Matt Brittin, commented during the public accounts committee grilling of Google, Amazon and Starbucks on Monday 13 November – “I wish we had invented Google in Cambridge, but we didn’t”. The point being that the royalties would then be flowing to UK instead of the US.
Ironically, HMRC have actually done rather well out of International Transfer Pricing Rules, they collected over £1bn in tax revenues from transfer pricing audits in the year to March 2012. The OECD have clear rules on how international transactions should be valued.
The government have been working hard to make Britain competitive on taxes.
In the 2010 Emergency Budget the Chancellor George Osborne outline a package of reforms with the intention of turning the UK into “the most competitive tax system in the G20”
The UK’s tax competitiveness has improved the most for business among major economies over the past two years, according to a study.
The country ranks six out of 14 worldwide, ahead of the US and all European countries analysed, with its score having been enhanced by almost 15 percentage points since 2010, analysis by KPMG shows.
The research took a selection of business levies, including capital taxes, sales taxes and property taxes, to calculate a total tax cost, which was compared between locations using the total tax index (TTI) for each location.
TTI is KPMG’s measure of the total taxes paid by corporations in one nation or city, expressed as a percentage of total taxes paid by corporations in the US – which is given a TTI of 100 that represents the benchmark against which all other locations are scored.
The lower the score earned, the more attractive a country is from a business tax perspective. With a TTI of 73.3, compared to 88 in 2010, the UK ranks immediately above the Netherlands (77.2), and has a fewer points than Germany (122), Japan (152.3) and France (179.7) among others. India, a new entrant, tops the chart with a TTI of 49.7.
So we are actively trying to get businesses to make their profits in the UK so that they pay less tax.
David Cameron highlighted the benefits of investing and inventing in the UK, at the Health Summit in August 2012 he said
The Patent Box means that if a company creates intellectual property in the UK, it will pay a corporation tax rate of just 10% on any profits generated by those patents.
Let me say that again: 10% corporation tax on patent profits – among the lowest in the developed world.
We want companies to come to the UK and pay less tax, so why are we complaining? we stand to gain the most, surely the last thing we want now are international rules that stop businesses from taking advantage of our new competitive tax regime?
