back to article OECD lashes out at tax avoiding globocorps' location-flipping antics

Proposals to stop tax avoidance by multinationals like Amazon and Google have been unveiled by the Organisation for Economic Co-operation and Development (OECD). The international group proposed on Tuesday that firms be subjected to detailed reporting on a country-by-country basis of their assets and operations so officials …

  1. Mage Silver badge

    probably not enough

    But a start.

    Dragons depress the economy by sitting on cash rather than putting it into circulation.

    1. the spectacularly refined chap

      Re: probably not enough

      You don't think the super rich shove their millions under the mattress do you? If they buy shares or bonds the money is in circulation. If they stick it in the bank it gets lent out again, putting it into circulation.

      1. Mage Silver badge

        Re: probably not enough

        Corporations like Apple & Google do not act the same way as Super Rich people.

        Apple actually BORROWED money to pay a dividend, rather than pay tax on their offshore cash mountain.

    2. Destroy All Monsters Silver badge
      Holmes

      Re: probably not enough

      Dragons depress the economy by sitting on cash rather than putting it into circulation.

      You are just a know-nothing who doesn't know how an economy works, how economic calculation works, and what the European Central Bank is currently doing.

      But don't sweat it, you are in good company. I would say about 95% of the population are similarly clueless.

    3. Anonymous Coward
      Anonymous Coward

      Re: probably not enough

      Call me ignorant but I thought the bigger part of the problem was these multinationals having companies in tax havens that owned the trademarks/copyrights/IP/whatever that then licensed it out at such a few so as to make those other units not so profitable but, as if by magic, the one in the tax haven is. Until you tackle the issues with this licensing and transfer pricing you've not really scratched the surface more, shall we say, fucked over Ireland?

      1. Field Marshal Von Krakenfart
        WTF?

        Re: probably not enough

        You're right, the issue is not the tax laws of countries but the very lax transfer pricing regulations (not laws) that exist.

        And it's not just an European problem.

        Micr0$oft "licences" the right to sell Micr0$oft products in the USA to Micr0$oft Puerto Rico for about $8Billion, Micr0$oft Puerto Rico then sells Micr0$oft product to the 'merkins for $16Billion, effectivelly off-shoring $8Billion profit to Puerto Rico.

        The last time I bought a Micr0$oft product I paid a UK company for a CD for a product that was that shipped from Germany to Ireland.

        Of course the real issue is not that companies are actually doing this, but how did the laws get set up??

        Bloomberg claims that the "grand architect" of the double Irish Dutch sandwich is Feargal O’Rourke who heads the tax practice at Price Waterhouse Coopers in Ireland, he is a member of the O’Rourke/Lenihan political dynasty in Ireland and at one point in time was advisor to his cousin, the late Brian Lenihan, former Irish minister of finance. According to bloomberg "He advises both multinational companies and the government on tax policy and has emerged as his country’s leading defender".

        http://www.bloomberg.com/news/2013-10-28/man-making-ireland-tax-avoidance-hub-globally-proves-local-hero.html

        No conflict of interest then

  2. Dazed and Confused

    Sounds like

    It's time to get into the lobbying business.

    I forecast the biggest spurge of cash on anyone who can influance politico the world has ever seen. Coz lets face it, the cost of buying everone will still be a fraction of the tax bill that's heading their way.

    1. This post has been deleted by its author

  3. codejunky Silver badge

    hmm

    Always add more tax laws and increase tax's. Never seems to be a case of reducing tax so as to stop hobbling the competition.

    1. BoldMan

      Re: hmm

      So you advocate a race to the bottom where nobody pays tax anywhere?

      1. Fido L Dido

        Re: hmm

        So you advocate a race to the bottom where nobody pays tax anywhere?

        I would advocate a race to the bottom where there is no corporation tax. I know this flies in the face of popular opinion, so let me explain.

        When a company makes a profit, it can do a combination of a few things:

        - Sit on the cash indefinitely. This doesn't help the business, its staff or owners. Really the only purpose for a company to stockpile cash is because it hasn't decided what to do with it yet, or that it'll need it during rainy days.

