Tuesday, June 07, 2011

Life on Planet Zug - some good questions asked

An excellent story in Britain's Evening Standard outlines, as if it needed stressing, the sheer artificiality of some of the business offered by Swiss cantons - in this case the most famous from a tax perspective, Zug. The reporter, by his own admission no tax expert, started off like this:
One recent lunchtime I found myself in the pharmacy queue at my local branch of the high street chemists founded by John Boot in Nottingham 162 years ago. Suppose that a pharmacist earned a salary of just over £35,000, I thought. That would make him or her liable for income tax at 40 per cent. Crippling in London, but there's probably consoling pride in working for a trusted British brand. Except Boots isn't British. It merged with the huge European business Alliance Unichem to form Alliance Boots in 2006. And it moved its financial affairs to Zug in 2008, shortly after its £12 billion takeover by businessman Stefano Pessina and US private equity house KKR.
. . . .
I found myself thinking, how dare they? When we're all being asked to shoulder more cuts, more tax, more debt, how very dare they.
A very, very good question to ask. Exactly. And so he decides to go and have a look for himself.
I have to hoof it up the stairs as the lift is broken.

A girl of about 20 answers the door. Is anyone from Boots in? "Er, normally there is someone here but today they are in Zurich," she says, drawing circles on the carpet with her foot. You mean Boots's corporate presence is represented by just one person? She shrugs. I give her my card and ask her to get the elusive employee to call me to discuss tax.
There's plenty more, including snippets on the secretive giant trader Glencore, a master at commodity market shenanigans which resides in a "reassuringly vulgar" building in this Swiss Hobbit-town:
It has topiary and water features and its own restaurant, Fontana. Employees smoking outside stare if you arrive on foot. A steely harridan at the reception desk says their media relations man is "not here".
Well, well worth a read.


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