back to article Multinationals hiding more than half a trillion from G20 tax collectors

In 2012, something like US$80 billion worth of multinationals' profits worked on their suntans in Bermuda, according to an international report into profit-shuffling and tax avoidance. Oxfam, the Tax Justice Network, the Global Alliance for Tax Justice, and Public Services International have put their heads and wallets …

Anonymous Coward

Well this answers one question

That clearly shows why Oxfam is on the list of "targets" for the BND and other agencies together with various terrorist organizations. Though shall not question thy paymasters of our politicians and go unpunished.

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Re: Well this answers one question

BND is taxpayer funded. You think they want to help people pay less tax?

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Re: Well this answers one question

BND is directed by politicians on (about to be) on multinational payrolls.

TFTFY

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And yet..

No-one has broken any rules because you let accountancy firms write the rules with loopholes they can seek to their clients.

It's all very well being holier than thou about this but we should all pay as little tax as we are legally allowed to pay.

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Vic
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Re: And yet..

we should all pay as little tax as we are legally allowed to pay.

Do you not?

I don't know anyone who pays more that the Tax man demands...

Vic.

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Big Brother

WOW! SUCH TAX LOSS! MUCH ABSENCE OF STATE GLITTER!

We could actually fuel about 1/10 of the Iraq war with that. THINK ABOUT THIS! 10% FREE WAR!!!

Well, you can have money going into actual productive investments instead but who wants that? Today, we can just print up the stuff, right?

KEYNES WAS RIGHT! No wait, then we wouldn't need tax collectors either. Ermm...

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Re: WOW! SUCH TAX LOSS! MUCH ABSENCE OF STATE GLITTER!

Very clever. You were really talking about the Queen's jewels but managed to hide it into war budgets.

But seriously, how will we pay to get the crown polished?

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Re: WOW! SUCH TAX LOSS! MUCH ABSENCE OF STATE GLITTER!

If you need to pay to get your crown polished, you may not be holding it correctly.

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You could stop this so easily...

Just tax companies on their unit-sold revenues in each country. But then you would have to deal with the armies of angry lobbyists and contributors.

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Re: You could stop this so easily...

Genius! We could call your new tax something like - I dunno - Value Added Tax or Sales Tax. Why has no-one ever thought of this?

And before anyone says: "but it's the consumer who pays those taxes", consumers eventually pay all corporate taxes, which can only possibly be funded by reducing costs (that ultimately means lower salaries or fewer people being paid the same salaries); increasing prices; or reduced profits (that means your savings and pension funds). There is no magic money tree, and to say this is not to make a political point, it follows from the definitions of these terms and basic arithmetic.

Where's Tim Worstall, when you need him?

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Re: Worstall

No need for corporation tax, as you imply.

http://www.theregister.co.uk/2015/01/11/tax_systems_the_good_the_bad_and_the_completely_loopy/

"So, in terms of efficiency, it's not that difficult to design a taxation system. Start with land taxation, add on any Pigou Taxes we want (carbon, baccy, booze, pollution etc, we want these precisely because they do destroy certain economic activity), as much VAT as we can get away with and if we still need more to feed the ravening maw of government, income taxes and on up the list."

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WTF?

> into how multinationals are picking the pockets of G20 nations.

Sorry, I thought this story was about corporations not paying tax. I didn't realise that they were actually stealing money from governments.

Isn't that against the law in most places?

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Mushroom

>Sorry, I thought this story was about corporations not paying tax. I didn't realise that they were actually stealing money from governments.

Isn't that against the law in most places?

Not if you are rich. THe rich do not have to follow the laws of mere mortals

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Trollface

Who pays taxes

"Taxes are for little people" Leona Helmsley

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The corporations are following the laws. They are paying taxes on the money they earned in the countries they earned it in.

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@James

Not if you are rich. The rich do not have to follow the laws of mere mortals

Rich in that sense doesn't mean what you may think it means.

A family friend retired from public service at the grand old age of 55. For those 55 years he had never committed a crime. In the past 20 years since retirement, he has done largely as he pleased, because his income was secured at 100% of his normal salary (last minute pre-retirement promo boosting his final salary through the roof meant his 40% pension payout equaled his typical salary payment). Fines mean very little to him, a criminal record means nothing at all, only prison would matter and he's very unlikely to be sent there as long as he pays his telly tax.

