Everyone seems to be talking about corporation tax at the moment, from politicians, who say that they want to clamp down on tax avoidance to advisers who say that the current system is too complicated. It has even become a topic for debate in the SNP’s campaign for independence.
Now the Organisation for Economic Co-operation and Development (OECD) is under pressure to devise a new taxpayers’ charter to resolve the current disputes over corporation tax payments, such as the ones the trading bloc has seen recently with Starbucks, Google and Vodafone.
The think tank will publish its latest paper on the subject today (May 29th) and is expected to present a coherent strategy that will suit all nations while keeping international business in Europe.
However, it is likely to be met with opposition from countries where a very low rate of corporation tax attracts large, mainly American, multinationals. Ireland and Turkey are unlikely to sign up to any agreement to raise their rate of tax, for example.
While in the UK, the manufacturers’ organisation, the EEF, is warning that the corporate tax avoidance debate could undermine business confidence in the country and could discourage businesses from setting up here.
The body has urged the Government to avoid “unilateral or knee-jerk responses” to the complex international issues at the heart of the corporation tax debate and wants it to instead create the right environment to get industry investing and growing in the UK.
Instead, the EEF suggests, the Government should not rule out a “better application” of the current rules against tax avoidance instead of creating new ones.
London accountant, Darren Specterman specialises in providing corporate tax advice and guidance.