Jump to content
House Price Crash Forum
matroskin

Corporate Tax Proposal To Make Vat Carousel Fraud

Recommended Posts

http://www.monbiot.com/2011/02/07/a-corporate-coup-detat/

At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil PLC pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match the corporate tax rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to “large and medium companies”(4): it is not available for smaller firms. The government says it expects “large financial services companies to make the greatest use of the exemption regime”(5). The main beneficiaries, in other words, will be the banks.

But that’s not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014

Effect on HPI? "Prime central London" expands to encompass M25 :P:P:P

The rest of this country sinks into slums owned by landlords living in "prime central London"

"Moscow 2042" here we come

Share this post


Link to post
Share on other sites

http://www.monbiot.com/2011/02/07/a-corporate-coup-detat/

Effect on HPI? "Prime central London" expands to encompass M25 :P:P:P

The rest of this country sinks into slums owned by landlords living in "prime central London"

"Moscow 2042" here we come

What the heck is going on?! :unsure: I find myself in complete agreement with George Monbiot. :o

Share this post


Link to post
Share on other sites

The government needs an influx of funds and it would much rather Google, Paypal, Microsoft et al were based here rather than the rep of Ireland.

I don't like it but, I'm not sure I want to stop it if the alternative is vat at 25%.

Share this post


Link to post
Share on other sites

It's not really comparable to VAT carousel fraud, these changes just stop the government from getting their hands on private sector money. VAT fraud actively swindles HMRC out of £billions.

The entire 'write it off against tax' premise is flawed anyway, yet I hear very few people arguing for it's abolition. To even things up we should either take an arbitrary sum, say 10% of company revenue and use that as the basis for calculating corporate tax liability, or we could allow individuals to write off all their expenses against tax.

This two speed system ain't working.

Edited by Chef

Share this post


Link to post
Share on other sites

What the heck is going on?! :unsure: I find myself in complete agreement with George Monbiot. :o

I was wondering that myself! :blink::lol:

Share this post


Link to post
Share on other sites

The government needs an influx of funds and it would much rather Google, Paypal, Microsoft et al were based here rather than the rep of Ireland.

I don't like it but, I'm not sure I want to stop it if the alternative is vat at 25%.

hmm...we are going the route of Ireland.

thats comforting.

Share this post


Link to post
Share on other sites

and this is a problem why? The UK needs to encourage private business and enterprise otherwise where is the economic growth going to come from?

If factually correct the only thing I take exception to is '..be able to claim the expense of funding its foreign branches against tax it pays in the UK'.

That is a step too far.

Share this post


Link to post
Share on other sites

What HMRC needs to do is to stop debt being used to reduce corporate tax so that businesses fund themselves and there takeovers by equity. But the bankers will not like that so can not see it happening which means many more good UK businesses will go bust because of taking on yet again too much debt because the bankers tell them it is "tax efficient."

Doh!

Share this post


Link to post
Share on other sites

and this is a problem why? The UK needs to encourage private business and enterprise otherwise where is the economic growth going to come from?

If factually correct the only thing I take exception to is '..be able to claim the expense of funding its foreign branches against tax it pays in the UK'.

That is a step too far.

Although it may benefit the UK in the near term, long term it is an international slippery slope. If the UK does it, other major economies will do it and large companies will pay even less tax than they do now and all multinationals will be filtering their profits through the Caymans, giving them even greater advantage over national and local copmpanies than they do now.

Share this post


Link to post
Share on other sites

and this is a problem why? The UK needs to encourage private business and enterprise otherwise where is the economic growth going to come from?

If factually correct the only thing I take exception to is '..be able to claim the expense of funding its foreign branches against tax it pays in the UK'.

That is a step too far.

Most growth comes from small firms; if anyone is getting a tax break, it should be them.

Instead, they will be paying more tax than their hidebound behemoth competitors.

Edited by DeepLurker

Share this post


Link to post
Share on other sites

One good aspect is that UK gets some big salary jobs shipped in - big income tax, big discretionary spend = big VAT - rather than having them shipped off to CH

Most multinationals have already taken steps to minimise UK taxation through commisaire / transfer pricing. This could discourage that.

Much like the R&D tax credits brought some nice R&D jobs in (shame that's now deemed less attractive by Pfizer amongst others), this could bring in some decent paying HQ jobs.

On balance its a nice idea but it needs to go further to pass similar benefits to smaller UK companies too. Its too one sided as it stands just now.

Share this post


Link to post
Share on other sites

One good aspect is that UK gets some big salary jobs shipped in - big income tax, big discretionary spend = big VAT - rather than having them shipped off to CH

You mean the bankers?

Most multinationals have already taken steps to minimise UK taxation through commisaire / transfer pricing. This could discourage that.

Much like the R&D tax credits brought some nice R&D jobs in (shame that's now deemed less attractive by Pfizer amongst others), this could bring in some decent paying HQ jobs.

Leading to a slippery slope in what gets classed as R&D. Like my first professional job in 1983-5 was classed as R&D.

On balance its a nice idea but it needs to go further to pass similar benefits to smaller UK companies too. Its too one sided as it stands just now.

