Are UK Authorities to Crack Down on the Tax Affairs of Multinationals?
Given our austere times it is perhaps not surprising that governments around the world have been trying to maximize tax revenues. So the news that several prominent multinationals are apparently dodging their fair share was bound to attract attention.
Such was the case this summer, with companies such as Amazon, Facebook and Starbucks coming under the spotlight. Whilst many believe they each make significant revenue in the UK, they each register profits from the country in a lower tax paying nation (usually Ireland), thus paying very low taxes to the UK government.
That particular chicken may be coming home to roost now, with news that a parliamentary committee has invited executives from the companies to answer question about their tax habits.
The hearing, which will take place on November 5th, will seek to discover how the companies can make so much in revenue from their UK operations, yet pay such little tax on it.
It should be noted that all of the companies obey the letter of the laws on taxation in Britain. The question however is whether they're obeying the spirit of the law that will see them paying less tax than many of their employees.
Prime Minster David Cameron said last week in response to a question in parliament about big companies paying little or no tax on UK earnings that he was unhappy with the current situation.
The loophole sees companies directing UK sales via another country with lower tax rates. Google for instance route sales via Ireland, whilst Amazon send all European sales via Luxembourg, both of which have significantly lower taxes than the 24% charged in Britain.
What do you think of this practice? Should big companies pay their fair share?