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back to article Global tax data exchange plan floated to recoup cash

The world's getting serious about multinational tax avoidance, with with the Organisation for Economic Co-operation and Development (OECD) today delivering a report (PDF) titled “A step change in tax transparency: Delivering a standardised,secure and cost effective model of bilateral automatic exchange for the multilateral …

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Meh

Remeber the difference between "avoidance" and "evasion"

About 5 years for individuals who are caught.

Let me suggest this should is limited to companies

Jeff Bezos did not make £13Bn.

Amazon did.

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Be careful what you wish for

Whilst our shiney faced bufoon of a prime minister sets off on another of his noble crusades, this time against corporate tax avoidance, he should perhaps think about the consequences. In the short term, it's curtains for Ireland, as the reasons for doing business there evaporate, with direct effects like a drying up in corporate tax receipts and with side effects like a further decline in corporate rents and additional bad debts for the banks. Perhaps the fate of the Irish economy isn't his concern, but it doesn't stop there.

In the medium terms, if it no longer matters where you do business, then London, which is a tax haven of sorts compared to much of Europe, and the more mismanaged economies of the world, could have problems. The deciding factor will be how easy it is to do business, and this and previous governments have ladled more and more legislation and regulation on companies. Does the house believe that the sorts of changes he wants will make the 10,000+ pages of UK tax law shorter or longer, more complex or simpler? No doubts on the answer to that.

So Cameron, always overlooking the law of unintended consequences is probably going to harm the British economy, in some doomed-to-failure battle against exploitation of complex tax codes that he and his public school chums have been responsible for writing in the first place. Meanwhile, the other world leaders look on, make politely supportive noises, whilst privately thinking "what a lightweight".

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Re: Be careful what you wish for

Meanwhile, the other world leaders look on, make politely supportive noises, whilst privately thinking "what a lightweight".

I think you are being polite there ("what a lightweight"), I suspect the actual appraisal is much harsher.

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WTF?

Waste of time and effort

Wonder which idiot came up with this plan ? If you're minimising tax then this will do nothing because that is legal. If you are avoiding it then your money will be somewhere that will not sign up to this scheme.

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Re: Waste of time and effort

It's political expediency at its worst.

You are right in that nothing will change.

Sure, there's lots of hot air and there'll be a lot more 'reports' like the one this article talks about. But nothing will get done. As soon as the global economy starts picking up (and it will - it always has) tax revenues will increase as company profits increase and everyone will forget about the crap tax legislation (that successive Governments on both sides of the House) have put out.

Ireland will still have its 12.5% tax rates and companies will still flock to Ireland where taxes are low and the labour force is well educated - thereby reducing unemployment in Ireland and forcing the welfare recipients onto the UK were Labour have created a gravy train for those that don't want to work.

Mind you, it won't stop the idealists saying 'we must do something' and 'it will happen' despite the fact that tax avoidance has been a feature of the free market ever since taxes were invented - just google the English law invention of the Trust (or 'Use' as it was first known).

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Anonymous Coward

Re: Waste of time and effort

Hmm. Perhaps they should set it up so that if you don't sign up, the company operations (in whichever jurisdiction) pay a witholding tax on turnover (since "profit" is more easily gamed). Then company operations in any given jurisdiction have a choice, and they can still pick the less expensive one; but some tax is paid nevertheless.

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Re: Waste of time and effort

"pay a witholding tax on turnover "

In principle, an excellent idea, with existing VAT infrastructure to collect at minimal cost (although there'd need to be code changes because you'd presumably have a separate rate for this sales tax, and not allow recoverability on B2B transactions. The challenge is to make it simple and effective. Profit margins vary, so a sensible turnover tax rate for Apple is not the same as the sensible tax rate on a grocery business - that makes for different rates, complexity, and opportunities for gaming. There's also the problem that some businesses (financial institutions, property companies, leasing companies) make money from their balance sheet, not their turnover, so that a turnover tax is problematic.

The existing laws and structures would work well if properly enforced, through transfer pricing rules, fair valuation of franchise or property rights, and tax avoidance regulations. The law and mechanisms to do so already exist, but tax officials have been ineffectual in using them, and politicians have been idle and incompetent in clamping down quickly and hard on egrerious abuse that transcends the ability of tax officials to deal with.

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Unhappy

Re: Waste of time and effort

" As soon as the global economy starts picking up (and it will - it always has)"

Why? China's growth is slowing, and there's huge problems of bad debt yet to be 'fessed up and written down. There's a limit to how much concrete you can pour, or coal you can burn, and the ghost cities and property speculation all point one way. The EU remains bogged down in restrictuve practices, and in many countries by high debt levels and compound spirals of decline. The UK and US are both struggling with barely manageable debt levels (both public and private). Japan is exploring the furthest reaches of debt manageability (at normalised levels of interest the Japanese public debt would consume. Russia and the oil producing countries are dependant upon high energy prices simply to balance domestic budgets.

In previous crises they have either been regionalised, so that growth in another region has taken up the slack from a European or US stagnation, or we've had a good war to reset the system. Option 1 doesn't appear to be available, I don't like option 2.

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Re: Waste of time and effort

"pay a witholding tax on turnover "

We already have that - it's called income tax. Seems to work well enough for most of us...

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Unhappy

Re: Waste of time and effort

"As soon as the global economy starts picking up (and it will - it always has) "

As any investment opportunity will tell you - past performance is no guarantee of future results.

Worldwide economic growth correlates fantastically well with energy use. Even taking all the caveats about correlation vs causation its pretty clear that as energy prices rise, economic growth will diminish. In short, it's extremely improbable that already-developed nations will ever experience real growth (ie excluding inflation) of more than 2-3%, and growing economies will have their growth rates start to drop as well (since in most cases the high growth rate was due to a low starting baseline as much as the absolute growth)

In other words, when your fund manager shows you a shiny graph of how the world economy will develop in the next 30-40 years based on the last 30-40 years, feel free to laugh

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Re: Waste of time and effort

> We already have that - it's called income tax. Seems to work well enough for most of us...

Most of us aren't the ones with most of the money.

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Re: Waste of time and effort@James Micallef

Spot on that man. Although I would suggest that energy prices aren't necessarily bound to remain consistently high. Chinese demand is the marginal price setter in the world economy, and in turn is predicated on investment in hard stuff - buildings, roads, railways, airports, cities. They (like anybody else) can't do this indefinitely, and arguably have already over-built and await the bust. It is quite feasible, indeed probable for Chinese demand to decline. Everybody parrots on about the 9% GDP growth rate, but that's based on the multiplier of all of the decreasingly productive fixed asset creation.

Initially, if demand declines, then the exporters of energy and commodities will hold their nerve because their national budgets are based on vast trade surpluses caused by high energy prices. But as the demand withers, they'll need to start fighting with each other for volume, and prices fall. It won't stay low, and I doubt that low energy prices will kickstart the moribund western economies, in particular because national energy policies are busy encouraging investment in renewables that aren't viable even at $140/bbl. Europe having squandered its cash on solar panels and wind farms, the low price of alternatives does not create an option in a non-free market.

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"A step change in tax transparency"

Meaning: "You'll be able to see more easily where the money is going - but as the rates won't change it'll still end up there"?

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