Tag Archive | "tax rate"

Multinational called on carpet for shifting profits overseas

Everyone knows that payday lenders are just horrid, but here’s some more proof: the nation’s largest just got accused of tax avoidance for its recent behaviour.

So today the news is as follows: Wonga, the biggest – and some say the worst – payday lender operating in the UK, just shifted some £35 million of the money its made off of poor Brits down on their luck to a shell company in Switzerland. Do you know what the tax rate is in Switzerland? Well, it’s somewhere in the neighbourhood of around 1 per cent – and campaigners are calling Wonga out on its practice.

This, my friends, is a perfect example of the kind of tax avoidance that multinationals like Wonga pull all the time. Never mind the fact that Wonga is going around saying that it paid more than its fair share to HMRC last year – so what if it did? Does that give it the right to put a thumb in the eye of the taxman just because it can?

I swear it’s infuriating to hear about things like this going on. Not only that but you can almost be guaranteed to know that nothing will come of this tax row either, since the Government is more interested in going after small business owners and other self-employed blokes like contractors instead of big businesses, despite the fact that these multinationals are getting away with murder. No, instead it will squeeze every last penny from hard-working sole traders because they’re easy targets and don’t have the kind of high-powered accountants that a big firm like Wonga can employ.

For what it’s worth, it’s not like Wonga even provides a valuable service to Brits, despite what it keeps telling us. No, the payday lender is more or less a legalised loan shark if you ask me – and now it’s taking its ill-gotten gains and funneling it into its ‘sister company’ out in Switzerland under the guise of ‘business fees.’ Listen, you don’t need me to tell you that’s absolute rubbish, do you? I mean nobody believes that Wonga’s doing this because they have to – it’s more than obvious that the firm simply wants to maximise the profits its making off of the nation’s low income earners. As if its ridiculous 4,000 per cent payday loans weren’t bad enough! It’s maddening, and I hope someone in the Government finally decided to put a stop to it.

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UK’s 50p tax rate is higher than most other EU countries

KPMG’s global tax survey has discovered that the UK’s top personal income tax rate of 50% is higher than the top rate in the majority of other EU countries.

Sweden has the highest rate of income tax at 57%, Denmark and the Netherlands have rates of 55% and 52% respectively, while Austria and Belgium both levy the same 50% rate as the UK on their high earners. The average personal income tax rate in the EU works out as 37%, and in Western Europe it is 45%.

KPMG surveyed 96 countries and found that the only two other nations with top rates higher or equal to the UK’s were Aruba at 59% and Japan at 50%.

Marc Burrows, from KPMG, said everyone notices headline rates. The UK does come out a bit better when you consider social security taxes and tax thresholds, but people don’t tend to take those into account.

He went on to say that Western European countries do not have particularly competitive rates when compared to Asian countries such as Hong Kong (15%) and Singapore (20%).

Last month, the Institute of Fiscal Studies warned that the UK’s 50p tax rate could be losing money for the government. The IFS pointed out that there are several ways to reduce taxable income when tax rates rise.

The Treasury estimates that the top rate will raise £2.7 billion per year, but the Chancellor of the Exchequer has asked HMRC to analyse the revenue raised so far. The Tories say the 50p rate is purely temporary but the Lib Dems want it to be a permanent feature of the UK’s taxation system.

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Would accountants for contractors benefit from lower corporation tax?

The CBI believes the government needs to reduce corporation tax further than its intended level of 24% if the UK is going to remain competitive.

John Cridland, the director general of the business group, said that tax reform should improve competitiveness and make the UK a more attractive place for investors. Lowering the corporate tax rate will go some way towards encouraging organisations to base their operations in this country but the government also needs to address the tax burden which is making the overall system uncompetitive. Furthermore, the 50% higher income tax rate is seen as a barrier to attracting much needed talent to the UK.

The CBI also has concerns about the proposals for taxing foreign companies that are owned by UK businesses. The anti avoidance measures that have been included in the proposed controlled foreign companies regulations make the regime cumbersome, it says.

Foreign companies perceive HMRC as very aggressive when it comes to CFCs and whilst it is important to keep the UK tax base, any anti-avoidance measures have to be proportionate to risk and aimed at specific abuse. Investment could be deterred if measures are perceived to be too heavy-handed.

The CBI does support the Patent Box to complement the current Research and Development Tax Credit scheme but believes that more thinking is required to make the UK more competitive. The government should also implement measures to incentivise intellectual property development after the research stage but before the patentable product creation stage.

Cridland’s comments were made as part of the Confederation’s submission to the Corporate Tax Reform government consultation.

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