Quote:
Originally Posted by Lynx-lynx
...But hey, at least the issue is being discussed at the top levels, and hopefully making the tax (thieves imo) nervous. (Yeah, I know there are a number of people here who will stand on their far right hind legs and yell and scream about that expression ..... stiff!)
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You can only call them "thieves" if you have some knowledge of taxation and also have detailed tax accounts showing malpractice of the companies which you criticise.
It seems likely that neither of those apply so I wonder what drives your apparent hatred of international corporations. Ideological or political convenience perhaps, and apparent ignorance of the subject?
If it were otherwise you would be much more circumspect before calling such corporations "thieves" and those who have a different view than yourself as standing "on their far right hind legs" and who "yell and scream"? The latter comment could, for example, be easily seen to be a cheap dismissal of the explanations I gave; in which case I might be thinking that I should not have bothered if it were not for the fact that a number here have actually thanked me for that contribution.
You would also be giving explanations in a technical manner as to why you hold such a denigrating opinion of such corporates. Instead you just appear to parrot those who for political convenience, ideology or just plain ignorance hold views that are apparently similar to your own. You are, of course, entitled to indulge in such parroting.
But to ameliorate that appearance I would be interested to know what your stances are, with technical justification, on just a few examples:
1. What do you class as a company tax level at which you consider a corporate is taking advantage of that by having a subsidiary there e.g. 0%, 15% (e.g. Hong Kong), 28% (e.g. NZ which is considerably lower than Australia) and why.
2. What credit do you think should be given to a parent company, in such cases of your wanting their tax liability to be in multiple countries, for a subsidiary in a zero company tax country but which pays other large non company taxes such as a central government payroll tax or sales taxes on its inputs? Give your analysis of the pros and cons.
3. What credit would you give in the case of 2. where the payroll tax is not a central (e.g. federal) government tax but a state and territorial one such as in Australia? And how would you handle any credit for the other taxes unique to the subsidiaries jurisdiction but which do not apply in the parent's?
4. Do you believe that intercompany transfer payments (e.g. interest on borrowings from parent, royalties, technical support, etc.) over borders should be deductible to the company making them (i.e. the effect is they are {Edit}
not taxed on them)?
5. In the case of 4. if you believe they should not be so then do you think they should be so for non related companies (e.g. payments by a company in one country to one in another unrelated company for use of designs, branding, etc.) and why, in technical terms, do you make the distinction? Furthermore, do you believe that the same type of payment between unrelated companies within the same country (e.g. for use of brand, franchise support)
6. In the case of 4. if you believe they should not be so then do you claim that the company receiving the payment should also be taxed on them (and so in effect they are doubly taxed)?
7. If a you claim, as it seems you do, that the parent of a subsidiary in a zero company tax country should pay tax on the subsidiary's profits then do you claim that that tax payment should not flow as a tax credit through imputation to its shareholders when the profit is distributed to them as dividends? Why?
8. If in the case of 7. you claim there should be no credit then why do you believe that the result that the profits will be taxed twice is just?
Plenty more but I'll leave it at that.
As I have pointed out, in western tax jurisdictions the Revenue is able to audit and challenge intercompany transfer payments claimed as deductions, made by international subsidiaries to their overseas parents or between unrelated companies and contest those if considered inappropriate (in fact they can normally place their own valuation on them and leave the company to challenge them in court should it disagree).
Instead of the political grandstanding apparent in Australia the Government here (with no apparent criticism by the opposition) seems to have taken a more balanced view based on good sense in that they have just reiterated that such payments will be audited by the Revenue and if need be the Revenue's budget will be increased in order for them to do so.
For the sake of understanding, I do believe that everyone should pay their taxes, but unlike some I only claim that they should be paying what they are legally obliged to under sound legislation; not what those with views which spring out of ideology, political convenience or ignorance claim.