The change that is very obviously needed is that a company must be considered resident where the economic substance of its management is located. And yes, that can be determined. It’s where a majority of the board and their senior management team work day in day out.
OK. So, say, BP, board and management all work in London (just as an example). So, BP is UK resident.
OK. Clearly, it should be paying tax where it is resident. OK.
So, err, BP shouldn’t be paying tax in Angola, should it? BP’s management and board aren’t in Angola, so the company isn’t resident in Angloa so BP shouldn’t be taxed in Angola.
Which leaves your country by country reporting crusade looking a little threadbare, doesn’t it?
4 responses so far ↓
1 The Pedant-General // Sep 27, 2010 at 11:25 am
Christ but the man’s a complete numpty.
Rule 1: Incentives matter
In this case, if this is the rule you set, BP’s board and mgmt will decamp to Irleand or Switzerland pronto. They can and they sure as shit will
rule 2: TANSTAAFL
Particularly not for those who wish to raise revenue from taxes.
WGCE
2 john b // Sep 27, 2010 at 12:26 pm
There’s an obvious solution to this problem:
1) ensure that companies pay tax in the countries where they have local operations
2) ensure that if companies don’t do so, or if the tax rates in those countries are comedically low, then tax the parent company for the difference in its home jurisdiction as calculated by Richie’s formula.
What kind of nutjob would want to impose such a thing? Oh, wait, it’s *what UK tax law says*…
3 SadButMadLad // Sep 27, 2010 at 1:34 pm
Does the numpty ever get anything right? And I don’t mean by accident or in a small section of one his “reports”.
4 FCAblog » Wolseley and moving tax base // Sep 28, 2010 at 9:38 am
[...] wrong. As well as the comments by Worstall, which point out the absurdity of the country by country reporting advocate calling for more [...]
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