Ever since the financial crisis there has been a growing clamour for multi-nationals to pay their \u201cfair share\u201d of taxes. In the UK, targets include Amazon, Google, Starbucks, Vodaphone. \u00a0In India targets include \u2013 wait for it \u2013 Vodaphone. \u00a0In the US, they include, you guessed, Amazon, Google and Starbucks. In France, it\u2019s all the above. \u00a0And so it goes on.<\/p>\n
And today, yet another politician has joined the voices of the dissatisfied.\u00a0 The American President no less, complaining about US Corporations moving their tax base overseas.\u00a0 His speech included two comments I find interesting:<\/p>\n
Looking at the first of these comments, I wonder how the President would feel were, say, Amazon to be obliged to pay tax in Germany on profits he believed it earned from its US activities and should therefore be taxed in the US. Would he turn to Amazon and say \u201cI\u2019m the president, and I say you pay your US dues\u201d, and would he then turn to Angela Merkel and say \u201cthey\u2019re US profits, they get taxed here, not there\u201d, or would he say nothing at all to Angela, and let Germany tax the same profits? Or would he perhaps turn to Xavier Bettel, Luxembourg\u2019s Prime Minister, and say \u201cyou can\u2019t offer your tax structure to Amazon, Amazon\u2019s mine\u201d.\u00a0 Maybe in a conversation with David Cameron, he\u2019d say \u201cwe charge our US businesses 35% on their profits, you\u2019re deliberately undercutting us, I\u2019m telling you to stop it \u2013 now!\u201d<\/p>\n
And when, or if, he invokes the second of his comments, will Angela, or Xavier, or David, start bleating about the damage he\u2019s doing to their tax base?<\/p>\n
What rules are multinationals meant to play by, if not those established by law?\u00a0 And who, if not our political masters, is responsible for passing those laws?<\/p>\n
Tax arbitrage exists, and will continue to exist, as long as national governments use their tax laws as a device to attract inward investment. \u00a0It ill behoves the leader of the most powerful nation on earth to cry foul when he bears as much responsibility as anyone for setting the rules.<\/p>\n","protected":false},"excerpt":{"rendered":"
Ever since the financial crisis there has been a growing clamour for multi-nationals to pay their \u201cfair share\u201d of taxes. In the UK, targets include Amazon, Google, Starbucks, Vodaphone. \u00a0In India targets include \u2013 wait for it \u2013 Vodaphone. \u00a0In the US, they include, you guessed, Amazon, Google and Starbucks. In France, it\u2019s all the[…] <\/p>\n