        - Reinvest in the business. This could be R&D, upping production, employing more staff. A successful and growing business will generally grow its workforce.

        - Pay it out to the workforce by way of bonuses or increased salaries.

        - Pay it to the owners by way of dividends.

        Paying it out incurs tax bills, whether that's PAYE/NI on bonuses/salaries, or tax on dividends (which would almost certainly be at a higher rate if there was no corporation tax). Reinvesting in the business would not incur any direct taxation, but that money would be spent somehow, and would likely generate tax revenues.

        So what is the benefits of no corporation tax? For companies that decide to reinvest in growth, it generates wealth, which in turn increases tax revenue. For companies that decide to spend it on their staff and owners, it generates tax revenues. Pension funds would perform better, as most funds are invested in public companies. The better these companies perform, the more dividends they pay, the bigger your pension pot will be.

        Corporation tax is an indirect tax on pensions.

        Further, it was seen when Ireland had one of the most competitive rates of Corporation tax in Europe, they attracted lots of business - this was not coincidence. Any country that takes the bold move to reduce corporation tax rates or get rid of them will attract more business because of it. More business means more workers, means more money in the economy means more tax revenues.

        It's a long term plan, because the Government would see a short term loss, but a longer term gain. But then why would they want to do something that helps the next Administration once they are no longer in power?

        1. Anonymous Coward
          Anonymous Coward

          Re: hmm

          "or that it'll need it during rainy days."

          The last set of rainy days for my company lasted several years. Apparently it was some sort of global recession. The last one in the early 90s caused me a change of career.

          How facile a simple "rainy day" trips off the keyboard. Our staff are damn glad we keep a big brolly handy.

          Cheers

          Jon

        2. Tex Arcana

          Re: hmm @Fido L Dido

          You've got the 1%er Kock rammed firmly down your throat, if you believe that whole raft of bullshit you just explosively eviscerated all over the server.

          A majority of corporations and religious organizations are just pyramid schemes meant to help make the 1% even richer. The don't give a damn about the workers, the product, or even the smaller investors: they care only about their own bonuses, and the payouts to the other 1%ers. They already do everything they can to either avoid paying their fair share in taxes for the infrastructures they use, or to steal taxpayer money right out from under our noses; so why should they get an even bigger moral pass?? They'll just try to steal more "free money" out of our pockets.

          The ONLY way to make taxation fair is a national sales tax: no matter who you are, if you buy something, you pay sales tax. Period. No matter where it's from, inside or outside of the country, you pay.

          And it IS "unpatriotic" to not pay taxes. How the hell do you think the stuff we use and need (roads, sewers water, electricity, communications, hospitals, ambulances, for departments, police departments, military protection, government) gets there in the first place??

          Truth be known, if you don't pay your taxes, then not only do you not get to be a "citizen", you shouldn't get to use those things taxes pay for. Maybe that'll wake a few people up...

        3. Tom 13

          Re: hmm

          What short term losses? Here are the numbers for the US under Reagan:

          Numbers in US Billions

          Year - Fed income/fed total revenue

          1980 - 308.7/517.1

          1981 - 347.1/599.3

          1982 - 347.0/617.8

          1983 - 326.0/600.6

          1984 - 355.3/666.4

          1985 - 359.9/734.0

          1986 - 412.1/769.2

          1987 - 476.5/854.3

          1988 - 495.7/909.2

          1989 - 549.0/991.1

          source: http://www.usgovernmentrevenue.com/yearrev1985_0.html (change drop down for each year)

          1980 is Carter's last year in office, so those are his revenue numbers. Reagan barely had the tax reform enacted by the end of 1981, yet the preferential treatment of taxes was enough that bringing in even a small portion of that tax sheltered money produced a significant increase in both federal income taxes and total revenues. Keep in mind those cuts that were enacted in 1981 were phased in over 3 years. Revenue continued to grow in spite of the recession caused by the fiscal policy required to reign in inflation.

      2. codejunky Silver badge

        Re: hmm

        @ BoldMan

        "So you advocate a race to the bottom where nobody pays tax anywhere?"

