.

The EU has a cruder – but equally effective – way of taxing the big corporations, especially American ones. The EU knows perfectly well that they will wriggle out of any tightly defined rules, so it just “fines” them a few hundred million Euros on some trumped-up offence every few years (market rigging, anti-competitive practices, banking fraud, tax evasion, whatever), the big corporations haggle a bit and then pay half or two-thirds of the original sum demanded, it’s just a ‘market access fee’.

And while £400 billion is clearly a lot of money, it’s probably an over-estimate, so let’s call it £200 billion. What share of that ought really to have been paid in the UK? Ballpark, the UK is 2% of the global economy, so maybe our tax receipts are down by £8 billion a year, which is barely one percent of the UK’s annual government budget.