Tag Archive | "gdp"

$3.1 trillion lost to global tax evasion

Tax evasion is a global problem and a recent report from the Tax Justice Network shows just how bad the problem is.

The Tax Justice Network analysed tax evasion in 145 countries around the world and discovered that it cost the global economy in excess of $3.1 trillion. That equates to 4.9% of global GDP!

The USA heads the tax evasion league table at £337 billion, followed by Brazil, Italy, Russia and Germany. The UK comes in at No. 9. The data suggests that the exchequer loses £69.9 billion to tax evasion each year – that’s almost 80% of the entire NHS budget.

The report, compiled by forensic accountant Richard Murphy, also showed that 87% of Europe’s total budget for healthcare is lost to tax evasion. In Africa, the percentage is 98% and South America loses a whopping 139% of its healthcare budget to tax evasion.

Despite a G20 pledge 2 years ago, little has been done to stop companies avoiding tax by transferring their funds to secret tax havens. The Cayman Islands, Hong Kong, Luxembourg, Switzerland and the US have all been considered safe places to stash secret funds.

The UK government is keen to stamp out that practice and it hopes the recently signed Anglo-Swiss deal will capture the assets of UK residents who have secreted their money in Swiss banks. Other countries are now trying to negotiate similar deals with Switzerland. HMRC has also set up the Liechtenstein Disclosure Facility so that taxpayers can declare previously unpaid taxes without risking criminal prosecution.

However, tax evasion is going to remain a problem until all countries around the world agree to tackle it. At a time of global economic crisis, $3.1 trillion is an awful lot of money to be losing to tax evaders!

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Look into my eyes…. by Johan J.Ingles-Le Nobel

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Demand for contractor accountants outstrips rest of market

The latest Job Index from Reed showed an increase in opportunities for newly qualified accountants last month.

Although there was little movement in the rest of the jobs market, there was a 5% increase in new accountancy jobs in August. According to Reed, the past year has seen an increase of 22% in demand for qualified accountants, and an increase of 34% since the Index came into being in December 2009.

Despite the increase in opportunities, salaries for new qualified accountants remained unchanged in August. Compared to the recruitment market as a whole, this is still an improvement as the Salary Index sank to 97, 3% below the benchmark set when the Index started.

The non-qualified Accountancy Index is also outstripping national figures at 28% higher than it was this time last year.

Martin Warnes, Reed.co.uk’s MD, said it was really striking to note the increase in demand for qualified accountants last month when all other areas of the economy remained flat.

The service sector in particular is suffering at the moment. The latest Markit/CIPS services purchasing managers index fell from 54.4 to 51.1 in August. This was the largest drop in ten years as economic uncertainty in the Eurozone continues to harm the FTSE and consumer confidence is eroded by rising inflation and constrained incomes.

Nick Jones from World First currency brokers said that a fall had been expected but the extent of the decline was a real shocker. The services industry is still slightly growing, he continued, but any more shocks to consumer confidence could see the sector contract and threaten the third quarter’s GDP.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Relax, Mr. Accountant by Dennis Wong

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Banks must do more to help small businesses get finance

A new report claims that the UK’s financial sector is not doing enough to support SMEs and this is damaging the economy.

Will Hutton, The Work Foundation’s executive vice chair, has submitted the report to the Independent Banking Commission, and says that despite bank assets growing to four times GDP, lending to corporates represents only 5% of all lending.

The report goes on to say that the lack of support for SMEs has discouraged borrowers from applying for loans. This lack of investment reduces innovation levels, which in turn creates a cycle of less dynamism, less investment and less innovation.

The authors of the report want to see rigorous ring-fencing, or separation, of commercial and retail banking operations from investment banking, as well as additional capital being made available. By doing this, internal frameworks would be changed and the financial sector would find it more attractive to lend to smaller firms.

Furthermore, the banks must stop concentrating on balance sheets and start to look on small businesses as positive investments which will strengthen the economic recovery.

The FSB also agrees that lending to small businesses must improve. The banks say small businesses are not applying for credit and yet a recent survey from the FSB shows that around 960,000 of its members asked the banks for a loan in the past 12 months and a third were refused. 16% of those refused were not told why their application was turned down.

34% of those who applied needed the funding to cover cash-flow, but 21% wanted finance to buy new machinery and equipment and a further 17% wanted to expand their business.

John Walker, the FSB’s national chairman, pointed out that the OBR forecasts that business investment will help to drive the recovery but this cannot happen until banks work with companies to make sure they get much needed finance.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Common Consolidated Tax Base would slightly reduce UK GDP

The European Commission wants to reduce significantly the burden of administration, legal uncertainties and compliance costs that face EU businesses and online accountants at present.