He may only get up to trivial stuff, but compared to my peer group who have to keep our noses clean to retain employment opportunities (ANY criminal offence is deemed immediate GPM in the City), he's a one man crime wave.

Its not just the millionaires, its pretty well anyone with a final salary pension in payment that can do whatever they want, coupled with welfare families with no intent to work, transient workers for whom a criminal record in the UK means nothing of consequence... Law abiding people assume most other people are also law abiding, when in reality, that isn't anywhere near clear cut as they think it is.

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In other words...

"how multinationals are avoiding having their pockets picking by G20 nations"

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http://www.private-eye.co.uk/ has been going on about this & similar dodges for at least 5 years if not more, in various different sections (business, government, general news etc) plus a couple of Special Reports. Being (mostly) UK focussed & distributed it may not have made WW headlines.. :(

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Basic Problem

The basic problem is corporate taxes are built into the price. So ultimately it is the consumer who pays indirectly. I wonder if a more transparent tax scheme (sales/VAT) at point of purchase with no corporate taxes be wiser.

Also, in the US, overseas profits are taxed both in the country where booked and in the US if they repatriated to the US. If a America's Native Criminal Class aka Congress would shut and stop subtracting from the sum total of human knowledge when they speak someone might fix the problem. But that is highly unlikely.

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Re: Basic Problem

The basic problem, more so than the taxation being built into the price, is that the money being salted away is not being used in the economy. No investment into productive use, unless you count buying property in London/New York as productive.

Paying as little tax as legally possible, well, that's ok..so I'll just open myself a few offshore accounts and shift my wages to Bermuda via Ireland...bet the gov would rapidly shift its arse to shut that down: If 30 million people did the same as a few corporations, or a few hundred multi-billionaires.

The rich get away with it because they're rich, and have bought the politicians.

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Re: Basic Problem

There is no reason that Briton should be able to tax money that people earn in other countries.

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Re: Basic Problem

@JohnMurray

The basic problem, more so than the taxation being built into the price, is that the money being salted away is not being used in the economy.

That isn't actually true. It would be, if the money remained in place, but it doesn't. It just gets declared there for the year then used to pay out next quarters dividends.

Paying as little tax as legally possible, well, that's ok..so I'll just open myself a few offshore accounts and shift my wages to Bermuda via Ireland...bet the gov would rapidly shift its arse to shut that down: If 30 million people did the same as a few corporations, or a few hundred multi-billionaires.

Wages are tricky, but if you're a contractor there's nothing particularly magical about most of the avoidance going on - it's something you can implement yourself if you wish. It'll always be easier to do with expensive advisors and accountants, but there's really nothing stopping you reading the tax code of several countries and their rules around incorporation.

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Re: Basic Problem

"If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. ***Your worldwide income is subject to U.S. income tax, regardless of where you reside***"

https://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad

Sauce for the goose.....

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Re: Basic Problem

So, get honest. You don't like paying tax here, go and live somewhere else.

Otherwise, while you're busy ducking tax, don't whine about the infrastructure being worn out, or the services being crap, or hospitals running in the red....no police, poorly equipped army (etc)....

Shit 'appens.

Still, if you have your own little pacific island I suppose the rest of the planet is a bit garbage innit.

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Anonymous Coward

And?

The post is required, and must contain letters.

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Greed knows no boundries

The socialists want money from those who earned it in order to waste it on those who don't.

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Anonymous Coward

Re: Greed knows no boundries

The socialists want money from those who earned it in order to waste it on those who don't themselves.

FIFY.

Greetings, New Labour.

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Thumb Down

Re: Greed knows no boundries

Translation: "Fuck you, little people, I'm alright Jack!"

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Re: Greed knows no boundries

Oh right, but the biggest thieves are the companies that absolutely rely on our economies having advanced education, infrastructure and rule of law enforcing strong property rights but pay nothing towards that. So... they must be socialist then? The ultimate free-riders trying to get something for nothing.

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FAIL

Come on El Reg - you can do better

Oxfam, the Tax Justice Network, the Global Alliance for Tax Justice, and Public Services International

So what we have is a charity that has grown so big it has failed to deliver and now no longer understands why it exists; a bunch of lefty union barons devoid of any operational knowledge about the mechanics of company & revenue structuring, who try to conceal their identities behind a simple cross border company arrangement; some rabid redistributionist’s; and a bunch of fat cat trougher public sector union barons.

The report’s conclusion was written before they even began gathering facts or evidence.

