to think that you need to stop what you're doing right now and read this article. And I mean need.

[granted]

I posted this on the Politics section but it deserves a much wider audience:

www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century?commentpage=last#end-of-comments

Quite possibly the best newspaper article I've ever read.

Multinational companies can relocate to low tax countries with little effort and there is fuk all the government of any colour can do about it. Tax shopping has become very easy.

This policy makes it more attractive to remain based in the UK, rather than up and leave as companies have been doing en masse for the last decade. It reflects the true bargaining position governments find themselves in when dealing with multinationals - i.e. not very good.

You were all whining about growth a week or two ago. Join the dots and see how making the UK a low tax country for business means companies will remain/return here.

This is a longterm strategic move.

Yes, the companies may be baed here ccpccp - but if they are not paying any taxes, then they are not exactly benefitting the UK economy. It may have some effect on London house prices, but if the work is being outsourced elsewhere in the world and taxes are not being paid here, the amount it will help the UK economy is bugger all.

Granted
yes, that is my understanding of it. Which is why I asked.

What good is it if the companies are based in London, but they are paying tax in Switzerland and moving the profits back to UK?

This is the situation in Geneva

Expats (or their companies) pay twice the local going rate for houses.

Its better to have them here than abroad granted. Your way will see the UK continuing to be stripped of its big companies and we will be getting no tax anyway.

I'd rather they pay no tax here than no tax there. At least then we have the illusion of some kind of industry left, and are positioned for future changes to bring the work back once china/india etc become as costly as we are.

Until this rebalance occurs, its going to be a tough time for the UK. We are too expensive and we arent very special.

Take to the streets.....(how long until we have to?)

I would rather the companies be here too than leave altogether.

It has been decades since I formed the opinion that The Guardian was read by people who are not as clever as they like to think they are.
Nothing here to make me change my mind.

But are we not just making it easy for them?

It is not that easy to just move a company abroad. Not everyone is going to move with you.

The banks threaten to move all the time, not seen many follow through on that.

"Yes, the companies may be baed here ccpccp - but if they are not paying any taxes, then they are not exactly benefitting the UK economy"

You mean, apart from the jobs and the wages they pay to staff which are taxed in the UK? Rent on office blocks? Employing other british companies for cleaning, security and other such services?

ftoomch
Then why don't you educate us instead of making snarky comments?

If there is a reason that this is good for the UK, then bring it on.

Clytaemnestra
That is a drop in the ocean compared to the taxes that a company would pay.

Just a note of caution - Geneva is not especially representative of all of Switzerland. Basel for example is not so expensive.

I think that countries have real and imagined reputations. I do want the financial sector in London to be competitive.

I don't know enough about it, I too would like to hear more from ftmooch. Hell I am ready to hear why the government would do this for good economic reasons.

Clytaemnestra
The point was that they won't be employing people here - they'll be employing people in China or wherever it's cheaper - just based here for tax reasons. If they employed people here I'd agree with you.

I also worry about the effect on our home-grown small/medium sized businesses, who will not benefit from these tax breaks - how are they supposed to compete even locally, let alone globally.

These moves seem to harm genuine UK-based S/M companies, who really do employ people locally.

That is what we should be focussing on - rather than trying to compete with China or India as a low cost economy, as ccpccp suggests would be ideal, we should be trying to emulate Germany as a provider of advanced products/services.

Otherwise I expect revolution sooner rather than later - I doubt the average person in the UK is happy to live the life of a Chinese unskilled worker.

Gipfeli
True, but many of the banks/multinationals are based in Geneva.

I think that the Government should be doing more to help small and middle-sized businesses, not just the London based financial services.

I thought they were helping s/m businesses. Lower corporate tax? Other stuff

Sorry to cut and paste so quickly ds2 is climbing stuff...

'David Cameron has appointed Lord Young to the influential new post of Adviser to the Prime Minister on Enterprise.
Calling for an end to the "institutional bias" against small business, the Prime Minister has asked Lord Young to produce a "brutally honest report" on the bureaucratic burdens facing entrepreneurs.
The report will look at access to finance, opening up government procurement to SMEs and breaking down barriers to growth.'

I am not convinced either way, but I did get the impression they were interested in promoting corporate growth of all sizes.

Oooh, a report.

I won't hold my breath.

We all know that what Cameron says he supports and is interested in and what he does are two entirely unrelated things. (Families, NHS, reducing immigration etc)

yeah yeah I know a report. I had to link quickly.

I think there have been some good things for SMEs I know dh's is feeling positive not despondent for various reasons.

It seems to me we've only had one post on this thread from someone who does know something about the area and felt the article was overstated. There will be anti-diversion rules. The banks will probably not be able to take advantage because they've been claiming tax relief for losses (something they wouldn't be able to do with the new rules). These laws already exist (introduced by Labour) for foreign subsiduaries so it's hardly a Tory innovation.

Or are there financial experts posting in agreement with the article who believe that the above isn't factually correct?

OK, I've done homework. This was set out in last June's budget. Small profits tax was reduced from 22% to 20%, which should help SMEs. However I still don't see how a bigger tax saving to foreign corporations will help the UK economy.

It's a bit like the fact that foreign owners don't pay capital gains tax on UK property sales - it pushes up local prices, while doing zilch to refill UK's empty coffers. This was recently reviewed and left unchanged, incidentally.

Treasury report on June 2010 budget. The enterprise section starts on page 19.

I still don't see should have said: I don't believe. Neither do I see why our rates should be the fifth lowest in G20. Couldn't we have settled for somewhere in the middle? Or is "Cheapest" now the only quality we have to offer?

If it was set out in last Junes budget, then Labours silence on the topic speaks volumes. I suspect its a direction that they would also be heading in.

"Or is "Cheapest" now the only quality we have to offer?" - ItsGraceAgain

We dont have to be cheapest forever. Just long enough to get out of the shit.

This comment was on the Guardian site

"A number of posters have explained why Mr Monbiot has got this completely wrong. These measures were first proposed by the Labour Government in the 2007 Budget. They have nothing whatsoever to do with boosting company profits, but are a modest and sensible adjustment in tax law such that overseas branches are treated in the same way as overseas subsidiaries.

Their aim is to simplify the complex accounting procedures that many international organisations are now compelled to adopt, and to reduce the administrative burden. Everyone (apart from Mr Mobiot) who has taken the trouble to understand these measures agrees they are a good idea. If they have any impact on treasury revenue at all, they will mean a modest increase in tax receipts from businesses that might otherwise be tempted to move their headquarters."