Corporate Tax Evasion

Corporate tax evasion has become quite a big issue in the UK. Things like the Occupy movement and Uk Uncut have raised awareness of this as an issue and it has now reached the mainstream political arena.Recently 3 multinationals (Google, Amazon and Starbucks) were called to account for their activities by the public accounts committee with some quite amusing results: Amazon, Google and StarbucksAt one point the Amazon rep was accused of "unacceptable nonsense" and dismissed on the basis that someone who actually knows what they are talking about needs to answer questions in a soon to be arranged follow-up.So my question: What should be done?Should we tread carefully and treat these multinational companies with special privileges because we desperately need the jobs and economic activity these hugely beneficial multinationals generate? Or would we be better off imposing the most stringent tax regimes possible on these blood-sucking multinationals so that local companies who do pay local taxes and employ local people can step in to the space these multinationals threaten to vacate if they are properly taxed?Or something in-between...? If so what?

The problem with tax avoidance is the laws. They need to be changed. Big business will always do the best they can to avoid paying any more than they have too (unless there is some PR cache in paying more).As I understand the situation is that they can use the law to not pay tax on UK income as they declare profits in another country, legally.Change the law; problem solved.

I think that we tread far too cautiously around big business.We always hear the cry that we will scare away huge, work-generating enterprises if we do the proper thing and charge them a reasonable proportion of their profits in taxes. But I think that the equation is fairly simple for the Google/Amazon/Starbucks of the world. In the UK, you might have an annual profit available of (let's say) 500m. We propose to take 200m of that away from you in tax, by stopping you avoiding UK corporation tax. Now, would you all like to abandon the UK in protest at our dreadful tax laws and forego the 300m you'll walk away with in your pocket ? In theory, the choice is between them staying in the UK and taking 300m profit out of it, or withdrawing from the market and taking nil instead.If the Board took the decision to withdraw from the UK, just because the UK was a higher taxing environment than before, I would not be a happy shareholder. Daddy wants his 300m !I know it's not quite that simple in the detail, but the principle holds broadly true.Our politicians should grow a pair or two.

Do other Western countries successfully stop tax evasion of this sort?Are there any other nation's whose laws we could emulate? Well it sounds easy.....

I broadly agree.I would just correct your figures by pointing out that UK corp tax is presently 24 percent (and falling) Treasury LinkSo of 500Million 120Million would be paid in tax. But they don't. Why? Are they genuinely fearful that the economy will be left devastated by big-business fleeing the UK? Are they ideologically bound to Adam Smiths invisible hand such that any action by government is seen as interference in some sort of 'natural' state? Are the part of an economic elite consciously out to screw the workers for all they are worth? Are they just not very bright and being manipulated by big business? Does the requirement for money to win elections mean that they effectively have no choice but to pander to big business if they want to get elected? What is it that stops them tackling the situation?I don't know (and I'm not asking you specifically to answer all those questions).I'm just throwing out some questions.

Thanks for the detail on the corporation tax Straggler - it rather makes it more of an egregious avoidance, the tax rate being so low compared to higher rate income tax payers, doesn't it ? I have no answer to any of those questions. However, one thing that I think that we can do as citizens, is make it far more acceptable and common to question the validity of the threat which companies make that they will withdraw from our country if we tax them reasonably. It is rare indeed for that claim to be challenged on news channels, and the more we raise our voices to say "Hold on - that sounds like complete and utter bollocks to me", then hopefully the more people like Paxman and Humphries will challenge the assumption, and the easier it will then be for politicians to get with the programme.

I think the Occupy movement (indirectly) and UK Uncut (directly) have done quite a lot to get this question (how valid is the assumption that companies really will leave these shores if they are taxed properly) into the mainstream. Obviously the current economic climate does a lot to raise the profile of the issue too. But it still isn’t challenged enough when the euphemistic cry of ‘We need to demonstrate that Britain is open for business’ is used to justify aspects of existing thinking and policy.I would also ask the question how much it would really matter if some of the companies did up-sticks and leave or even significantly scale back their operation. If Starbucks left the UK would people stop going for coffee? Or would local-tax-paying companies and even independent coffee shops take over the vacated premises? Could it actually be a good thing for the UK economy if some of these tax-avoiding multinationals left the market-space so that it could be filled by others who don’t have an army of tax evasion lawyers at their disposal?Again — I don’t know. But it seems to me to be a question that needs to at least be asked.

Ive got a better idea. Let folks like DrAdequate, vimsey, larni, straggler and all the other uppity, know it all brits leave britain and help your bretheren over here in the states make america into your vision and obama's vision? Also, let the tea party types in america come join the people in britain you guys mock and spit upon. Perhaps there are still some folks who yearn to be free from the shackles of liberalism and yearn for a decent society who aren't always envious of anybody who makes more money than they do in britain. Perhaps we could turn britain into the major world player that it used to be again.

I'm a higher rate taxpayer in the UK.If Starbucks were actually paying the tax they are supposed to they would pay corp tax at about half the rate I pay in income tax.But they aren't even paying that.You consider this a good situation?

Aren't the US Tea Party nut jobs allowed to emigrate to Great Britain now?

They aren't nutjobs; that would be your type of people. If all the uppity liberal brits leave the island, the tea party people would all band together to help each other financially so that they could make it to britain and start from scratch.

If they were not paying the tax they were LEGALLY supposed to be paying, they would be in prison. If you want them to pay more, then simplify the tax code. You won't do that though because the tax code was written by uppity liberals like yourself to suit your own societal engineering utopian ideas.

But that has nothing to do with either what you posted or the question asked.So once more: Aren't the US Tea Party nut jobs allowed to emigrate to Great Britain now?

Do you consider large scale corporate tax evasion to be a good thing? So the law is at fault here. Gosh are you suggesting that markets alone won't always result in the best outcome and that appropriate regulation is therefore required? "Simplify" in what way and how will "simplifying" in this manner help the situation? Which "utopian ideas" would those be? The "utopian idea" that what is good for giant corporations siphoning money out of the economy may not be what is best for the local economy in question? Edited by Straggler, : No reason given.

Where is that "uppity" coming from, FEY? I'm old enough to clearly recall the history of that term, and it isn't too pretty. It fits perfectly with the Tea Party's distaste for our current legally elected President, yes. He is pretty smart and he has too much melanin in his skin for their liking......