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Lack of Effective Solution as Companies Branded 'Evil' for Tax Planning

Lack of Effective Solution as Companies Branded 'Evil' for Tax Planning
16 May 2013
This letter was submitted to Financial Times, 17 May 2013

Sir,

Your coverage of Google's public accounts committee hearing ('MP accuses Google of 'evil' conduct', May 17) effectively summarised the current sentiment around corporate tax planning and the negative perception of 'avoidance', however, there was a lack of any meaningful debate as to any effective solution to this global issue.

Companies continue to be lambasted for tax planning activities and even branded 'evil' despite full compliance with the law. Furthermore, there is a vacuum of any credible proposals that present a realistic way forward. There have been some tentative references to an internationally coordinated tax system, that clarifies exactly where sales and profits, particularly those of internet companies, would be taxed, but at present this appears a long way off.

Whilst a harmonised approach to international tax planning has its merits, there are significant risks around 'double taxation' for businesses. The problems associated with unitary systems have, ironically, been pointed out by the UK Government, in their reaction against the EU's Financial Transaction Tax, which potentially disregards long-term inter-country agreements, as well as threatening economic growth for a number of regions.

This all creates a dangerous air of uncertainty for multinational companies, at a time where the still fragile global economy is in need of cross-border investment activity. If the international tax system is to be fundamentally reformed, then this should be clarified and implemented swiftly, rather than working towards a half-hearted solution that leaves corporates both in the dark and indefinitely subject to challenges on issues of morality.

Frederic Donnedieu de Vabres, Chairman of Taxand

This letter was submitted to Financial Times, 17 May 2013


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Taxand's Take

Companies continue to be lambasted for tax planning activities and even branded 'evil' despite full compliance with the law. Furthermore, there is a vacuum of any credible proposals that present a realistic way forward. There have been some tentative references to an internationally coordinated tax system, that clarifies exactly where sales and profits, particularly those of internet companies, would be taxed, but at present this appears a long way off.

Taxand's Take Author