Government policy is always about trade-offs and nowhere is this more apparent than tax policy, as any properly functioning tax system relies upon the widespread consent of the public as a whole. The taxation of the US tech companies demonstrates this well. There is a lack of general understanding that the international tax system attributes profits on the basis of where the value is created, not where the revenues are raised. However, the US corporate tax system can enable tech companies to get away with not paying tax on their overseas profits, potentially leading to unfair competition. The most likely response is to argue that the tax system is out of date and that greater emphasis should be placed on where the revenues are raised. The OECD seems to be moving in this direction, and the UK should be an advocate for multilateral action.
If you are not a subscriber, subscribe now to read this content.
Government policy is always about trade-offs and nowhere is this more apparent than tax policy, as any properly functioning tax system relies upon the widespread consent of the public as a whole. The taxation of the US tech companies demonstrates this well. There is a lack of general understanding that the international tax system attributes profits on the basis of where the value is created, not where the revenues are raised. However, the US corporate tax system can enable tech companies to get away with not paying tax on their overseas profits, potentially leading to unfair competition. The most likely response is to argue that the tax system is out of date and that greater emphasis should be placed on where the revenues are raised. The OECD seems to be moving in this direction, and the UK should be an advocate for multilateral action.
If you are not a subscriber, subscribe now to read this content.
.tmb-editorspic.jpg?sfvrsn=df04ab27_1)
