I was asked recently how effective the so-called Google Tax had been at beating corporate tax abuse. More correctly called the Diverted Profit Tax, this measure was rushed through before the 2015 general election so that George Osborne could say he was beating abuse by the likes of Google, Twitter, Facebook and others.
We now know it did not work on Google: their tax settlement of £130 million was unaffected by the charge, apparently.
To find out I did an FoI. This is the response:
As ever, things are not quite all they seem. First, to state the obvious, they know and don't want to say. That's absurd, and does not indicate confidence.
Second, note that the figure to be published will not just be the tax collected but an estimate of behavioural change.
Third, note that this is expected to be the number they first thought of.
I would like to be less cynical. Nothing in here permits that.
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“behavioural change” – a new currency then? Can you buy anything with it?
No doubt publication will take place after May-hem’s election & it will show that Gidiot’s tax law has had close to zero impact.
I couldn’t possibly comment……
Ha-ha, Mike. That’s jolly humorous how you take Mrs May’s surname and Mr Osborne’s middle name and change them slightly for playground giggles.
And people say political satire died with ‘Spitting Image’!
If the amount is greater than zero I would be amazed. I have not seen a single client affected by this since it was introduced – albeit everyone has to go through the time and expense of analysing the rules to conclude they arent affected by them
I am sure you are right
Wasn’t the purpose of the diverted profits tax to encourage companies to restructure so that they weren’t caught by it – hence it was set at 25%, well above the standard 19% corporation tax rate? If it works you would expect zero revenues from the diverted profits tax but higher corporation tax revenues?
But have they?
None of my clients had to do anything. They simply weren’t caught on a technical basis. It’s a badly designed law
More confusion in my head. But I think I understand Sam. If a speed limit of 15mph were imposed outside a school and a speed camera installed which caught no-one that wouldn’t mean it was a failure. It might even mean no one had been speeding in the first place. Just can’t know can we?
Is this a useful contribution to debate?
Hi Richard.
You’ve focused on the DPT. What about the effect of the planned 2016 changes in the rules on royalty withholding? Did these get enacted? Are they now in effect?
You may recall the article that Tommaso Faccio and I wrote about a year ago on the DPT and these planned changes on royalty withholding. (You said that you were too occupied at the time to participate as a co-author.) In the article, we showed through examples how significant the new royalty withholding rules were to forcing MNEs to change their behavior.
If you or others visiting your blog would like to scan the article, it can be downloaded at:
http://ssrn.com/abstract=2789833
If these royalty withholding rules have been enacted, you could consider doing an FoI request about that.
All the best,
Jeff
Jeff
Far too early as yet I am afraid…
But to bear in mind
Best
Richard