RSS feedsIn October 2005 we published our first Financial Director Guide To: Global Tax Strategy and high on the list of key agenda points was the need for boards to decide what kind of taxpayer they wanted to be. Was there value in trying out tax-saving schemes that might ultimately fail a legal challenge by the tax authorities, and risk the ire of the public as a result? Or is there a social responsibility issue, here, that overrides any real or apparent cut in the tax bill, compelling companies to determine what seems a 'fair' amount of tax and to just pay it, even if it's more than the sum that clever tax people say you should be handing over?
We return to the question of global tax strategy this month with another Guide, which our subscribers should find along with this month's magazine. This time, the international scene has come to the fore. Last November, for example, insurance group Hiscox announced it was going to up sticks and move to Bermuda because of the more competitive tax regime. In doing so, it would be on a more equal footing with its haven-based competitors.
Then HSBC stirred things up with a speech in which the company's head of tax let slip that the bank – which, as you'll remember from the letter 'H' in its name, used to be based in Hong Kong – had been approached by "a number of low tax jurisdictions" to see if they could tempt the global operator to relocate again. And Aidan Smith, FD of Liberty International, told us recently that the one-time South African-domiciled property group perhaps wouldn't today have chosen London as its base were it not for the new Reit (real estate investment trust) regime. Then, of course, there's U2 rock star Bono, whose move from Ireland to the Netherlands deprives the Emerald Isle of a taxable entity the size of a mid-cap corporate.
All the more ironic, then, that the OECD should be trying to stamp out 'non-compliance' with domestic tax laws while apparently having little interest in the fact that countries around the world are redrawing their tax codes to bring in foreign investors. Then there's the European Commission, busily pushing ahead with plans for a common consolidated corporate tax base (a hideous, stuttering, five-letter acronym, CCCTB), that, supposedly, will present a 28th tax jurisdiction option to businesses operating in the 27 EU member states. (If the Daily Mail ever finds out that this is the thin end of the European tax harmonisation wedge, stand well back.)
Complicated business, this global tax strategy stuff. More than ever, companies need clarity of thought and clarity in their tax reporting.
