The International Taxation of Multinationals
First published on Web Tv www.labourseetlavie.com, 26 November 2012
The issue of international taxation has taken a new turn with recent discussions in many countries on the taxation of multinationals. The Audit Committee of the British Government has questionned senior representatives from Google, Amazon and Starbucks on their tax situation in the UK. These questions are being asked as states seek money to meet public debt and large companies seek to attract investors. Frederic Donnedieu de Vabres, Chairman of Taxand, has been interviewed by journalist Didier Testot on this sensitive subject and the issues it creates world-wide.
- Tax is important for global corporations and fiscal planning is complex and has to be adapted to local markets
- Tax evasion still exists but only marginally
- Client projects should never be tax driven; those don't work. Multinationals should be able to manage their taxes in the "best possible way"
- There is competition among EU countries and some have interesting tax situations. It is only normal (and not illegal) for corporates to go into countries that are most favourable
- The fiscal situation of the EU member states is getting tougher, and companies feel the difference.
- A) Recently, the government has begun to aggressively look for fiscal information in companies, whereas before it was purely a "request for information"
- B) The situation has changed for businesses who deal with immaterial goods. Taxes are imposed in the country where the profit making has taken place (Google, Amazon), however it is often difficult to determine the location of profit.
- Reconstitution of profit based on the revenue is becoming more popular as a modus operandi
- Political pressure is immense, this has been seen with the English parliament, and in June in France during the political debate. There is an atmosphere of suspicion among politicians against companies and their tax payment policies
- Tax advice has a bright future, but the nature of relationships with the authorities will change to incorporate:
- A better dialogue with the tax administration
- Better "rulings" and guidelines to reassure companies
For further information please contact:
Abigail Tarren, COO
T. +44 (0)207715 5243
It is impossible to deny the fact that the landscape of tax legislation is changing. Multinationals are being scruntised now more than ever, as has been seen with the recent Amazon and Google cases. Countries will not want to lose the business of major multinationals, while the companies themselves need to be cost effective in the current economic climate. Multinationals and Governments will have to work together towards a solution which satisfies both parties and encourages cross border investment.