Starbucks are to review their tax practices according to reports and media in the UK. So we are now relying on big corporates to take the first step and say ‘we haven’t paid enough tax, we want to pay more’.
How many out there would follow their lead?
How many out there will look at their own tax affairs, and say, “you know what, morally I can do more’.
The tax system provides opportunity to maximise your profits and minimise your tax burden. There exist international laws and treaties. The OECD published their Guidelines, updated as recently as July 2010. The question is, are these organisations compliant? If yes, then in reality they are within their rights to do what they can to become tax efficient and fulfil their obligation to their shareholders.
With reference to Amazon, what are their functions in the UK? Where are the key decisions made? Which entity takes the risks? Who owns the assets?
How many British organisations control profits abroad, providing a comparable return, in similar fashion to what foreign organisation are doing in the UK?
What are the implications, internationally? Are we now going to go through a period of double taxation disputes; if so how much will that cost HMRC and ultimately the common taxpayer?
We all must remember that if the UK claims that profits have been earned in their jurisdiction, then that will reduce the profit in another jurisdiction and as a result reducing that authority’s tax income. Will they simply accept the decision?
These are murky waters, that the public cannot dictate the path. This is a journey for the policy makers, not just of one nation but many.
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