Subsidiary A (in state with high corp tax) pays millions in "consulting fees" to same MNC's subsidiary B (in state with no corp tax), but the actual value of the consulting B delivers to A is negligible. Legal? Perhaps. But why are you so opposed to calling it "illicit"? Thanks!https://twitter.com/MForstater/status/1022821492017557504 …
-
Thanks for asking. The distinctions are a bit subtle for twitter, but I will try: (1) Your scenario doesn't sound legal or normal for big corps - it could be illicit (2) What big corps do in terms of BEPS is not this (3) What the indicator picks up is neither 1 or 2....<more..>
(1) Yr scenario of invoicing yourself for fictious services sounds like tax fraud or money laundering (perhaps w fact of the other co being a related entity hidden) - that wld be illicit (but note: rare to hv tax treaties w zero tax jurisdictions, jurisdiction A wld charge WHT)
-
-
(2) Legal tax planning by big corps includes transfer pricing defensible w/in arms length principle. Can be disagreements over value (or arguments for a different system), but superficial similarity w first scenario does not make it 'illicit'
-
(3) Note the proposed SDG indicator applied to individual companies suggests a lot of "apparent profit shifting" into high tax countries - US, UK, France, China, South Africa, Italy etc... (suggests the numbers it generates are not profit shifting)
End of conversation
New conversation -
-
-
I agree. That is not normal tax planning. In many countries it would be illegal. Calling it “illicit” seems fair.
-
You could go further. It might actually be criminal in many States (including Ireland) so definitely no problems with calling it illicit. Huge difference between debating if X is worth £10 or £15 and charging £20 for something which isn't worth £1.
End of conversation
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.