Tuesday, November 20, 2012

On the news agenda: TJN in FT, NYT, Guardian

We monitor our news coverage and we are in the news several times every day. Our current crop is quite a high profile one. First, we have a comment article by TJN Senior Adviser Sol Picciotto and writer Nicholas Shaxson in the Financial Times, entitled Make Corporate Tax Rules Fairer For All. It's  about corporate tax avoidance and unitary tax. It's a fair bit shorter than what was submitted but still a good edit. The article states:
"The world’s tax rules have not kept pace with profound changes in the global economy."
Then it goes on briefly to describe the hocus-pocus of international corporate income tax avoidance, and our original article (though not the published version) went on to say:
"The rules, dominated by the OECD club of rich countries, are supposed to tackle this prestidigitation by pretending that it is possible to set an “arm’s length,” market-determined price for these transactions, based on comparables elsewhere. But multinationals generally produce unique products and services and enjoy economies of scale and scope, so even the world’s most sophisticated tax authorities cannot find appropriate comparables. Developing countries find it nigh on impossible."
The OECD's methods are, as former top US international tax official Michael Durst explains, “based on a fundamental misunderstanding of practical economics.” The published version then notes a better, simpler alternative: unitary tax.
"Instead of taxing multinationals according to the legal forms that their tax advisers conjure up, they are taxed according to the genuine economic substance of what they do and where they do it."
We should note that unitary tax is entirely compatible with the concept of country by country reporting, another core theme of TJN.

If you want to know more about unitary tax, see Prof. Picciotto's draft paper here. A substantially edited final version will be available soon.

Next, we have TJN Senior Adviser Richard Murphy in the New York Times, with a very nice quote
“Google is saying, ‘We just float around freely above this useful aircraft carrier, Ireland,’ ” said Richard Murphy, founder of the Tax Justice Network, an independent organization that campaigns against what it calls tax “loopholes and distortions.” “What France is saying is, ‘We don’t think you float around over Ireland, we think you are in France.’ ”
we also have John Christensen in The Guardian, talking about tax avoidance by the British broadcaster Sky:
"John Christensen of Tax Justice Network said: "Tax avoidance is deeply engrained in Britain's corporate culture. While the government's proposed general anti-avoidance rule will go some way to remedying this, more needs to be done to put pressure on accountants, tax advisers and tax lawyers to build tax compliance into their professionals norms and guidelines. Tax avoidance is now a high-risk activity, not just to the companies involved, but also to the reputations of their professional advisers."
Quite so.


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