Yesterday the House of Commons Public Accounts Committee (PAC) questioned the "great and good" from a number of well known multinationals about the "Taxation of Multinational Companies".
The guest list was as follows;
Matt
Brittin, Chief Executive Officer, Google UK, Troy Alstead, Starbucks
Global Chief Financial Officer, Andrew Cecil, Director, Public Policy,
Amazon.
The video of the hearing can be watched via this link Taxation of Multinational Companies.
"We are not accusing you of being illegal, we are accusing
you of being immoral.”
UGH!
As an aside, whilst it is all very well that Margaret Hodge et al get worked up over the percentage of tax paid by these companies in the UK, when compared with their UK turnover etc, Hodge might care to read what Stemcor has to say on the subject.
Who are Stemcor?
Oh that's Hodge's family company, it was founded by Mrs Hodge’s father Hans Oppenheimer over 60 years
ago.
As per the
Telegraph:
"Stemcor’s tax bill to the exchequer equates to just 0.01pc of the revenues it
booked through its UK-based business.
In accounts filed with Companies
House, Stemcor revealed that despite generating about one third of its
revenues in Britain, its UK tax contribution made up only 2.7pc of the tax
the company paid globally."
Here's what Stemcor has to say on the matter (my thanks to loyal reader who pointed me to the statement):
"Several comments have appeared in the press suggesting that Stemcor is
involved in tax avoidance in the UK. Stemcor refutes these allegations.
Stemcor’s
directors and shareholders are proud of the company’s contribution to
the UK economy. As well as creating jobs across the UK, Stemcor has also
provided financial support to steelworks in the UK, helping to
regenerate the British economy. Stemcor has nothing to hide and is happy
to provide more detail about its tax affairs to the media if requested.
Stemcor
is almost unique among international trading companies in that it still
maintains its headquarters in the UK. Most other such companies have
located themselves in low tax jurisdictions, while still having sizeable
operations in London. Stemcor’s shareholders have refused to
countenance such a move.
In the past 3 years, a total of £14m of
corporation tax has been paid by Stemcor in the UK. Stemcor’s effective
tax rate internationally in the last three years has been over 30%, much
higher than that of other international trading companies. 2011 was,
however, not a strong year for the UK operations and margins were
squeezed due to the adverse economic climate – this resulted in a very
low UK corporation tax charge for that particular year. In 2011 Stemcor
paid tax in jurisdictions such as the USA and India, where corporation
tax rates are higher than in the UK. It is just an unfortunate fact that
the UK operations overall performed poorly in 2011, resulting in a very
low UK tax charge.
Stemcor’s consolidated financial statements
are audited and signed before the end of March following the December
year end and certain assumptions are made in preparing the UK tax
computations which support the UK tax charge in those financial
statements. In accordance with UK law, UK corporation tax returns are
filed any time up to 12 months following that year end. The adjustment
of a tax credit of £586k in the 2011 financial statements arose as a
result of reconciling the Group’s financial statements back to the UK
corporation tax returns for 2010, which were calculated and filed on a
timely basis based on UK tax legislation. This resulted in the UK tax
charge for 2011 being reduced even further.
Profits in a
trading company cannot be compared to profits in a manufacturing company
and turnover is no guide to the level of profits made. Stemcor’s annual
report for 2011 shows that total international Group profits were only
around 1% of turnover, which is typical for many commodity trading
companies. However, profits in some of the jurisdictions where Stemcor
operates were higher than 1%, while in other jurisdictions the Group
made little profit or even losses.
In any international group
which has interaction between its worldwide offices, whether through the
trading of goods or provision of services, transfer pricing occurs.
Stemcor, in accordance with OECD guidelines, regularly monitors the
arrangements between its group companies to ensure that its pricing
complies with the arm’s length principle and with tax legislation. The
Group uses Price Waterhouse Coopers as a consultant to ensure that it
pays the correct taxation in the various jurisdictions in which it
operates around the world and does not abuse transfer pricing to avoid
tax."
Oh, and before I forget, I am reminded by the same loyal reader that Hodge voted for s554E (12) ITEPA 2003 exempting MPs from the disguised remuneration anti avoidance rules.
Tricky thing tax, isn't it?
Tax does have to be taxing.
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