I'm not sure what you googled then. The UK taxes foreign income for example, although relief is given by a DTT or if there is an election into the branch exemption rules (although in that instance they also won't benefit from foreign losses).
March Budget 2016
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I'm not sure what you googled then. The UK taxes foreign income for example, although relief is given by a DTT or if there is an election into the branch exemption rules (although in that instance they also won't benefit from foreign losses).
I Googled 'territorial tax system'. It pulled up articles like this one.
It sounds like you know a lot more about this than I do though.
DTT is very different to taxing foreign income in the way the US does it.
You are being pedantic or deliberately misleading.
I Googled 'territorial tax system'. It pulled up articles like this one.
It sounds like you know a lot more about this than I do though.
Aah, it sounds like they're talking about taxing worldwide dividends/repatriation of cash. In which case it could be that there aren't many countries who do that (it's a very aggressive stance to take!)
The UK generally exempts dividends received, irrespective whether they're UK or foreign sourced, but we tax worldwide income received by a UK resident with certain reliefs or exemptions. Non-residents with a UK trade are taxed on UK income only. This gives us a mixture of resident/territorial taxation (and probably much fairer). This type of system is more common than the American model.
Are we using DTT in the same way?
We'll see if the diverted profit tax works. I'd love to know how you even go about proving it when it isn't obvious e.g. setting up in Ireland.
Could Germany claim for example claim that by setting up a HQ wih the UK's 17% rate is also unfair diverted profits?
The US hasn't played this game of racing to the bottom in terms of Corporation Tax and they are about to reap the rewards as 2trn dollars worth of profits will have to be repatriated to pay shareholders or settle debts.
No because if Vodafone was American it would pay tax at 35% on its entire group profits (once repatriated) minus what it had paid abroad. Only concern ourselves with the UK company which can then very reasonably show they made little in profit.
We don't take the 20% rate and apply the same logic.
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It was much less than that prior to the financial crisis.
http://news.bbc.co.uk/1/hi/uk_politics/6975536.stm
The trouble is neither party will acknowledge that the banks were at fault and the disabled/poor are being made to pay for the subsequent bailouts and money printing (QE), rather than those caused it. The Tories have now added more to our national debt with austerity than Labour did with their "wreckless spending" (Tory soundbite).
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Soldato
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I wonder what chances there are of seeing Osborne getting the boot? How many times has he messed up on the budget and missed his own targets now? If I were Cameron I would look at Osborne and ask myself if my Chancellor of the Exchequer is a political asset or political liability. I'm a Tory through and through but even I'm struggling now to defend Osborne at the moment.
I have no idea what you're trying to say.
Edit: In an actual way and not in I'm trying to be rude or offensive.
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Caporegime
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I think he could be living on borrowed time. He may be Cameron's chum, but we all know that politicians have no qualms about cutting their friends loose to save themselves.
http://www.ey.com/GL/en/Services/Ta...Url=/ec1mages/taxguides/WCTG-2015/WCTG-GB.xml
So check out Section B for the UK and how EY state that in reality UK Corporation Tax ends up being on UK focussed activities.
Then compare with the USA Section B.
Then tell me how much tax a company like Vodafone would pay in the UK and US. So the comparison is being UK or US resident.
A UK company can elect to pay taxes in the foreign country at their rates. A US company can do the same but will pay the difference to the US tax rate when repatriated.
The latter has no reason to keep a subsidiary abroad to minimise tax (eg Ireland) unless they believe that they will never have to repatriate the profits or believe they will get a good deal to repatriate it in the future (eg Bush tax amnesty).
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I'm not trying to be difficult, but could you explain your argument in more detail please? Please also don't link to high level summary statements like EY's as it's not really helpful.
To explain why I'm saying this, I work in this field and I can't work out what your argument is centred around. For example, your statement that UK corporations can elect their tax rate is grossly simplified (assuming you're referring to the irrevocable branch election that also prevents UK companies accessing overseas losses). Without the election then the UK also has to pay the difference, and if they pay at a higher rate, e.g. because they pay tax in the USA, then they can't get the excess back. They just have to suffer the higher rate. In the opposite situation at least the US company can get full credit for their overseas taxes.
Highly profitable companies aren't worried about not being able to access non-existant losses.
My argument is entirely around branch election as you put it. Such an election would only be made if the subsidiary has an advantageous tax location.
In the US you can't make such a tax efficient decision.
My argument is entirely around branch election as you put it. Such an election would only be made if the subsidiary has an advantageous tax location.
In the US you can't make such a tax efficient decision.
A subsidiary isn't a branch. A subsidiary is another legal entity. A branch is a place of business of your legal entity operating in another tax jurisdiction.
The US does tax dividends, but that's because they're the US and can get away with it. The US market is too big for companies to ignore it, so they have to pay the price to access it.
Also, the UK branch election isn't as attractive as it sounds. It's irrevocable once the relevant accounting period commences and you can't pick and choose where it applies. For example, if you have a PE in the Cayman Islands (minimal tax) and the USA (high tax) you can't have a branch election in place for the Cayman Islands and not one in place for USA. It's all or nothing.
I have no idea what you mean by highly profitable companies aren't interested in accessing non-existent losses.
I'm also confused why this is relevant to why lowering the tax rate isn't attractive to multi national corporations when they're considering their overseas operations. Which is how this started.
Branch is the wrong word then, I am talking about subsidiaries part of a group.
Offsetting against profits against losses would be irrelevant if you made profits far more often.
The original point is that we wont see companies suddenly setting up in the UK because of any global tax deal or the 17% tax rate. Unless you become a tax haven with treaties.
The bulk of corporation tax receipts will remain to be with domestic companies for whom lowering the rate is just a shifting of the tax burden in the economy.
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Elect is also probably going to have a specific meaning. So let's say decide.
Offsetting against profits against losses would be irrelevant if you made profits far more often.
The original point is that we wont see companies suddenly setting up in the UK because of any global tax deal or the 17% tax rate. Unless you become a tax haven with treaties.
The bulk of corporation tax receipts will remain to be with domestic companies for whom lowering the rate is just a shifting of the tax burden in the economy.
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Elect is also probably going to have a specific meaning. So let's say decide.
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Ok then.
Multi nationals will typically look to have regional headquarters in the Americas, APAC (Asia-Pacific) and EMEA at the very least. Obviously, some will have more or less of them, and some may look to have more in depth presence in certain areas/markets. Europe would be one of them as it's quite affluent and highly skilled in general.
There is competitiveness therefore for regional countries to attract these multi nationals. The UK isn't competing with Bermuda or Cayman Island because they're too geographically remote, but we are competing with Ireland and Switzerland as they are Europe centric and offer good environments for regional headquarters.
Obviously the tax regime is one part of the competitiveness, another being access to knowledge and skills (i.e. universities), affinity to the market (services, manufacturing etc.) and so on. A few years ago the UK tax rate certainly was a deterrent to multi nationals, as were the rather convoluted Controlled Foreign Company rules (CFC). The work done to streamline, revise and improve the corporate tax legislation has certainly helped improve the UK's attractiveness, illustrated by the UK being one of the most competitive tax regimes in the G20.
However, I will caveat the above that I'm not sure revising the CT reduction to 17% from 18% will help massively. But the reduction from 28% over the past ConDem government certainly has encouraged overseas investment in the UK.