Controversies about corporate ‘tax dodging’ tend to follow a common pattern. Critics expose the web of complex structures and opaque transactions used by a company and point to the advantageous tax result. It might be legal, they say, but it smells fishy.But one person’s egregious exploitation of loopholes, can be another’s innocuous interpretation of the rules. The people responsible for the company’s tax affairs tend to feel that they are being stung by an unfair and unwarranted attack based on misunderstanding and innuendo. They issue a terse statement along the lines of ‘we pay the right amount of tax according to the law’, and hope it all blows over.

we comply with all rules

The #taxmantra – @soongjohnston

But after the noise has died down we are left no clearer about what where the boundaries of responsible tax planning versus unacceptable avoidance might be.

This week, unusually, the NGO doing the criticizing was the free market Institute for Economic Affairs, and the Finance Director emerging blinking into the sunlight of unexpected public scrutiny was Oxfam’s Alison Hopkinson.

Richard Teather at the IEA called into question Oxfam’s use of tax planning via its trading arm Oxfam Activities Ltd and the way it uses the government’s gift aid scheme. “It is a strange philosophy that condemns actions in others whilst busily engaging in them oneself.”

Alison Hopkinson at Oxfam responded that “The IEA blog is a classic case of smoke and mirrors using partial information to make a case against Oxfam where none exists. The fact is that we are very careful to comply not just with the letter of the law on tax but also the intention behind it.“

You can simply pick sides based on where your sympathies lie (NB: my allegiances: I am both a shopper and donator at my local Oxfam store. I support Oxfam’s mission, but I wish they would get more serious in their tax advocacy).

However, I think the case raises interesting points which could push us to try to clarify thinking about the blurry zone between uncontroversial ‘good’ tax planning and bad/aggressive/immoral stuff, and the extent to which there could be more well-defined criteria for making the distinction (or can at least having a sensible discussion about it). Continue reading ‘Is Oxfam Avoiding Tax? (revised)’

I am delighted to welcome a guest post by Iain Campbell who is a member of the National Committee of the UK Association of Revenue and Customs (ARC). While I have  previously looked at the ‘big numbers’ that shape the debate on corporate tax avoidance, here Iain takes a close look at an estimate relating to offshore tax evasion by individuals:


People who read Maya’s blog probably need no introduction to the name or work of Gabriel Zucman. He has been actively pursuing the issue of offshore wealth and associated tax losses over a number of years and publications, such as The Missing Wealth of Nations (2013),Taxing Across Borders (2014) and The Hidden Wealth of Nations (2015).

I am particularly interested, as an elected official for ARC, a trade union whose members are the senior professionals in HMRC. Our members are naturally interested in discussions of tax compliance and what more can be done to tackle evasion and avoidance, as well as how to measure the scale of the problem.

We should be grateful to Zucman for pushing debate along in this important area. He has published his papers alongside extensive technical appendices and details of sources and calculations, which aim to allow readers to check or reproduce his results. He has also responded in a positive way to some e-mail questions I have raised – but clearly he has not agreed with everything I have said.

Continue reading ‘$190bn and counting – measuring offshore tax losses’

The headline cases from the Panama Papers illustrate the problem of criminals, sanctions breakers, corrupt officials, tax evaders and fraudsters hiding their assets behind innocent sounding corporations and trusts. With a cache of 1.5 million documents, there are likely to be secrets that are still to be revealed, but already issues of corruption, fraud and theft of public assets are beginning to be conflated with broader debates on the way that international taxation is organised. This matters because different problems need different solutions. Continue reading ‘The Panama Filing Cabinets’

A lot of focus in the UK has been on the question of whether Google is doing something artificial and abusive by “booking” revenues from UK-based advertisers in Ireland, rather than in the UK (the so called ‘permanent establishment’ question). This seems to me to be a red herring.

Many people have become convinced that the fact that Google ‘books’ sales of adverts across Europe in one place rather than individually in every country where it has a marketing operation is a move to avoid taxes in the those countries.

Richard Murphy, for example argues that Google’s UK revenues are the result of “British ads sold by British sales people aimed at British customers on a UK website that get value by clicks on British computers.” Seema Malhotra, Labour’s Shadow Chief Secretary to the Treasury, in a letter to the NAO says that Google UK ‘provides advertising for UK businesses on a website that is explicitly UK-focused and that most of the revenue that Google UK earns is entirely dependent on people in the UK clicking on these adverts.’