There are some benefits to smaller companies. Some have been stopped in recent years, though those were sometimes breaks that were open to abuse. Let's hope those we (still) have don't fall victim to the destructive sentiments of those who want to tax their owners into oblivion.

Share this post


Link to post
Share on other sites

and this is a problem why? The UK needs to encourage private business and enterprise otherwise where is the economic growth going to come from?

If factually correct the only thing I take exception to is '..be able to claim the expense of funding its foreign branches against tax it pays in the UK'.

That is a step too far.

Indeed.

Should we let BP deduct the cost of next Gulf of Mexico cleanup/compensations from its tax bill?

That's the big question.

Share this post


Link to post
Share on other sites

It's not really comparable to VAT carousel fraud, these changes just stop the government from getting their hands on private sector money. VAT fraud actively swindles HMRC out of £billions.

The entire 'write it off against tax' premise is flawed anyway, yet I hear very few people arguing for it's abolition. To even things up we should either take an arbitrary sum, say 10% of company revenue and use that as the basis for calculating corporate tax liability, or we could allow individuals to write off all their expenses against tax.

This two speed system ain't working.

A corporations income from activity is its profit, gence it's taxed on profit. There is no two speed syste. To suggest a % of revenue is mad because different businesses have radically different margins; a great many big firms don't even make 5%.

An individuals net income is usually their salary, although if you spend money that qualifies you can set it off for tax purposes.

Share this post


Link to post
Share on other sites

A corporations income from activity is its profit, gence it's taxed on profit. There is no two speed syste. To suggest a % of revenue is mad because different businesses have radically different margins; a great many big firms don't even make 5%.

An individuals net income is usually their salary, although if you spend money that qualifies you can set it off for tax purposes.

Nope, a corporation is taxed on the profit it declares. There's a big difference.

Taxing an arbitrary % of revenue is as "mad" as applying income tax after the personal allowance has been breached. Do you believe the personal allowance is a crazy idea?

The two speed system you supprt gives large corporations free reign to pay as little tax as they want while their workers are lumbered with the inflexible PAYE system. Why not give everyone an equal chance to benefit from tax avoidance?

Edited by Chef

Share this post


Link to post
Share on other sites

Nope, a corporation is taxed on the profit it declares. There's a big difference.

Taxing an arbitrary % of revenue is as "mad" as applying income tax after the personal allowance has been breached. Do you believe the personal allowance is a crazy idea?

The two speed system you supprt gives large corporations free reign to pay as little tax as they want while their workers are lumbered with the inflexible PAYE system. Why not give everyone an equal chance to benefit from tax avoidance?

Not really. Profit manipulation is an overstated phenomenon, most businesses, if they manage their tax bills at all, do it through international distribution.

Yeah, it's pretty stupid to tax a standard % of revenue as many businesses trade on miniscule margins - take a Cash & Carry, which does really well to make 2% profit. What % of their revenue do you plan to tax at?

There is no two speed system; you're just misinterpreting revenue.

Share this post


Link to post
Share on other sites

Nope, a corporation is taxed on the profit it declares. There's a big difference.

Taxing an arbitrary % of revenue is as "mad" as applying income tax after the personal allowance has been breached. Do you believe the personal allowance is a crazy idea?

The two speed system you supprt gives large corporations free reign to pay as little tax as they want while their workers are lumbered with the inflexible PAYE system. Why not give everyone an equal chance to benefit from tax avoidance?

For most large companies, the directors' bonuses and share options depend on them declaring large profits, so there is little motivation to reduce declared profits. It is only in owner managed businesses with no external finance that you find people underdeclaring profits.

Share this post


Link to post
Share on other sites

Not really. Profit manipulation is an overstated phenomenon, most businesses, if they manage their tax bills at all, do it through international distribution.

Yeah, it's pretty stupid to tax a standard % of revenue as many businesses trade on miniscule margins - take a Cash & Carry, which does really well to make 2% profit. What % of their revenue do you plan to tax at?

There is no two speed system; you're just misinterpreting revenue.

I don't see what the problem is here, if you believe that offsetting costs against tax is a swell idea then why not roll it out to the workforce?

Surely an extension of this divine system would be right up your street. Or do you have to be special to qualify for such privileges?

Share this post


Link to post
Share on other sites

I don't see what the problem is here, if you believe that offsetting costs against tax is a swell idea then why not roll it out to the workforce?

Surely an extension of this divine system would be right up your street. Or do you have to be special to qualify for such privileges?

Why up my street? What's your point?

Still waiting to hear what tax rate you'd levy on the Cash & Carry, and whether it would be the same as on Tesco, and if not what mechanism you'd use to decide the difference.

Edited by bogbrush

Share this post


Link to post
Share on other sites

If the UK does it, other major economies will do it and large companies will pay even less tax than they do now and all multinationals will be filtering their profits through the Caymans, giving them even greater advantage over national and local copmpanies than they do now.

So, uh, eliminate corporation tax in the UK. It's a load of ******** anyway; companies don't pay tax, their customers do.

Britain's problem is not too little tax, it's far too much government spending.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.