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Corporation Tax

There is a lot of information on large corporations operating in the UK who are not resident here, and as such, are able to avoid paying as much tax on their businesses as the UK government would prefer. Notice we use the word ‘avoid’ rather than ‘evade’.

Avoidance is perfectly legal, but for some reason, politicians have jumped onto a bandwagon of “business morality” which dictates that all businesses have a moral duty to pay the requisite amount of tax on their transactions.

Clearly, right now in this country, this isn’t how the system works. Companies such as Google, Amazon, Apple and Starbucks are targeted for their taxation policies, and methods of tax avoidance. The way Starbucks does it is to have a company registered in Switzerland that owns their brand and logo. Every year, Starbucks pays this company to lease the brand and logo. Quite legitimate, you might think.

Except that if Starbucks makes £400 million profit in the UK in one year, it would be subject to around £80 million in taxation, if not marginally more. What it does to avoid this is to pay the Swiss-based company £400 million for the lease of the brand, and then pay the Swiss taxation amount, which would be around £40 million, if not less after the accountants have worked their magic. This is coincidentally, the amount of profit they made this year. The lease cost is directly proportional to the profit made every year. And it’s not illegal.

On the one hand, it is a brilliant way of reducing their tax burden by 50%.
On the other hand, how much revenue is the UK government missing out on by Starbucks subverting their taxation payments in this way? How does the UK government pay for roads, schools, the NHS and so on, if corporations prefer to find ways of paying their taxes elsewhere in the EU than here?

What’s Best for the UK People?

Research suggests that the countries with the least amount of tax burden on its citizens and its businesses fair the best for growth and in ‘happiness’ statistics.

Instead of going after the companies named above, why not ask: what are we not seeing when it comes to corporate taxation? What is Switzerland doing better than we are in order to entice Starbucks to register there? How can we adopt the same best practices that actually keep Starbucks paying tax in the UK?

What do we need to do to the system in order to affect positive change, rather than going after those organisations that are actually using the system in the way that it was intended and then vilifying them for doing so?

The Non-Partisan Party will instigate a tax reform that will see the likes of Starbucks paying tax in this country, even if it’s at 10% because we believe it is in the best interests of the UK government and citizens to receive £40 million in taxation than zero.