June2014


Stuck On The Movies

Posted on June 29th, by Global Tax Weekly in Media. No Comments

This week there is a flurry of announcements of new or enhanced tax breaks for movie production, notably in China and California, which already had such incentives, and in independent Scotland, which didn’t, since it hasn’t existed since 1707, and probably never will again, although the UK does have such incentives. In fact, almost all countries, and sub-countries such as US States, have media production incentives, so one has to ask why? Even in the European Union such incentives are permitted, while many other types of tax break are frowned on or banned outright, although it’s true that the Commission normally insists on a “cultural content” test, i.e. your movie must have something Lithuanian about it, if you are shooting in Lithuania. And therein perhaps lies the explanation for the prevalence of such douceurs: they are part of nationalism, which … Read More »


Planning Prohibited

Posted on June 25th, by Global Tax Weekly in Corporation Tax, International Taxation. No Comments

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 »


Fanciful France

Posted on June 22nd, by Global Tax Weekly in Budgets, Corporation Tax, Individual Taxation. No Comments

Since it’s still before breakfast (for me, that is) I will choose to believe something impossible, which is that the French Government is going to cut its expenses and reduce taxes. The Court of Auditors, having had a very substantial breakfast, doesn’t believe the Government, however, and in the past the Court has consistently been more accurate than the Finance Ministry. It’s impossible to discern where the President is standing in this: he began from a very far-Left position more or less indistinguishable from Communism, but has been rocked by adverse election results and the lowest approval rating of any President, ever. “I hear you,” he says, but presumably only because he has no choice. The choices are going to be made at the Matignon, whence the Prime Minister will be leaning on the Finance Minister, Michel Sapin, to come … Read More »


Hong Kong Gong

Posted on June 15th, by Global Tax Weekly in Offshore, Trade. No Comments

In a week when international attention was focused, apart from the unavoidable World Cup, on the 25th anniversary of the Tiananmen Square massacre, commemorated this year as every year with a candlelight vigil in Hong Kong, it was praiseworthy of China to issue a “White Paper” lauding Hong Kong’s economic and financial achievements over the 17 years since it returned to Chinese rule. Of course, having Hong Kong on its doorstep is a massive advantage for China, which can use it as a free-market laboratory, as its own private “offshore” center, and as a source of investment funds via Hong Kong stock exchange listings. A slightly more cavalier commentator might wonder about the extent to which Chinese officials and quasi-state business operators might use Hong Kong as a laundry-basket for their wealth: without Hong Kong, they would find it far … Read More »


Hungarian Hoopla

Posted on June 12th, by Global Tax Weekly in Media. No Comments

A tax on advertising is possibly an even more egregious offense against free trade principles than are anti-dumping duties. I thought that such dippy ideas had been junked along with Gosplan and the Marxist-Leninist Millennium, but I was wrong, because here it is, surfacing again in the EU’s equivalent of a Marx Brothers comedy, that’s to say, the Hungarian Government. They are seriously considering a tax on the revenue of media organizations of up to 40 percent. I really don’t know where to begin with this one. Presumably there is some undercurrent of moral disapprobation going on: that was certainly the case in the USSR, where advertising was seen as as a reprehensible feature of capitalism, and taxing it was therefore a virtuous expression of good Communist principles. But Hungary isn’t Communist. It teeters on the edge of becoming a … Read More »


Japanese Hi-Jinx

Posted on June 8th, by Global Tax Weekly in Budgets, Corporation Tax, IMF. No Comments

We are seeing a series of improbable developments in Japan, as previously unthinkable changes seem to be swallowed wholesale by an economy which was thought to be on terminal life-support. There now seems to be wide acceptance that it will be possible to make further cuts in corporate tax rates while continuing to beef up sales taxes. Even the IMF agrees that this is the correct strategy, while of course continuing to insist on the need for measures to address the country’s indebtedness: 240 percent of GDP and rising. Due to the fact that a very high proportion of the debt is held by domestic savers, who have historically been prepared to accept low interest rates, the average rate paid by the Government is a mere 1 percent. But the budget deficit this year is likely to be 11 percent … Read More »


Dump The DoC

Posted on June 6th, by Global Tax Weekly in Trade. No Comments

I don’t apologize for returning to the long-running craziness of anti-dumping duties, which can have no result but to hurt consumers. This week, it is serial offender the US Department of Commerce that is in the spotlight over specialty steels. There are a lot of numbers and a lot of countries involved, but we’ll just focus on one pair: the DoC is proposing an anti-dumping duty of 407 percent (no, there are no decimal points missing, it’s four hundred plus percent) on non-oriented electrical steel (NOES), whatever that might be, from China. And in case you think this is just an anti-Chinese rant, there is a 200 percent duty on Swedish companies, for good measure. To be clear, that means that if a Chinese company sells NOES to a Chicago manufacturer for USD2,000 a tonne, it will actually cost the … Read More »


Summer Dreams

Posted on June 1st, by Global Tax Weekly in Banking, Currency, IMF. No Comments

In Russia, they dream in winter; but in Greece they dream in summer. Because it’s too cold in the first case, and I suppose because it’s too hot in the second. At all events, Prime Minister Antonis Samaras is promising to reduce all types of tax over the next few years, and predicts EUR55bn of incoming investment over the same period. There are a few inconvenient factlets standing in his way, however, and we won’t even consider the fractured state of Greek politics. First, GDP has shrunk by more than 25 percent since recession hit in 2008, and continued to fall in the first quarter of 2014; second, the unemployment rate increased in the first quarter of 2014 to about 27 percent, and in the 15 – 24 year age group is running at 57 percent; third, Greece has been … Read More »





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