Aggressive tax planning has been achieved ‘with the complicity of governments themselves to cope with tax competition’, says senior OECD tax official
Consumers are ‘getting ready to act with their feet’ following the news that several major firms have paid ‘minimal amounts of UK corporation tax’, PRWeek reported last week as it introduced the findings of its latest reputation survey.
But as MPs on the Commons public accounts committee prepare to quiz the big four firms of accountants next week, and peers begin an inquiry today into Finance Bill measures to tackle avoidance, commentators have drawn attention to the part that tax competition between governments has played in helping to create an ‘unlevel playing field’ for businesses.
OnePoll questioned 2,000 members of the public for the PRWeek survey. While 71% had not boycotted a firm because of its tax practices, 46% said they had considered doing so.
Three quarters of the respondents said they believed firms were increasingly seeking to ‘avoid their fair share of tax’, and 70% agreed with the statement that ‘firms should not adopt schemes to minimise their tax bills’ while only 22% said the government was taking enough action.
Michael Robb, head of corporate communications at Cicero, noted that corporation tax had been ‘catapulted’ to the ‘very top of the news and policymaker agenda’. The survey showed that the ‘comms challenge’ for companies was ‘huge’. However, government had a duty to ‘put in place a regime that works’, he added. ‘And, crucially, a regime that ensures Britain remains competitive in a global marketplace.’
Baker Tilly said earlier this month that 60% of people responding to its own survey indicated that they would not boycott companies that ‘were not paying their “fair” share of tax in the UK’. This suggested that pressure from UK consumers would not be the driving force for change, the firm said.
Governments
As Tax Journal reported earlier this month, public relations group Pelham Bell Pottinger has warned that large companies must be prepared to explain why they have chosen to structure their affairs in order to save tax. However, the group’s chief executive James Henderson called on governments to be more transparent about policies that make ‘certain tax structures’ possible.
Vanessa Houlder, tax correspondent at the Financial Times, noted last week that businesses were ‘under fire for using corporate structures that shift profits to low-tax jurisdictions’. Political anger was mounting, she wrote, over ‘the low taxes paid by multinationals such as Apple, Google and Amazon during an age of brutal cuts in public spending’.
She quoted Pascal Saint-Amans, director of the OECD’s centre for tax policy and administration, as saying that the current political pressure represented ‘a turning of the tide against avoidance by big business’.
But Saint-Amans added: ‘The aggressive tax planning of the last 20 years was achieved with the complicity of governments themselves to cope with tax competition ... This mindset is seriously changing.’
Houlder wrote: ‘Multinationals, stung by the damage to their reputations, accuse governments of blaming companies for a system that the states themselves designed to attract investors.’
She quoted an EC official as saying that countries were using their tax system to compete, and added: ‘In the UK, for example, at the same time as spearheading international efforts to collaborate on reforms, George Osborne, the chancellor, is this year launching a “patent box” offering a cut-price tax rate for certain types of intellectual property and an offshore finance company regime to enhance the UK’s ability to attract headquarters.’
The forces of tax competition ‘remain significant’, she added.
However, campaigners argue that multinationals lobby governments on tax issues, and that some tax professionals whose firms act for multinationals are involved in drafting legislation. ‘Corporate lobbyists and other special interest groups are [a] major source of pressure on governments to lower tax rates,’ the Tax Justice Network has said.
Aggressive tax planning has been achieved ‘with the complicity of governments themselves to cope with tax competition’, says senior OECD tax official
Consumers are ‘getting ready to act with their feet’ following the news that several major firms have paid ‘minimal amounts of UK corporation tax’, PRWeek reported last week as it introduced the findings of its latest reputation survey.
But as MPs on the Commons public accounts committee prepare to quiz the big four firms of accountants next week, and peers begin an inquiry today into Finance Bill measures to tackle avoidance, commentators have drawn attention to the part that tax competition between governments has played in helping to create an ‘unlevel playing field’ for businesses.
OnePoll questioned 2,000 members of the public for the PRWeek survey. While 71% had not boycotted a firm because of its tax practices, 46% said they had considered doing so.
Three quarters of the respondents said they believed firms were increasingly seeking to ‘avoid their fair share of tax’, and 70% agreed with the statement that ‘firms should not adopt schemes to minimise their tax bills’ while only 22% said the government was taking enough action.
Michael Robb, head of corporate communications at Cicero, noted that corporation tax had been ‘catapulted’ to the ‘very top of the news and policymaker agenda’. The survey showed that the ‘comms challenge’ for companies was ‘huge’. However, government had a duty to ‘put in place a regime that works’, he added. ‘And, crucially, a regime that ensures Britain remains competitive in a global marketplace.’
Baker Tilly said earlier this month that 60% of people responding to its own survey indicated that they would not boycott companies that ‘were not paying their “fair” share of tax in the UK’. This suggested that pressure from UK consumers would not be the driving force for change, the firm said.
Governments
As Tax Journal reported earlier this month, public relations group Pelham Bell Pottinger has warned that large companies must be prepared to explain why they have chosen to structure their affairs in order to save tax. However, the group’s chief executive James Henderson called on governments to be more transparent about policies that make ‘certain tax structures’ possible.
Vanessa Houlder, tax correspondent at the Financial Times, noted last week that businesses were ‘under fire for using corporate structures that shift profits to low-tax jurisdictions’. Political anger was mounting, she wrote, over ‘the low taxes paid by multinationals such as Apple, Google and Amazon during an age of brutal cuts in public spending’.
She quoted Pascal Saint-Amans, director of the OECD’s centre for tax policy and administration, as saying that the current political pressure represented ‘a turning of the tide against avoidance by big business’.
But Saint-Amans added: ‘The aggressive tax planning of the last 20 years was achieved with the complicity of governments themselves to cope with tax competition ... This mindset is seriously changing.’
Houlder wrote: ‘Multinationals, stung by the damage to their reputations, accuse governments of blaming companies for a system that the states themselves designed to attract investors.’
She quoted an EC official as saying that countries were using their tax system to compete, and added: ‘In the UK, for example, at the same time as spearheading international efforts to collaborate on reforms, George Osborne, the chancellor, is this year launching a “patent box” offering a cut-price tax rate for certain types of intellectual property and an offshore finance company regime to enhance the UK’s ability to attract headquarters.’
The forces of tax competition ‘remain significant’, she added.
However, campaigners argue that multinationals lobby governments on tax issues, and that some tax professionals whose firms act for multinationals are involved in drafting legislation. ‘Corporate lobbyists and other special interest groups are [a] major source of pressure on governments to lower tax rates,’ the Tax Justice Network has said.
