Debate: Has corporation tax had its day?

   1   0 Blog, Corporate Tax

x

 

We have previously commented on the lobbying effort to kill off the corporate income tax (CIT).  In a debate published in the latest edition of Tax Journal, TJN’s director John Christensen goes head to head in discussion with Stephen Herring, head of taxation at the UK’s Institute of Directors.

Herring’s position is summarised in four points.  First, the CIT is collecting a diminishing share of revenue.  Second (and interestingly), BEPS is likely to lead to a situation in which national governments seek to ensure that their “national champions” are not impacted.  Third, companies will increasingly use intellectual property rights and suchlike to shift profits to avoid paying tax,  Fourth, tax competition will drive down tax rates.

Herring is not positive about current reform proposals.  BEPS, he says, will cause widespread dissatisfaction:

In the 1990s, the increasing emphasis placed upon robust transfer pricing legislation was thought to be the answer to cross-border taxation issues, but it has proven to be neither satisfactory nor acceptable to politicians, the public or, indeed, many tax specialists.  I foresee that dissatisfaction with the BEPS outcomes will arise much sooner.

Christensen responds by saying that the CIT raises considerable sums and the tax serves crucial functions such as preventing wealthy individuals from using asset holding companies to avoid tax entirely.  The CIT, he argues, provides a way to tax foreign shareholders, preventing them from free-riding on locally provided services.  Tax competition, he points out, won’t lead to zero rates of CIT; tax cuts, special incentives and handouts don’t stop at zero – they head into negative territory.

Read both sides of the argument here.

For a much more in-depth look at why the corporate income tax is so precious, see this.

 

 


Related Posts

The Offshore Wrapper – Friday 18 August

panama_cityThe Offshore Wrapper is our weekly roundup of news from the world of tax justice. If you want to receive the wrapper every week in your inbox, you can subscribe here.

READ MORE →

Swiss Politicians seek to block automatic exchange of banking information with developing countries

Photo by Pedro SzekelyCould we be seeing a return to the bad old days of Swiss Banking? A right wing party in Switzerland, the Swiss People’s Party, has launched an assault on the automatic exchange of banking information, according to Swiss Daily Newspaper Tages Anzeiger.

READ MORE →

The Offshore Wrapper – Data havens and new crackdowns on tax avoidance

Gorgeous Computer FixingsBelow is the text of the offshore wrapper,  a weekly roundup of news from the world of tax justice sent out to our mailing list. If you haven’t signed up yet and would like to receive the wrapper in your inbox every week – you can do so here.

READ MORE →

Open data for tax justice – designing a new CbCR database

OD4TJlogoThis week, TJN participated in a design sprint in London organised by Open Knowledge International. The purpose of the sprint was to bring together coders and tax justice advocates to start work on building a database for the new country by country reporting data that we hope will be released in the future, if public […]

READ MORE →

New research on key role major economies play in global tax avoidance

offshore-network_colorcorrectedAn important new study on Offshore Financial Centres (OFCs) from the University of Amsterdam has made some fascinating discoveries, challenging, as the Financial Secrecy Index has, the popular misconception that tax havens are only palm fringed little islands and exposing that in fact major economies play a key role in global tax avoidance. Specifically they’ve […]

READ MORE →

About The Author

John Christensen

Trained as a forensic auditor and economist, he has worked in many countries around the world, including a period of working in offshore financial services with Touche Ross & Co. For 11 years he was economic adviser to the government of the British Channel Island of Jersey. In 2003 he became what the Guardian has described as “the unlikely figurehead of a worldwide campaign against tax avoidance.” His research on offshore finance has been widely published in books and academic journals, and John has taken part in many films, television documentaries and radio programmes.
View all posts by

One thought on “Debate: Has corporation tax had its day?

  1. Rob Fox says:

    CIT is indeed decreasing as a proportion of tax revenues. It is open to abuse and abitrage across national borders, and the legislation is complex and therefore relatively easy to exploit. The case for replacing it is strong. So what with? I’d go for a tax on distributions, on the distributor, with a wide definition to include all interest, IP, and ‘management fee’ payments to connected persons (over 50% common ownership, worldwide)

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top