Those profits get processed through various implementations of the “Irish-Dutch sandwich” to be booked in low-tax countries like the Netherlands, Ireland, Luxembourg, Switzerland and Bermuda.

And here we have the giveaway that they don't really understand what they're talking about. In terms of structuring your revenues, this is entry level stuff that is about 5 years out of date.

The magic ingredients in the professionals secret sauce isn't some beach haven in the sun, its places like Holland for IP, Belgium for capital gains, Delaware for everything, the UK for loss treatment..... Seriously El Reg, if you're going to write about this stuff can you get someone that understands it properly to advise you? Regurgitating this socialist puff piece is beneath you and your readers.

between $500 and $700 billion gets shuffled around in this way

If they knew what they were talking about then they'd know the numbers involved aren't measured in billions. I have some professional experience in this area, so I know for a fact they don't, not with numbers like these.

There is a simple way to end corporate structuring / tax arbitrage, and it is this: Have globalised framework of rate harmonization, such that differing jurisdictions convey no advantage over each other. It is purely a problem of politics. Now, if the politicians cannot do their job, then who's fault is that? Anything else, everything else, is just tinkering around the edges.

Business is a bit like drugs in sport. As soon as one person takes them, everyone else has to just to compete (Lance Armstrong come on down). It is the same with tax minimization - as soon as one of your competitors does it, you have to, or they eat your lunch. Ideology rarely comes into it.

As the UK is in the EU, I am entitled to open a business in any jurisdiction. Let’s say I start a company today making medical devices based upon in house research as well as licensing IP from the market. If I start one company in the UK because that is where I live then I'm going to get bounced out of the market quickly. I need a holding company in Belgium for the trading company, a subsidiary in the UK for the licensing fees of the market IP, a holding company in Holland for my IP royalties (Hello Bono & U2), and a bunch of other companies for different divisions. And that is just to be able to compete in the market.

Tax is an emotive issue for most, but if anything is to change, emotion is going to have to give way to reason, logic, and pragmatism. None of this reports backers are helping that process, because they're only adding ignorant noise which is easily dismissed and which causes immense collateral damage to their cause.

There are various arguments about how much tax is a good thing, after which it becomes a bad thing. if you believe the current Shadow Chancellor that "There is no such thing as private wealth", or words to that effect, then it is 100%. If you believe the current Chancellor its about 30%. And if you believe a hard core capitalist it’s pretty close to 0% "all tax is theft" being their sentiment.

The starting point of any grown up debate isn't ranting like in this report, it is to determine what services we want the state to provide and how we want them to be provided (public/private, cheap/competent etc). A clean sheet of paper being the starting point for that. That will inform how much tax we need to raise, and after that we can begin a debate on how we raise that revenue and what "paying your fair share" really means. Is fair a flat tax? Is fair a fixed sum per person? Is fair an escalating curve such that the more you earn the greater percentage of tax you pay. Is fair something else entirely?

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Re: Come on El Reg - you can do better

"Seriously El Reg, if you're going to write about this stuff can you get someone that understands it properly to advise you?"

Heh-heh. Touché.

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Love this:

Small market traders and shops setting up the same tax dodges as the big multinationals to expose how these guys take and take and take and give nothing back.

http://www.independent.co.uk/news/uk/crickhowell-welsh-town-moves-offshore-to-avoid-tax-on-local-business-a6728971.html

As one local trader put it: "We do want to pay our taxes because we all use local schools and hospitals but we want a change of law so everyone pays their fair share."

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Kill a few people, they call you a murderer. Kill a million and you're a conqueror.

The same goes with taxes. Holland is mentioned as a tax haven, but only for big corporations.

If a working man pays his road tax one week late, he gets threatening letters and a 80% fine.

Same goes with some little shopkeeper filing his VAT statement one day late to the tax.

Dutch legal system puts pregnant women in jail for failing to pay traffic fines.

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The Artful dodgers

I suspect these Mega Corps who have engaged in aggressive tax avoidance will be the first in line to sue through TTP & TTIP the same countries Governments who have the cheek to defend their democratic mandates. It is also noticed that the much lauded success by David Cameron, for initiating a G20 agreement to overcome such tax avoidance measures was predominantly lobbied, influenced and had sizeable representation of the offending Corporations on the board drafting it. So not only has it been slow in coming, has had most of its teeth removed.

Tory solution, benefit, health, tax credit and other austerity cuts on those who can't defend themselves.

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