But this mental model of Google as a network of national companies with Dutch people selling Dutch adverts to be viewed by Dutch customers on a Dutch Website etc… is just not how Google works.

Continue reading ‘How much does it matter where Google ‘books’ its sales?’

Screen Shot 2016-01-25 at 23.31.54

The settlement between HMRC and Google that the company will pay  £130 million in additional back taxes and higher rates of tax in the future is big news here in the UK, and is an early sign of how implementation of the  G20/OECD ‘BEPs’ international tax reforms might play out.   A common reaction to the announcement that, after a six year investigation Google’s annual UK tax bill has been increased to around £30 million is that it doesn’t seem like a lot ( ‘very small‘….’pitiful‘…minute‘..’derisory‘…’trivial‘….. you get the picture).

It is certainly not a lot compared to popular expectations that tackling tax corporate dodging will generate billions  of additional public revenues. And it doesn’t look like a lot compared to Google’s UK revenues (Google reports that about 10% of its revenues – $6.5bn or around £4.6 billion – came from the UK in 2014).

But corporate taxation, of course, is calculated on profits not on revenues. One suggestion that is making people angry at its apparent unfairness, and which supports the view that the settlement is way below what it should be, is the estimate that £30 million represents a 3% tax rate on Google’s UK profits. Professors Prem Sikka and Richard Murphy, and tax QC, Jolyon Maugham have all come up with a similar estimate, and it has been cited today by  John McDonnell on the Today show and on Newsnight and by MPs  in Parliament.

Continue reading ‘Did the UK really agree to charge Google a 3% tax rate?’

A joint blog post with Vijaya Ramachandran – cross-posted at the Center for Global Development160114173556-oxfam-wealth-inequality-780x439Its that time of year again when presidents, CEOs and civil society leaders get together at the World Economic Forum in Davos, Switzerland, leaving the rest of us to wonder whether it is really true that a small number of very rich people at the top of the income distribution own more than the bottom half of the world.

Oxfam’s annual Davos calculation declaring that “the top [X] people have the same amount of wealth as the bottom 3.5 billion”, followed by responses from various skeptical commentators, is in danger of becoming a January tradition. (See for example Ezra KleinChris Giles and Felix Salmon and for a response to their criticisms, Nick Galasso).  This year’s calculation from Oxfam says X=62.

Defenders of this killer fact argue that quibbling over the numbers is besides the point; it is a useful headline to attract attention to the disparity between the world’s richest and poorest.

But the neat and shocking equivalence between the wealth of a Davos shuttle bus-load of billionaires and that of half the world’s population may also be beside the point. The calculation works not because 62 people own the vast majority of everything (they don’t), but because 3.5 billion people own barely anything. Both groups own less than 1% of the world’s wealth. Continue reading ‘Davos dreaming: development without development’

I did not start this blog with the intention of endlessly cataloguing strange-numbers-and-weird-beliefs in the international tax avoidance debates, but since I have taken on the role of the child-who-missed-the-memo-about-the-Emperor’s-New Clothes, I guess I have to keep pointing them out when they stride past.

Last week the king who was in the altogether was Transparency International, the grandfather of transparency and anti-corruption advocates, a usually sober organisation which takes its own accountability seriously

Transparency International’s Brussels team put out a video on the issue of multinational tax avoidance which makes the case for public country-by-country reporting;  highlighting the issue of profit shifting,  the ‘lux leaks’ scandal and state aid cases involving Fiat and Starbucks. (its about 3 minutes)

‘The potential impact of such deals is huge’

After introducing the topic the video says

“The potential impact of such deals is huge; In the EU alone 1 trillion Euro is lost each year by tax evasion and avoidance, luckily there is a solution…. ”

Hold up. A trillion Euros a year is not just huge, its huuuuuuuge. It is more than double the total amount of corporation tax that European governments collect from domestic and multinational companies combined. It is around 20 times what is implied by the OECD’s recent estimate of global Base Erosion and Profit Shifting, or 7 times the equivilient figure that Ernesto Crivelli, Ruud De Mooij and Michael Keen at the IMF come up with (*warning: back of an envelope calculations– see below).

Continue reading ‘If no one thinks that country-by-country reporting can raise a trillion Euros, why pretend it can?’


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