Friday, Aug 15, 2008
Another Nail in the GBP Coffin
FT: Merrill set to avoid UK tax after $29bn loss
Merrill Lynch is unlikely to pay corporation tax in the UK for several decades after $29bn (£16bn) of losses suffered by the US investment bank were charged to its London-based subsidiary.
"After the latest sale, Merrill has a UK operating loss of about $29bn that it can carry forward indefinitely for tax purposes" - What the Hell?
Posted by layers @ 10:25 AM (753 views) Add Comment
9 Comments
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1. paul said...
'Light touch' FSA consequences.
2. d'oh said...
Heads they win, tails you lose.
3. fancypants said...
a neat way to avoid paying for the Olympics
4. Jacket said...
Surely this is illegal? The loss was made in the US, not the UK.
If it's not illegal, couldn't every multinational do the same thing to avoid UK corporation tax?
5. benedict said...
Isn't that kind of a good thing? If a nominal allocation between different subsidiaries means that their global losses are all registered here for tax purposes in a way that means that local profit generation would take 60 years according to the article to recoup it doesn't that mean there's a big incentive for them to shift a lot of operations here to take advantage of their tax credit?
6. paul said...
benedict that's an interesting way of looking at it. You could well be right.
7. shipbuilder said...
Isn't globalisation great?
8. wiltshire said...
Benedict, isn't that what Labour having been trying to do all this time? Enormous tax breaks for obscenely wealthy multinationals where the CEO pays less tax than the cleaner? I think it's arguable whether the UK benefits from this. Obviously London and the South East benefit but is that leading to disparity elsewhere in the UK?
And we just have to await them finding an even more cost effective home for their business.
9. Keeprenting said...
//Isn't that kind of a good thing? If a nominal allocation between different subsidiaries means that their global losses are all registered here for tax purposes in a way that means that local profit generation would take 60 years according to the article to recoup it doesn't that mean there's a big incentive for them to shift a lot of operations here to take advantage of their tax credit?//
Well, 3 points in response to that:
1. All the other banks have booked their losses in the US so does this mean that the UK will lose business to Goldmans US, JP Morgan US, etc?
2. In any event, they can (and almost certainly will) "move" profits to the UK just using financial trickery, without actually increasing the level of their economic activities in the UK.
3. Do you think we should abolish corporation tax for all investment banks so they move more of their activities to the UK? :)