Tax reforms finally announced
In line with Trump’s pre-election promises – and with all the pomp and circumstance we’ve come to expect from the new administration – the White House unveiled its plans to reform the US tax system this week.
Heralding ‘the biggest tax cuts in history’, the document itself was something of a damp squib – just a single A4 page summarising the main points of the reform agenda which would at a stroke simplify the US tax system, slash business taxes and consign inheritance taxes to history.
An upturn for the economy?
After a period of sluggish performance, the US economy may be set for an unexpected upturn. The incoming Republican administration seems determined to throw all its resources into boosting the economy which, together with the much-touted trade restrictions shoring up the price of imports, is almost certain to fuel inflation above the average 2.2% of Obama’s second term.
While under Barack Obama, labour regulation and environmental legislation expanded greatly – witness the scope of Obamacare, for instance – its subsequent contraction under Trump may well encourage businesses to start investing again.
Tech giant Apple has been hit with Europe’s biggest-ever tax penalty after Brussels ruled that the company had received what amounted to illegal state aid from Ireland. The company will be required to pay billions of euro in back taxes as the European Commission seeks to redress the aggressive tax avoidance strategies employed by the world’s biggest corporations.
The judgment follows a three-year investigation into claims that Dublin violated EU law by granting Apple an advantage not available to other companies. It’s likely that the decision will be the subject of appeals by both Apple and Ireland – both of which deny any wrongdoing.
Google facing charges of financial fraud
Since the leak of the Panama Papers earlier this year – and in the wake of recent revelations regarding high-profile sweetheart tax deals – the pressure has been on governments across the world to crack down on multi-national corporations who are employing elaborate strategies to avoid paying tax and so depriving their host economies of much-needed revenues.
So the news that French investigators have raided Google’s Paris headquarters as part of its long-running enquiry into the internet giant’s tax affairs, stating that the company is under investigation for aggravated financial fraud and organised money laundering, should come as no surprise to those of us watching from the sidelines.
Time for a new approach to global tax?
Christine Lagarde, head of the International Monetary Fund (IMF) has said it is time to ‘think outside the box’ on global tax, but has cautioned against proposals by British-based charity Oxfam to rush into the creation of a UN global tax body which she believes could face insurmountable obstacles.
The public desire to see multinational companies brought to book over their tax-avoidance strategies has been thrust back into the spotlight following the publication of the Panama Papers. The documents leaked from Panamanian law firm Mossack Fonseca show how trillions of dollars of cash is stashed by savvy companies in fiscal havens, where it escapes the scrutiny of tax authorities and governments around the world.
EU strengthens resolve to target multinationals
Since the publication of the Panama Papers at the beginning of April, there have been growing calls for increased transparency in the tax affairs of politicians and multinational companies across the globe in a bid to quash efforts by some businesses to engage in elaborate tax-avoidance schemes that rob governments of important contributions to the public purse.
In the latest chapter of the unfolding global drama, European Union (EU) regulators have announced proposals to force multinationals, including subsidiaries of non-European organisations, to disclose profits earned and taxes paid in Europe’s 28 member states, as well as in tax havens.