There is a (largely constructed by people ignorant of the very basics of tax laws) furore building up around the fact that various (usually American) multinational companies have been ‘dodging’ UK Corporation Tax (CT). Firms such as eBay, Google, Amazon, Facebook and Starbucks have, amongst others, all been ‘outed’ as part of this wave of silliness.
Leaving aside the convenient fiction that companies pay tax, the reason why the UK government has seen (thankfully – they’d only waste it) little money in CT is because these companies do not have their EU headquarters in this country. Under the Single Market (one of the few things about the EU which is actually sensible) only one HQ is necessary to do business in the EU and so any CT on profits made in the EU is paid to the national government in country where it resides.
Why do firms have their EU HQ in other countries? Simple: because CT rates are lower.
How could we get those companies to place their HQ in the UK? Simple: cut CT. Whilst ideally I’d say scrap it, anything in the 10% – 15% range would make the UK more competitive.
The problem (of course) is that those currently foaming at the mouth about so-called CT ‘avoidance’ are those who hate the idea of lower CT rates.
As Spock would say, ‘Illogical, Captain’.