It is probably the case that the perception that large companies don’t pay their fair share arises because corporate tax is a relatively small percentage of overall tax receipts in many countries now. For example, in the United States, corporate tax revenues accounted for 11 percent of total federal revenues in the 2015 fiscal year, while individual taxpayers contributed almost half.
When looking purely at companies’ corporate tax contributions, it is understandable that there is an ongoing debate about how much companies pay in comparison to individuals. However, the fact is that corporate tax has been diminishing in importance as a revenue stream for governments all over the world in recent years, as tax burdens have been shifted away from income and towards consumption.
Corporate tax rates have also fallen sharply as countries compete for foreign investment. In which case, you could … Read More »
In general, governments are continuing to move quickly in the area of taxation in the era of BEPS. Yet, a survey conducted by financial advisory firm Grant Thornton earlier this year found that the OECD BEPS project has had little impact on the way companies plan their tax affairs. As many as 78 percent of businesses have not changed their business’s approach to taxation, the survey, published in September, found, despite more than 80 countries having agreed to adopt at least the minimum elements of the BEPS Action Plan at that point.
Why should this be the case, when companies around the world are experiencing an unprecedented level of change and uncertainty? Well, the key word it seems is uncertainty. When you are uncertain of the right way to go to get to your preferred destination, and someone keeps redrawing the … Read More »
China recently announced that it is lining up new measures to simplify a simplification, as it seeks a smoother roll-out of its new value-added tax system, which is replacing the complex business tax regime. But it remains to be seen whether the well-meaning intentions of state officials turn out to be a help or a hindrance to business.
It could also be said that China’s ongoing reforms have not been terribly effective. Otherwise it wouldn’t find itself in 137th place in the Paying Taxes index. Indeed, where China is concerned, company executives seem to think that the legal framework is becoming less predictable, if the results of PwC’s Doing Business in China survey are anything to go by. This found that businesses are more concerned about their ability to interpret regulations and anticipate costs, with only 12 percent of China/Hong Kong … Read More »
Australia’s rap sheet of tax-related misdemeanors grew yet longer in the past few days. First, we had further backpeddling on the backpacker tax, followed by the news that Australia is forging ahead with a UK-style diverted profits tax, a BEPS-inspired measure that has made even the OECD a little uneasy. Then the OECD itself was on the Government’s case for repeated failures to follow through on tax reform pledges.
There was one bright spot though, and it came in the form of an announcement by the Australian Tax Office that it would issue “tax certainty” letters to taxpayers, guaranteeing them that, as far as the tax man is concerned, they are fully tax compliant and that they need not fear checks or audits. However, given the upending of the tax ruling systems in other parts of the world, namely the EU, … Read More »
Judging by the United Kingdom Government’s Autumn Statement, which has come to serve as a secondary Budget, you would be forgiven for thinking that there must have been a general election at some point in the recent past that everyone missed. Had there been, I’m fairly sure we would have been looking at a very different Autumn Statement than the one just delivered by Chancellor of the Exchequer Philip Hammond, if it had it been announced by former Chancellor George Osborne.
The approach to fiscal policy under the Tory Government of Cameron and Osborne (who both ran the Tory-led coalition which preceded it) and the Tory Government of May and Hammond is quite stark. Almost like two different political parties, in fact. Osborne was all about righting Labour’s wrongs with his focus on deficit reduction, spending cuts, and showy corporate tax … Read More »