Colombia’s recent economic track record is quite remarkable given the internal strife that continues to blight the country. Large swathes of rural Colombia remain no-go zones for those not affiliated with the FARC guerrilla movement, which the Government has been battling (literally) for 50 years. Yet, the economy has been growing at a very respectable four percent a year for the past four years, stretching a trend of unbroken economic growth which has lasted a decade. Colombia also attracted record levels of foreign investment last year after all three international credit rating agencies upgraded the Government’s debt to investment grade. Not bad for a country seemingly in a perpetual state of civil war. It’s also pretty impressive when you consider how bad the country’s tax system is. As the OECD pointed out recently, the combined statutory corporate tax rate of … Read More »
Gibraltar is a jurisdiction that seems to have been in an almost constant state of conflict with the EU over tax in recent years. And the “Rock” was again fighting its own small corner of Europe last week, sending Chief Minister Fabian Picardo along to brief the European Parliament’s so-called TAXE committee on national tax rulings, with Gibraltar’s regime very much in the EU’s sights. And brief it certainly was, for the Q-and-A session lasted little more than an hour — surely not enough time for an in-depth discussion on what is a complex and technical area of taxation. There are two strands to the EU probe on tax rulings: whether these rulings were granted to certain companies on a selective basis in breach of EU state aid laws; and whether, by granting these companies favorable tax treatment, they eroded … Read More »
Something has gone very wrong somewhere when an American passport, historically that most prized of possessions, is considered a curse rather than a blessing. But the statistics don’t lie: the Treasury Department’s own figures show just over 1,000 people handed back their passports or their green cards in the first quarter of 2014, an increase of almost 50 percent compared with Q1 2013. And this is no freak either, because these numbers have been steadily rising for the past two or three years. What these raw figures don’t tell us is why people are turning their backs on America in increasing numbers, and there could be any number of reasons, political or practical. However, let’s face it, most of us are thinking it: tax is the reason. But more specifically FATCA, which went into full force (almost) on July 1. … Read More »
Arun Jaitley’s first national budget as Indian Finance Minister comes at a critical juncture for India. Most economists would probably agree that India should be challenging China and the major advanced economies a lot harder than it is right now, but the reason it isn’t is because its enormous economic potential seems to have been squandered. Jaitley’s declaration that he is “duty bound” to usher in a policy regime that will result in higher growth seems to have been generally well received by those with a stake in the Indian economy. But excuse me if I play the contrarian here! True, the budget eases some barriers to foreign investment, and places an emphasis firmly on investment in industry and infrastructure which is sorely needed. But after leading investors to believe that the previous Government’s retrospective tax measure – the thing … Read More »
One does have a modicum of sympathy for Her Majesty’s Revenue and Customs, albeit a tiny one. Regularly lambasted by Parliament’s Public Accounts Committee (PAC) – led by Labour MP Margaret Hodge, who has emerged as Britain’s answer to Senator Carl Levin in America – and the mainstream media for being soft on corporate tax avoidance and cosying up to large multinationals in a series of so-called “sweetheart” tax rulings, HMRC is also castigated by the same set of critics for an increasingly heavy-handed approach in its numerous tax compliance campaigns. Damned if you do and damned if you don’t, you could say. On the first point, the criticism of the department has been a tad harsh. HMRC can only uphold the laws which are set by parliament in the first place, and a study of five sweetheart deals by … Read More »
Switzerland is probably fairly happy that international attention this week was being devoted to a French bank, for a change, and newly-announced figures for the money the country generated from applying the EU’s Savings Tax Directive may also have created a small frisson of satisfaction among the country’s financial leaders. For others, who don’t understand why, at first blush USD570m doesn’t seem to be a derisory amount of money to have extracted through a tax of 30 percent on interest payments, even if it was down 20 percent on last year, but hold hard: while there are no robust figures for total Swiss assets under management, a semi-official figure published last year suggests that they amount to about USD6 trillion, representing more than a quarter of global AUM. USD570m is 30 percent of USD1.9bn, which is an astronomically small proportion … Read More »
The EU Commission’s rather curious attack on countries hosting multinationals smacks of politicking, although the machinations of the Berlaymont (have they finished extracting the asbestos yet?) make the word Byzantine seem like an exercise in transparency. At all events, Ireland has hit back quickly and effectively, sensing yet another concealed attack on its low tax rate, which probably does make up a certain proportion of the Commission’s logic. The other two countries in the Commission’s sights, Luxembourg and the Netherlands, are also “the usual suspects,” with low-tax credentials. It may be significant that the Commission has chosen to act in this way at the end of its current term, possibly wishing to send a pro-OECD message to show that it has taken the BEPS initiative seriously, and it is not difficult to imagine that the OECD, which has seen its … Read More »
So the European Court of Justice, supposedly the guardian of the sacred freedoms of the European Union, has chickened out of one of most important issues currently confronting the EU, at exactly the moment when it should have taken centre stage and erected or reaffirmed some principles for the Union to follow.
In recusing itself from any involvement in the structural legislative processes of the Union over the question of the Financial Transactions Tax, the Court has diminished itself and the Union, sending a message that administrative convenience is a more important principle than judicial rectitude. It will be many a long day before it recovers from this piece of egregious cowardice, if it ever does.
There are multiple theories to explain the court’s behaviour (I hereby deprive it of its capital letter – it no longer deserves it), but the most … Read More »
Coffee, anyone, with your double Irish Dutch sandwich? That’ll be Starbucks, then, especially if you’re at say Oxford Circus or Trafalgar Square. The firm has announced that it is moving its European HQ from the Netherlands to the UK. Although the company was fairly unclear about its motives, it can’t be irrelevant that the UK’s corporate tax rate will be down to 20 percent from next year, while the Netherlands sticks with its 25 percent rate and has no plans to reduce it. Of course, that’s not the whole story: the Dutch withholding tax regime is hard to beat, although the UK’s participation exemption is by now not that different from the Dutch regime; and the Dutch patent box rate of 5 percent is still much better than the UK’s 10 percent rate. I would not have guessed that serving … Read More »
Common sense you surely needn’t look for in the European inheritance tax labyrinth, demonstrated this week by the latest twist in the French/Swiss farrago. I’m not even going to try to opine on the combatants’ positions. It’s obvious to everyone (me, that is) that inheritance tax ought to be abolished. It’s immoral to tax money that has already been taxed; and it’s doubly immoral to get in the way of inter-generational transfers. The relationship between parents and children is fraught enough already without government stepping between them. Of course it cuts in all sorts of unexpected directions: Joe hopes that his Dad’s first wife, Isobel, dies before his Dad does (bad); but he hopes that his Dad outlives her (good); but his step-sister Madeleine is conflicted because she stands to get more through her mother’s will than directly from her … Read More »