Already attacked by big business leaders, George Osborne is planning to crack down on “corporate tax avoidance” and introduce a new tax which avoids the loopholes open to conglomerates such as Google, Starbucks, Facebook and Amazon who have managed to amass huge profits in the UK at the same time as getting praise- laden quotes from personnel such as Matthew Barzun, Washington’s Ambassador to the UK claiming they were “simply following international tax rules laid down by governments”. David Cameron has advised these multinationals who exploit loopholes to avoid UK taxes they will be made to “damn Well pay”.
So what’s it all about? Facebook, for example has paid no corporation tax in the UK for the last two years and Google generated £3.5 billion from the UK last year, and only paid £20 million in corporation tax and so the story goes on with a number of huge international companies.
The new diverted profits tax – dubbed “the google tax” will be levied from April 2015 and sidetracks loopholes which have been fully exploited for years. The move has been termed as a lot of “aggression, complexity and subjectivity” and described as a “highly aggressive piece of legislation” by Chas Roy-Chowdhury – head of taxation at the Association of Certified Chartered Accountants.
The FT – reliable for its accuracy – cites Osborne as “going it alone” on the new plan to prevent corporate tax avoidance. The new proposed nicknamed “google tax” will prove no easy task to execute. Court cases may even be involved to investigate offshore protocol, and the chancellor could be accused of flouting bilateral tax treaties.
In India, Shell and Vodafone are being investigated for the same type of tax avoidance – more on that in a later story.
Back to Great Britain and our well known and well used corporations – John Mann – a Labour member of Commons Treasury has said “it is totally unreasonable to expect these firms to just hand over the taxes they have spent years trying to avoid. It’s a farce…and the result will be that the taxpayer will be offered a biscuit , while these firms carry on with their banquet”.
Walt Disney have also been accused of being “deviant and greedy” over their tax affairs, apparently funnelling their profits via Luxembourg, according to the International Consortium of Investigative Journalists, though a Disney spokesperson said “The report is deliberately misleading”.
We will continue to update you on news on this issue so watch this space.