Corporate Tax Services - Can public opinion help solve the problem of big company taxation?

Dec 4
06:47

2012

Daniel Kidd

Daniel Kidd

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Google, Amazon, Starbucks, Vodafone – you name it. These are just a few of the global giants now in the sights of corporate tax authorities in the UK and other major developed markets.

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In a world in which so many countries are struggling to bring public sector deficits under control,Corporate Tax Services - Can public opinion help solve the problem of big company taxation? Articles it seems a total paradox that the entities earning the most would appear to be paying the least towards bridging the gaps. The reason that these trading behemoths are able to get away with contributing so little in the way of corporate tax revenues is precisely because they are doing business on such a global scale. 
This affords them ample opportunity to “deposit “the bulk of their profits wherever corporate taxes are lowest – ideally some tax haven in the Caribbean.  Any big fast food and drinks company can easily, for example, arrange for a subsidiary in a low tax regime to render invoices at inflated prices to subsidiaries in normal or high tax regimes so that profits there are negligible. Who exactly is going to police what each company is paying for its coffee or hamburger buns ?The sad truth is that Corporate Taxes levied on company profits are not impacting fairly and are leaving private individuals and smaller businesses at a considerable disadvantage. An extra £ 5 billion or so raised every year from the global giants operating in the UK would have a noticeably beneficial effect on tax rates for everyone else.
Governments in many developed markets are no doubt already working on ways of correcting this anomaly. After all, these large global players benefit from the provision of public services wherever they trade and it is not unreasonable to ask them to contribute their fair share towards the cost. The problem for legislators is how to find a watertight way of either implementing Corporation Tax effectively or coming up with a replacement that actually works. Many commentators have, for example, suggested replacing the tax with higher taxation on dividends but that, of course, would only benefit the countries where the big corporate companies were headquartered. 
Whatever changes legislators come up with to make sure that the biggest names in business no longer treat tax on their profits as something voluntary, accountants who provide corporate tax services are likely to be burning the midnight oil finding possible escape routes. However, the question for their global clients is whether it is good for trade to be recognised as serial tax avoiders in the first place. The time might come when they pay their fair share purely in order to keep their customers onside. They now go to great lengths to trumpet their green credentials for precisely this reason so maybe public opinion alone can get them to start displaying tax paying credentials as well.