        I am glad to see other people explaining to you that there are options in life beyond just taking more out of greed or tradition. To match you question do you advocate a race to tax everything and provide a welfare state based on the 100% taken income? Obviously that is taking your argument to the extreme, but that is what you did to mine.

        As it has already been said, a simpler tax system would reduce cheating and make it obvious where people are doing so. More important than that I think it will help our tax enforcers to understand the laws which they are applying (not very well in my experience). This country has a tax system based on taking first and returning later, instead of only taking what should be taken. Reduce the complexity and reduce the burden.

        Tax was designed to feed off the rich however every penalty designed for the rich still stands as it absorbs the much less wealthy it was never intended to affect. So when you argue for more tax you argue to tax the poor because they will never be able to escape it, while the richer will use any means necessary to avoid being robbed even legally not being here.

        So instead of trying to fix the problem by adding another tax which will only attack the ones who cant get out of it (less wealthy), why not level the playing field? Instead of killing smaller businesses by crippling them, why not reduce the tax burden on them instead of increasing it? Instead of assuming the solution is to steal more (and that is what it is) why not solve the problem by allowing smaller businesses pay less in crippling tax and instead allow that money to make people richer. That could pay for more workers, more stock, etc.

        And yes the big companies will love paying low tax too, but they are already doing that anyway. And stiffing you and all those hard working people trying to make a business. Instead of taxing away jobs and stalling the economy why not reduce the burdens and allow more people start more businesses with less money? Make it easier for those with less to try and make more.

      3. LucreLout
        FAIL

        Re: hmm

        "So you advocate a race to the bottom where nobody pays tax anywhere?"

        Oh FFS. Not that unionised garbage again!

        10% of £1Bn is a lot more tax than 50% of £1M, or 100% of nothing. Why is it that socialists never get that? We, you, are in a global competition for tax revenues, be it from high earners, or from corporations. Standing on ceremony wittering about some Marxist claptrap isn't going to get the job done.

        Reducing tax rates reduces the need for avoidance, and spurrs the economy into action. I have very little incentive to earn more as the state will take half of any gain from me. As a result I prioritise appropriately and simply work less.

      4. Tom 13

        Re: advocate a race to the bottom where

        No, a race to sanity and away from Marxist idiots/ideologues.

    2. Eddy Ito

      Re: hmm

      Countries would probably be much better off simplifying their tax codes so they aren't giving advantage to certain companies and driving others to look for loopholes in other jurisdictions. It would also make it very plain to see when someone was trying to cheat. Top it off with a lower tax rate and revenues may even go up since companies may determine that the savings of the tax trick tango isn't justified by the expense.

      As it stands if a US based multinational wants to build a new factory in the US the best thing for them to do is buy a cheap foreign outfit, perform an inversion and become a foreign company. In that way they can invest the money held overseas in the factory and save the 35% tax that would be incurred by bringing the money "back" into the US as a US company. Of course Obama would call them unpatriotic if they did that.

    3. Tom 13

      Re: hmm

      The more interesting hypocrisy/idiocy is that this proposal is no different than the US demanding MS turn over data from Irish servers about email accounts. Countries are essentially demanding information about things which are not occurring in their territory. In this case there's actually a physical location issue as well, unlike the internet of data where everything is next to everything else.

  4. Anonymous Coward
    Anonymous Coward

    Except...

    My country does not have a tax treaty with the USA. I therefore lose 30% of all income to the IRS on any sale taking place in the US. I am not American, nor have I ever been resident in that country. My only salvation at stopping that is to house my company in a country that does have a treaty with the US, then I'd pay a fair rate on the local economy and write the tax bill down with deductions. Something I cannot do with the IRS.

    Eliminating offshore tax havens screws a lot of small business owners into paying the Americans taxes they do not deserve. Corporations will find another legal loophole and the little people will pay the price.

  5. Anonymous Coward
    Anonymous Coward

    I'm more interested in the creative accounting.....

    ...that allows Amazon to show only a pre-tax profit of £74m on £3350m sales.

