..
One of the true heroes of the fight against neoliberal hegemony is Richard Murphy and his indefatigable work on Corporate tax evasion via his web site Tax Research UK.
Richard was sent a copy of a new report by the ICAEW (Institute of Chartered Accountants in England and Wales) called ‘Taxing corporate profits – hard choices‘ and helpfully have his impressions on his blog in double quick time.
He was less than impressed:
I’d love to say that this document (of which then above is a fair summary) is a valuable contribution to debate on this issue, but it isn’t. There are a number of good reasons for saying so, all of them because as an exercise in obfuscation this document ranks amongst the best.
Firstly, it is very hard to see how the ICAEW could put out a paper on this issue and miss the two main issues that are subject to discussion. Everyone knows that companies can and do take advantage of tax incentives and as far as I am aware no one anywhere is criticising them for doing so when and if the claims they make for the allowances and reliefs they undertake still result in them paying the right amount of tax (but no more), at the right rate, in the right place and at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.
The issue is not with these allowances and reliefs, as the ICAEW clearly wishes to portray this matter. The problem is that all over the world multinational corporations are not seeking to pay tax in the way I have just noted. They are instead seeking to shift their profits artificially to locations which have little or nothing to do with the economic substance of the transactions that those companies undertake but which do provide them with the means to record profits they can attribute to those places at lower tax rates than would be paid in the places where the profits really arise. The world’s tax authorities, politicians and regulators from the G20 downwards have realised this and the OECD’s Base Erosion and Profits Shifting project is wholly focussed on this issue – not least because of the evidence arising from the Google, Starbucks and Amazon cases – and for the ICEW to ignore this obvious truth and to instead pretend that the whole problem does instead relate to the claiming of legitimate allowances and reliefs undermines any claim to credibility it might have on this issue.
One wonders quite what the purpose of the report is when it ignores the screamingly obvious – perhaps to be an apologist for the societal abuse which corporate tax evasion represents? Richard is on the case as ever.
The second problem with what the ICAEW have to say is that they deny that transparency can offer any significant solution to this problem. This is, again, quite extraordinary. Around the world it is now appreciated that country-by-country reporting has a major contribution to make in identifying which companies may, or may not be shifting profits into tax haven locations. That is why the G20 and G8 have endorsed this idea (which in the interests of full disclosure I have to mention I created). But the ICAEW completely ignores it. That’s unsurprising: the ICAEW seems determined to oppose progress on that issue, echoing calls from Big 4 accounting firms on the subject, all of whom are opposed to it precisely because it would undermine their lucrative tax haven markets, in which they all operate.
ahaaa!!! So the ICAEW doesn’t think that transparency about which companies make profits in which countries is going help with the ‘hard choices’ to be made about corporate tax evasion – how odd! The ICAEW is happy to have a ‘debate’ about it but as Richard ably identifies “this the perennial defence of those seeking more time in the hope that an idea might go away.”
I suppose its only to be expected – he who pays the piper calls the tune and the ICAEW knows who butters the bread of its members – this is a serious problem as the public imagine that accountants are there to hold powerful companies to account – not to assist them in their tax evasion efforts. But as ENRON proved…
I’ll leave the final words to Richard:
So transparency can solve this issue.
We could know who is paying low taxes because they are abusing and who is doing so because they’re investing.
But instead of saying this the ICAEW has set up a deliberate straw man, stating the problem to be one that does not exist and saying solutions within accountancy are not available when they clearly are. If the ICAEW wants to be credible it has to do much better than this.
If not, it has to expect to be by-passed in the debate on what to do, and it will be. The choice is theirs to make: own up to the nature of the problem that exists and how it might be dealt with or simply look like an apologist for the abuse. At present it looks pretty clear which way they’re jumping.
read the full text @ http://www.taxresearch.org.uk/Blog/2014/01/02/the-icaew-has-to-do-better-than-this-if-it-is-to-be-taken-seriously/
test comment – how der yer like that?