“The Organization for Economic Cooperation and Development proposed a blueprint for cracking down on tax-dodging strategies used by companies such as Google Inc., Apple Inc. and Yahoo! Inc.,” Jesse Drucker and Rainer Buergin report for Bloomberg News. “German Finance Minister Wolfgang Schaeuble called the OECD’s plan a ‘major step.’ The proposal aims to develop rules over the next two years preventing companies from escaping taxes by putting patent rights into shell companies, taking interest deductions in one country without reporting taxable profit in another, and forcing them to disclose to regulators where they report their income around the world.”
“The 40-page report will complement efforts by deficit-laden governments to increase revenue they collect from profitable enterprises,” Drucker and Buergin report. “It follows hearings in the U.S. and U.K. revealing how companies avoided billions in taxes by attributing profits to mailbox subsidiaries in places like Bermuda and the Cayman Islands. The U.K. Parliament has held three hearings since November on corporate tax dodging — examining strategies used by Google, Amazon and Starbucks Corp. In May, the U.S. Senate held a hearing on Apple’s offshore tax strategies. The companies all say they’ve complied with international tax laws”
Drucker and Buergin report, “A pair of the OECD proposals calls for rules to make it harder to shift profits by assigning intellectual property, such as patent rights, to offshore units. Under current law, such offshore subsidiaries can take credit for profits arising from patents developed in countries like the U.S. and U.K. — generally with cash the parent companies provided to them in the first place. Though there is no real economic activity going on in Bermuda ‘all the returns are in Bermuda,’ said Pascal Saint-Amans, director of the Center for Tax Policy and Administration for the Paris-based OECD, not referring specifically to Google. ‘This is wrong, we need to fix it.’ The OECD is a government-funded think tank that was charged by the G-20 to tackle the issue.”
“Achieving the plan’s objectives may be hamstrung by the role that several European countries — including Ireland, the Netherlands and Luxembourg — play in enabling the avoidance, said Sol Picciotto, an emeritus professor of law at Lancaster University in the U.K. and a senior adviser to the Tax Justice Network advocacy group,” Drucker and Buergin report. “‘It depends on governments willing to take measures and the OECD doesn’t have any power to compel any governments to do anything,’ he said.
Read more in the full article here.
MacDailyNews Take: Let’s take this to its logical conclusion:
Imagine that certain profligate-spending countries get their hands on some extra money. What would happen?
Does anyone in their right mind really believe that these serial over-spenders and debt-addicts would finally balance their budgets and live happily ever after? You know, run their countries like Apple runs its business?
Likely not. Almost guaranteed, we’d bet, would be that these types of governments would quickly propose new, additional spending and then, after overspending as usual (after all, they’ve totally proven it’s their wont and, in fact, raison d’être) what would they do next? Where would these governments turn to get their next fix?
Government is like a baby: an alimentary canal with a big appetite at one end and no sense of responsibility at the other. — Ronald Reagan
Last autumn, Tim Worstall wrote an interesting article for The Register. In case you missed it:
Google, Apple, eBay shouldn’t pay taxes – people should pay taxes.
Related articles:
Apple again faces scrutiny after paying no UK corporate taxes for 2012 – July 1, 2013
Bloomberg News’ awful reporting on Apple’s U.S. corporate taxes – May 30, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Former Senator Sununu: Congress wrote the tax laws, so why blame Apple for obeying them? – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Apple CEO Tim Cook charms Capitol Hill – May 22, 2013
Rush Limbaugh: ‘High-tech lynching: Senate attempts to crucify Apple’ – May 21, 2013
Nobody on U.S. Senate committee laid a glove on Apple CEO Tim Cook – May 21, 2013
Senator Rand Paul: Senate committee ‘should apologize to Apple for bullying one of America’s greatest success stories’ (with video) – May 21, 2013
Ireland: We have no special tax rate deal with Apple – May 21, 2013
Apple prepares for Washington onslaught: CEO Tim Cook isn’t taking any chances with senators looking to grandstand – May 21, 2013
Watch Apple CEO Tim Cook’s live testimony before U.S. Senate, starting at 9:30am EDT – May 21, 2013
U.S. Senate investigation found no evidence that Apple did anything illegal in avoiding taxes – May 20, 2013
Apple pays under 2% on overseas profits and it’s entirely legal – November 5, 2012
Google, Apple, eBay shouldn’t pay taxes – people should pay taxes – November 25, 2012
So how much did Apple really pay in taxes? – November 1, 2012
Apple’s showdown with the U.S. government over taxes on offshore cash – July 13, 2012
Apple‘s $74 billion tops list of U.S. tech companies’ overseas cash – July 9, 2012
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011