    That's a profit margin of 0.02% on sales. I call bullshit.

    What they are doing is pushing real profits around the organisation, hiding them under rocks, so they don't show a profit, so they don't have to pay tax.

    And despite only showing a £74m profit, the cheeky bastards still don't want to pay the going rate - £1.8m in corporation tax in the UK is a fucking disgrace.

    To put that into perspective - that's about the same as just 100 people on £50k a year pay in tax!

    Disgraceful.

    1. Yet Another Anonymous coward Silver badge

      Re: I'm more interested in the creative accounting.....

      That's because none of the 1000s of workers at Google' new HQ do any actual work.

      All the sales a re made by a single REALLY productive guy at their office in Ireland.

      That's why Ireland's economy did so well - Irish sales guys are 100,000% more effective than those in countries with higher tax rates.

      1. seansaysthis

        Re: I'm more interested in the creative accounting.....

        Obviously because the Irish are best workforce in the world :)

        Actually it stinks because indigenous industry/business don't get any where near the same amount of relief. The Irish economy did not do so well, it collapsed after the construction bubble as manufacturing jobs went after the tax reliefs were up. This was masked by the move from manufacturing to construction. in the jobs market.

        Setting up indigenous sustainable industry is key to the long term success. The fact is that Ireland is an export lead economy because its population is relatively small. You can hardly call a debt ration of 120% to GDP a success. We had our chance to build something for the future and we blew it. We should have been concentrating of renewable energy,moving up agriculture value chain and developing our own IT industry. Instead we built apartment blocks in fields.

        1. Tex Arcana

          Re: I'm more interested in the creative accounting..... Irish apartment blocks...

          That's the Danny Faulkner method of getting rich quick: build a bunch of stuff on credit from the banks, ****with giant local tax breaks****; then default on everything and head off to the Cayman's with the profits. Meanwhile, the economy collapses, and the taxpayers get screwed because the local governments have to foot the bill on dealing with the shoddy buildings that will never get occupied.

    2. Tom 13

      Re: I'm more interested in the creative accounting.....

      Interesting. A company doing exactly what the commies want, yet the commies call BS on them.

      Amazon really does have a profit that low because they have an established corporate policy of investing anything that would otherwise be profit into expanding their business into new territories. Price of the stock goes up because they generate more revenue and have a larger market share. Not what I'd want as a share holder, but it seems to work for some people.

  6. Leeroy

    About bloody time. ........ if it actually happens.

  7. Steve Davies 3 Silver badge

    Wot? No (anti) Apple Angle?

    Now that's a surprise. Mind you they must pay a lot in Business Rates for their Regent St Shop. Could that be more than Amazon paid in Tax? Now that would be news....

    1. Yet Another Anonymous coward Silver badge

      Re: Wot? No (anti) Apple Angle?

      The Regent St shop doesn't pay any business rates because, like all Apple stores, it really only exists in a higher plane of existence and can only be perceived by the truly stylish.

      - will that do ?

  8. Destroy All Monsters Silver badge
    Holmes

    Political garndstanding and fiscal wankerisms

    Search giant Google has been accused of avoiding UK tax by routing most of its earnings through Ireland – saving about £100m a year by paying Irish corporation tax at 12.5 per cent rather than the 28 per cent in the UK.

    Ok, so this is basically a funny bunfight between the different taxation reservoirs, a beggar-your-neighbour freakshow and nothing else.

    In other words, Ireland's extortion result would be down by £100m a year, and the UK's up by £200m a year. The £100m clawed back would not go to investment at Google, but to various preferred taxfeeders in the UK. This is also going to help a lot towards paying back the national debt of £1'000'000m (that's not a typo).

    I laugh.

    1. Yet Another Anonymous coward Silver badge

      Re: Political garndstanding and fiscal wankerisms

      Although IIRC they don't even pay Ireland's 12.5% - they agreed some sort of discount rate deal in return for creating lots of jobs.

