To answer your last question first: essentially none, or just plain "none". Swiss banking secrecy laws were done away with after pressure from the USA. UBS had been up to stuff that the Americans considered illegal and ordered them to hand over information on American clients, in contradiction to Swiss banking secrecy laws. They threatened UBS with having its licence revoked in the USA if they didn't comply, so the Swiss government caved. It was essentially American blackmail. I don't have a problem with it. I'm in favour of transparency for all the reasons I have already written. The banking laws now impose a freedom of information between countries, so in theory, if I had a pot of gold stashed in the UK, then the Swiss could now find out about it because the UK would have to tell them and vice versa. Within Switzerland, there is no change. The banks won't tell the government how many accounts I have although I am supposed to tell the tax authorities myself. It's irrelevant for someone like me with no great amount of wealth - there is nothing to hide. What has annoyed the Swiss, of course, is that the Americans come down on Switzerland like a ton of bricks (partly because the US would like some of its banking business back) but don't do anything about parts of the US - Delaware for example - where you can nominally set up shop and pay no tax. It's the usual American thing of bullying smaller places while consistently failing to make any attempt to put its own house in order. They do it all the time in every sphere.
It wouldn't have been legal for me to hide my bank accounts from the taxman, but it would have been illegal for the taxman to ask my bank about my accounts, or at any rate illegal for the bank to tell them. It's still tax evasion and it's still illegal. It is not tax avoidance. But the law has no teeth to root out the tax evasion. Bonkers, when you think about it.
Businesses charge each other for licenses under patents, copyright materials, and trademarks as well as for goods. And they can charge and pay as much or as little as they decide, whether within a country or between countries. Are you suggesting some regime in which such charges would be subject to controls? How would that work, then?
a bit of a mixed one, admittedly but I don't hold myself to vastly superior standards compared to most posters on here.
Ah, but if you had said "tusks" instead of teeth ... you could have written your own ticket. Metaphorically speaking.
Yes. Within an organisation you wouldn't be able to charge different bits of it for licensing patents, copyright materials and trademarks. If I, Gliddofglood, decide to charge your company, Pete1950, for using my copyright - my avatar say, then that is fair enough, no matter where the companies are located. But Gliddofglood SA of Switzerland should not be allowed to charge Gliddofglood plc of the UK for using my avatar or anything else, unless the two companies are entirely separate, not owned by the same holding company or any other ridiculous off or on-shore vehicle. You'd need entirely separate listings on stock exchanges and a demonstrable lack of common control of both companies for it to be possible. A few years ago I tried to get some Timberland shoes delivered to me in Switzerland. The company that traded throughout the EU, Timberland Europe or something, was located in Zug, Switzerland. However, they declined to deliver me the shoes as I lived in Switzerland. They didn't deliver to Switzerland. This is clearly bullshit. They should have been located in a jurisdiction where they actually did some business. You can bet that they were charging all the Timberland entities across Europe fees for using the Timberland brand ensuring that they made no profit from actually selling products so all the profits occurred in Zug where they paid next to no tax. How is this fair or reasonable?
Yep, Tusk. Ripping out the old roots of Europe and replacing it with something modern, and fit for purpose.
Good posts, a nice debate without any flippancy (although sometimes that's needed to lighten things up a bit). Yes, I think we all agree we're talking about direct taxes which can be managed. We seem to be split between those that believe it's unacceptable to use legitimate means to avoid paying tax as this is 'moral turpitude' (to use a phrase someone posted on the Brexit thread at the time, can't remember who, but it's a great phrase) and those that believe it's acceptable. As @Darkness said at #12 Govt's make the rules and if they don't like them it's for them to change them. As @Pete1950 said this is exactly what Govt's do . Govt's will keep changing the rules and people/corporations will keep trying to find new ways around them. For those who believe it's unacceptable to avoid paying tax I pose a thought. We all, there may be the odd exception on this forum but I doubt it, use a tax avoidance scheme to our personal advantage. Pension contributions. These are tax deductible either at source or retrospectively depending how they were made. In effect one avoids paying tax on that part of our incomes at that time and pushes it down the road until we begin to drawdown our pension. The effect is there is up to 40% more in our fund than would have been the case had tax been paid at the time. The extra is earning interest and growing for each of us. We only pay the tax as we begin to drawdown on the pension; we have avoided paying tax at the point in time when the contribution to our pension fund is made. Is that morally wrong? Should we have paid the tax before making the contribution?
The bit that worries me is that, and brexit highlights the mindset, people seem happier for governments to be less acountable to the people as long as the people can say either, why aren't the government doing something or, what are the government doing with our money? It's that expectation as I've said before that people want gucci services for primark money. How do you change that mindset?
I think this is the crux of the perceived issue...... ie where tax law has been designed to give a tax break in order to facilitate something which may benefit society and where those same regulations are being arguably abused. However, no laws are being broken so it's perhaps the laws that need to be changed.
They are changed often - for the benefit of those who want loopholes to be created so they can sneak their money out without paying tax on it. If you think laws should be changed to close up loopholes, the UK Treasury would have to (a) stop outsourcing the legislative drafting process to firms with conflicts of interest; and (b) co-ordinate the changes to dovetail with those in other countries. The present government is strenuously opposed to such an approach.
To answer the morality question, it would perhaps be helpful to look at first principles. What is the purpose of taxation? Is it for funding the society that we want to live in? Or is it to create a gaming environment in which the winners are those who are smart enough and rich enough to manipulate the game environment, to the disadvantage of those left with no options and no alternative but to pay their taxes? Again, I would argue that rules that allow any individual to reduce their tax liability are likely to be fair and equitable. Pension contribution is a good example of this. Claiming genuine allowable expenditure, as self-employed or an employee, to reduce your taxable income, is another. These, I suggest, are not in dispute. Reducing your tax liability is not intrinsically wrong. If it costs money to make money, that fact should in some way be reflected in your tax bill. Creating a paper empire in order to artificially create "allowable" expenditure however, is morally wrong and it runs counter to the "first principle" I set out above. Avoiding tax should not be a matter of how well you "play the game" - because taxation is not a game. Police forces are not a game. Having an army to defend the country is not a game. Maintaining roads, infrastructure, essential services ... not a game.
I think this is part of a broader point, which is about double taxation. * Should a person receiving income in one country and transferring it to another country where they live, be obliged to pay tax twice i.e. in both countries? * Should a person who puts some of their income into savings which they later take out be obliged to pay tax twice i.e. when they first receive the money and later when they access it? It is widely accepted that tax should be levied only once, so that there has to be some kind of treaty or arrangement providing that one or the other stage in these examples is exempt. This is not a very controversial issue.
@Pete1950 @Loz I do wish to respond to your points but it's St Patrick's Day here and I have to run off to marshal the vintage cars and tractors (no bikes) who take part in the annual parade through town. TTFN.
