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A tax break that helps companies to make profit from loss
Tuesday 17th, December 2013 / 22:35 Written
by Oman Observer
This article by Tom Bergin is presently making
its round across the universe, probably through some syndication agreement. Of
all places, this is a link to the "Oman Daily Observer". The main
focus is on what sounds like a magic formula, and is summarized here in the
article:
"The
rule, which dates back to World War Two, helps companies save hundreds of
millions of dollars in taxes each year, a Reuters analysis of the accounts of
several major international corporations shows. The profits that escape tax
have often not been earned in Luxembourg, but in countries like Britain, the
United States and Germany. Those countries may lose out.
New York-listed telecoms
group Vimpelcom, US Internet group AOL Inc, building equipment maker
Caterpillar and UK mobile telecoms group Vodafone are just four of those to
have made use of the system, accounts for their Luxembourg subsidiaries show.
Other firms have similar arrangements, tax advisers say, but have not made them
public."
On one hand, this looks like good publicity.
Considered however in the context of a wide assault on tax havens, the fundamental
question is: where is the border between a tax haven and a non tax haven? And
we know already what a tax hell is. I learnt that from Gerard Depardieu, the
famous French actor who left the French tax hell for heaven in Russia. Not seen
since Napoleon.
Two conclusions for (new) governments in "tax
havens":
- It is a losing proposition to fight against the rest of the world's will to eliminate tax evasion, financial crime, and money laundering.
- It is a legitimate battle to defend a line that separates financial crime from legitimate business, which includes low tax jurisdictions as opposed to tax hells. In the European context, the question is: are tax policies a matter of subsidiarity, or of central dirigisme, and/or to what extent?