      1. Destroy All Monsters Silver badge
        Holmes

        Re: Political garndstanding and fiscal wankerisms

        That kind of horse trading is not a good idea either. Clarity in all things.

    2. DavCrav

      Re: Political garndstanding and fiscal wankerisms

      "In other words, Ireland's extortion result would be down by £100m a year, and the UK's up by £200m a year. The £100m clawed back would not go to investment at Google, but to various preferred taxfeeders in the UK. This is also going to help a lot towards paying back the national debt of £1'000'000m (that's not a typo)."

      For investment at Google, notice that this is 1) most likely in the US anyway, not the UK, and 2) would probably really be money into a massive cash pile in the Cayman Islands, not investment. See Apple's $100bn cash pile as an example.

      As for paying back the national debt, no £200m/year is not a lot. But 500 global companies avoiding/evading £200m/year each is £100bn/year, and that's the deficit.

      1. codejunky Silver badge

        Re: Political garndstanding and fiscal wankerisms

        @ DavCrav

        "For investment at Google, notice that this is 1) most likely in the US anyway, not the UK, and 2) would probably really be money into a massive cash pile in the Cayman Islands, not investment. See Apple's $100bn cash pile as an example."

        This sounds like a simple concept- you can earn money, work hard and make money, be innovative and then you can do whatever you want with the money. As long as its what you want? That sounds like a poor deal. You complain about a pile of cash, but the alternative was demonstrated by frivolous govs around the world who are now massively in debt and wanting the money these companies wisely managed. Its like eating all your sweets then trying to rob the other kids who have self control.

        "As for paying back the national debt, no £200m/year is not a lot. But 500 global companies avoiding/evading £200m/year each is £100bn/year, and that's the deficit."

        Evading is illegal, avoiding is common sense. If you feel that private entities have the responsibility to bail out poor money management by the government then I urge you to lead by example, stick your hand in your own pocket and overpay your tax bills. If all the members of the lynch mobs would do the same then maybe the deficit can be tackled that way! And £100bn/yr is only until they add to it. Probably spent trying to bribe voters, bribe scotland or pay for pet projects and little public sector empires. Anything left may be spent on public services assuming nobody needs a moat, a duck house or porn films.

  9. Anonymous Coward
    Anonymous Coward

    Oh goody!

    The Google, Amazon.com, Apple, ..., Anti-Competition Protection Tax Agreement. At which point I hear a collective "huh?" from the audience. Question to the audience: "At what point did Amazon.com stop opposition to applying state's sales taxes to their sales even without an in-state physical presence?" Why when they had a distribution warehouse in all their major markets. At that that point, their unit that insured their compliance with all the state and other locality taxes became a competitive weapon preventing anyone other than Wal-Mart, for instance, getting in.

    Sorry, but such regimes will always be lobbied to apply to the competition as equally, if not more so, and lacking the size to achieve similar compliance scale.... Oops! Regulations are opposed by any rational economic actor right up to the point where it becomes a barrier to other players entering the market or when it can be used as a competitive weapon within a market segment.

    The point that you should take away here is to look long and hard at every word, keeping ever mindful of how slippery languages can be in the hands of lawyers, regulators, politicians, and lobbyists (actually a single group over their lifespans). Of serious concern is that "they" are doing this in phases. Methinks they've learnt what comes of single treaty or law proposals (TTIP, CISPA, ...) now that we've become aware of how that game is played. It ain't so easy if you have to micro-monitor every play, no matter what the sport.

  10. Mage Silver badge

    Tax Rate

    There does need to be a universal system system without exploitive loop holes. having NO corporation tax and tax elsewhere MIGHT work. Because you can tax the income of dividends, tax sales, tax workers and Management etc.

    I have no idea if zero corporation tax everywhere would solve this. But at least there is agreement that big international companies are getting an unfair advantage over small local companies and distorting the economies.

    1. Tex Arcana

      Re: Tax Rate

      "having NO corporation tax and tax elsewhere MIGHT work."

      Yeah, right. O_o

      As long as corporations are considered "citizens", then they need to pay taxes, and a fuckton based on their true incomes.