It has now published proposals to calculate the tax base of all the 27 member countries under a common system.

The Common Consolidated Tax Base would provide companies with a ‘one stop shop’ system when it comes to filing tax returns. The system would also enable organisations to consolidate all profits and losses incurred across the European Union. EU states would still retain the right to set their own tax rates.

Under the current system, companies trading across borders could be dealing with 27 different rules for tax calculations, including a complex way of working out the taxation on intra-group transactions.

The commissioner for taxation, customs, anti-fraud and audit, Algirdas Šemeta, said the CCTB will make doing business with the EU cheaper, easier and convenient. It will also benefit SMEs that want to expand outwith their domestic market. The proposal will benefit business and improve the EU’s global competitiveness.

However, research conducted by the Oxford University Centre for Business Taxation has found that the UK’s GDP would fall by 0.05% if these plans are implemented.

The ICAEW has said that the idea of a consolidated tax base if good and will make it easier to trade, minimise disputes and reduce compliance costs. But the new system will run alongside the old model and therefore administrative burdens will be increased. The Institute is therefore calling for the scheme to be voluntary.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: all in one by C Jill Reed

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Online accountants benefit from trading through the Internet

The Internet now contributes 7.2% to the UK’s total GDP, according to research from the Boston Consulting Group. The report also shows that 250,000 people, including contractors, are employed in the sector.

About 60% of the £100 billion generated by the Internet is driven by consumption. This includes online shopping and the cost of the connections and devices needed to get on the net. The other 40% comes from government IT spending, investment in internet infrastructure and net exports.

It is expected that the Internet industry will continue to grow at an annual rate of 10% over the coming five years, meaning that by 2015, it will be contributing 10% GDP.

Women find the online world to be a safe, convenient channel when it comes to promoting their business. Ecademy, the UK’s first business social network, says 46% of its users are women and they actively promote their business through the site.

Companies that have still not invested in social media might be interested to learn that it has been heralded as the perfect environment when it comes to engaging with customers. ComScore, the technology analysis firm says that social networks inject life into online activity and even the recession has not affected the social network industry.

88% of the online population in the UK now spend time on social networks and/or blogs and these activities account for 20% of the total time spent by Brits online. In light of these figures, it’s easy to see why certain companies take advantage of the opportunities offered by social networks to promote their products and services.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Hey guys, I captured the mouse! by Darwin Bell

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Online accountants in for a rocky ride

Contractor accountants should take note that the CBI warned recently that although the economy has been showing signs of improvement, challenges and uncertainty still lie ahead.

The comment came after the Bank of England decided to maintain the historically low interest rates at 0.5% last week.

The head of economic analysis at the CBI, Lai Wah Co, said that although the move was widely expected, there is growing disparity amongst members of the Monetary Policy Committee over the strength of the economic recovery.

GDP has increased by 1.1% in the past three months according to government figures but this is expected to slow down during the second half of 2010. The recovery is being supported by an exceptionally loose monetary policy and it may be sensible to move towards gradually withdrawing this monetary stimulus, the CBI expert remarked.

Meanwhile, the majority of the UK’s small businesses and limited company contractors have still not returned to pre-recession levels of profitability. 70% of British entrepreneurs have not seen their profits return to normal after the credit crisis, according to RSM Tenon’s Business Barometer.

9% of entrepreneurs believe they will have to wait for at least another 3 years before their business returns to normal, 20% think between 2 and 3 years and 27% say 1 to 2 years.

Over 40% of entrepreneurs have had to review their business through fears of a double dip recession and 22% think that a lack of cash flow could seriously threaten their operation in the coming 12 months.

The head of recovery at RSM Tenon said that they are expecting to see corporate insolvency levels remaining the same as over the past two years as business owners still struggle to secure additional funding.

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Fears of double dip recession eased

Fears of a double-dip recession have been alleviated, at least temporarily, by a report released at the end of last week that showed that GDP rose 0.2% in the first quarter of 2010.

Self employed contractors and limited companies in the financial sector should definitely be encouraged by this news as the rise was mainly due to a growth in financial industries and business services of 0.6%.

Other sectors that contributed to the growth were communication, government, storage and transport.

Some industries however did not show such positive results, with construction, distribution, hotels and restaurants all showing a decrease in output

The treasury spokesman for the Lib Dems, Vince Cable, was not particularly optimistic at the news. He said that there is still a real danger of the country sinking back into recession as the marginal growth shows there are very few visible signs of the promised recovery.

He added that whilst the banks continue to starve businesses of credit and people struggle to get out of debt, the recovery is likely to remain in a fragile state.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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