  11. LucreLout
    Mushroom

    Its not about taking more...

    In order to work in all but the short term, taxes need to be predictable, unavoidable, and low. Miss anyone feature and you get avoidance, structuring, and evasion. And you always will.

    To that end, we should aim for a tax rate of 10% on all income, be it PAYE, dividends, interest, or profit – dividends paid in the UK would be tax free where the corporation tax is paid here. You’ll find very quickly that you’ve fixed the tax system, but unfortunately now have less tax revenue to spend; A problem that will persist for a decade or two while your economy grows.

    So added to that you need to start with a blank sheet of paper and write down the most important task the state undertakes on our behalf, and a budget for achieving that. Deduct that from your lowest expected tax revenue minus interest payments. Repeat until your lowest expected tax revenue is zero. The state then stops doing all the other things it currently does.

    Before the (mostly) public sector employed commentards fire up their angry trousers, consider which of the following services you’d pay for out of your own pocket were the state not offering them:

    Street football management

    5 a day fruit and veg co-ordination

    Diversity management

    A hearty lives project manager (meaning there’s a whole team of people paid to make kids in Newham run about a little)

    Environmental sustainability / carbon management

    The list is almost endless. And absolutely none of it would be paid for in the real world by real people out of their own pockets. We’d all pay for frontline civil defence and military personnel, though probably would question why every other person in the NHS is an administrator or other clerical role, when you don’t find nearly as many in private hospitals.

    Before seeking to take someones income to spend on your schemes, first make sure the person you’re taking from shares your vision. The state needs less than half the taxes it takes, and is simply wasteful on an industrial scale. It’s time to cut hard, and cut deep, none of the tickling around the edges we’ve seen the past 5 years. Let’s have a vision, and a target, for what the state could achieve on 10% taxation, instead of the 50% it currently consumes.

    1. Tex Arcana

      Re: Its not about taking more...

      "And absolutely none of it would be paid for in the real world by real people out of their own pockets." <-- especially corporations and 1%ers, am I right?

      This is why we have taxes and government: because NO ONE is inclined to pay for anything out of their own pockets, yet expects someone to provide whatever it is they want anyway. Corporations and 1%ers are notoriously at the top of this list, the rest of which is filled out by the hoards of Teahadists who don't care about anything or anyone else, as long as they get to act like their deified 1%ers.

      Someone wanted those services you listed as "useless", and in large enough numbers for the government to take notice. And that's one function of government: to enact and enforce those services we demand as "public services".

      The problem with the budgets of governments isn't what we perceive as "waste": it's the money being siphoned out by crooked politicians to funnel back to their leash-holders, who demand kickbacks for the bribes--i mean "political donations"--they gave them so they can gut the laws and bleed our governments dry.

      And until WE, THE PEOPLE (and this applies for any and all nations, not just the US) realize that it's OUR GOVERNMENT, and that it's OUR MONEY funding it and the benefits we receive from it, it's not going to change, and the 1%ers and the corporate thieves will keep stealing our tax money and screwing us all.

    2. DavCrav

      Re: Its not about taking more...

      "Let’s have a vision, and a target, for what the state could achieve on 10% taxation, instead of the 50% it currently consumes."

      This isn't a great vision. In the UK (the only country I know well) state old age pensions are about 10% of GDP, at about £100bn (roughly, it's order of magnitude). Your 10% nonsense would mean that's it. No schools, hospitals, roads, army, police, fire, benefits, repayment of debt (third highest expenditure by department), government, parks, cleaning, universities, research, anything else you can think of.

      Well done, you just broke the world. Or rather Herman Cain, with his idiot 999 plan did. It's fun because in the UK, 999 is the number for the emergency services.

  12. T J

    Good but Beware

    Glad to see this inspired the inevitable usual dickh... intelligent commentary.

    Whilst this approach is a GoodThing[tm] - the bastards should pay their fair tax share - anything that starts to look like World Government stirrings makes my blood chill. A Gordon Brown or Tony Abbot at the head of a world parliament.... kinda makes the nuclear exchange threat of the 60s pale into insignificance.

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