Tag Archives: legal
Don’t Blame The Havens – Tax Dodging Is Everyone Else’s Fault
http://www.ft.com/cm…l#ixzz2WlUNxAHS By John Kay Authorities have preferred to cut deals with big companies rather than pursue costly legal action ©Alamy The first time my research gained wide publicity was in 1979. In collaboration with another young academic, I explained that many large British companies paid no corporation tax. The issue resurfaces again as my co-author retires from the Bank of England. This week’s Group of Eight meeting produced denunciations of secrecy and tax havens. But the sources of the problem are not to be found in Bermuda or the Channel Islands. The activities that escape taxation take place in the G8. The correct starting point is the flawed structure and implementation of corporation tax in the G8 itself. Corporation tax is a levy on the profit a company earns for its shareholders. It is therefore both a tax on corporate activity and on shareholders, and it is not well designed to achieve either purpose. It is not robust administratively or economically. Complex and vulnerable to avoidance, it produces major distortions of both investment and financial decisions of companies. It makes sense to tax the incomes of shareholders. If it is desirable to tax separately the activities of companies, the most appropriate base is free cash flow, or economic rent – the amount a business earns in excess of its cost of capital. Almost every dispassionate examination of the structure of company taxation has favoured reform on these lines. Sir Mervyn King and I advocated it in 1979; the Mirrlees Review of the UK tax structure recently undertaken by the Institute for Fiscal Studies reached the same conclusion. There are several different ways of moving towards this result – removing interest deductibility, introducing an allowance for the cost of corporate equity or shifting the tax base towards cash flow rather than accounting profit – but all end up in broadly the same place. These reforms attempt to treat different levels of investment and different methods of financing in the same way. Opportunities for tax avoidance are everywhere and always the consequence of rules that treat economically similar transactions differently. It follows that there is generally alignment rather than conflict between the objectives of promoting economic efficiency and establishing administrative structures robust to avoidance. The present structure of company tax achieves neither. It would be best if these reforms could be undertaken on a co-ordinated international basis, but that is not essential: it is essential, however, to agree better rules for assigning tax revenues between jurisdictions. Since governments – even within the EU – have failed to co-ordinate rules on the principles that each taxes the worldwide income of “their” companies, there are opportunities to create revenues that are taxed nowhere and expenditures that are deductible more than once. Such avoidance is facilitated and enhanced by corporate manipulation of the prices at which capital, goods and services are transferred across borders. The resulting accounts show profit being earned in low-tax jurisdictions in which little or no real business takes place. It is disingenuous for companies to claim they pay the tax legally due when their assessments are based on accounts that defy economic and business realities. In the main, however, tax authorities have preferred to cut deals with big corporations rather than pursue costly legal action. They will not do the same for you and me. It makes no sense for a small company to pay an accountant to do anything but calculate the amount of tax that is properly due, or to incur legal fees resisting a challenge. The unacceptable outcome is an entirely correct perception that there is one law for the little guy and another for the big battalions. The potential effect of that perception on tax compliance is one that it is well worth spending millions of pounds to avoid. A serious reform agenda would involve a principled reappraisal of the basis for taxing corporations both nationally and globally, and a strategy for effective enforcement of existing rules. Such a strategy would make clear that executives of companies which present accounts to tax authorities that are essentially false, and the accountants who support them, will in future run serious risks. The door they hear closing behind them might be the door of a prison cell rather than the door of 10 Downing Street. johnkay@johnkay.com Continue reading
“Carbon Farming” Makes Waves at Stalled Bonn Talks
By Stephen Leahy Civil society organisations warn that if agriculture becomes part of a carbon market, it will spur more land grabbing in Africa. Credit: Patrick Burnett/IPS UXBRIDGE, Canada, Jun 12 2013 (IPS) – U.N. climate talks have largely stalled with the suspension of one of three negotiating tracks at a key mid-year session in Bonn, Germany. Meanwhile, civil society organisations claim the controversial issue of “carbon farming” has been pushed back onto the agenda after African nations objected to the use of their lands to absorb carbon emissions. “There is a profound danger to agriculture here, with real potential for more land grabbing and expansion of monocultures in order to harvest credits.” — Helena Paul of EcoNexus At the Bonn Climate Change Conference this week, Russia insisted on new procedural rules. That blocked all activity in one track of negotiations called the “Subsidiary Body for Implementation” (SBI). The SBI is a technical body that was supposed to discuss finance to help developing countries cope with climate change, as well as proposals for “loss and damage” to compensate countries for damages. The SBI talks were suspended Wednesday. “This development is unfortunate,” said Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change (UNFCCC). Figueres also said the two-week Bonn conference, which ends Friday, had made considerable progress in the two other tracks. A complex new global climate treaty is scheduled to be completed by the end of 2015 with the goal of keeping global warming to less than two degrees C. “Governments need to look up from their legal and procedural tricks and focus on the planetary emergency that is hitting Africa first and hardest,” said Mithika Mwenda of the Pan African Climate Justice Alliance (PACJA), an African-wide climate movement with over 300 organisations in 45 countries. And where there is “progress” at the climate talks it is in the wrong direction, according to civil society. “We’ve seen many governments in Bonn call for a review of the current failed carbon markets to see what went wrong, why they haven’t actually reduced emissions and why they haven’t raised finance on a significant scale,” said Kate Dooley, a consultant on market mechanisms to the Third World Network. “If we don’t learn these lessons we’ll be doomed to repeat these environmentally and financially risky schemes, at the cost of real action to reduce emissions,” Dooley said in a statement. In Bonn, two key African negotiators appear to be pushing the World Bank agenda rather than their national interests, civil society organisations claim. Those negotiators are also working for organisations receiving World Bank funding. One appears to want African nations’ mitigation actions to be based on agriculture, they said. The World Bank and the U.N. Food and Agriculture Organisation and other organisations favour what they call “climate smart” agriculture. This is defined as forms of farming that are sustainable, increase productivity and with a focus on soaking up carbon from the atmosphere. African environment ministers from 54 nations recently stated they were not obligated to use their lands to mitigate carbon emissions since Africa is not responsible for climate change. They also instructed African negotiators at the Bonn climate talks to focus on helping African agriculture adapt to a changing climate. “Are these people serving two masters?” asked Mariam Mayet of the Africa Centre for Biosafety, which works to protect farmers’ rights and biodiversity across the continent. “What is the World Bank’s level of influence over these individuals, and is there a risk that this is impacting on their actions and the outcome here?” Mayet told IPS. In December 2011, more than 100 African and international civil society organisations sent a joint letter to African ministers asking for “no soil carbon markets in Africa”. Globally, agriculture is a major source of global warming gases like carbon and methane – directly accounting for 15 percent to 30 percent of global emissions. Changes in agricultural practices such as reducing or eliminating plowing and fertiliser use can greatly reduce emissions. Agriculture can also be used to absorb or trap carbon in the soil. When a plant grows, it takes CO2 out the atmosphere and releases oxygen. The more of a crop – maize, soy or vegetable – that remains after harvest, the more carbon is returned to the soil. Civil society organisations warn that if agriculture becomes part of a carbon market, it will spur more land grabbing in Africa, with woodlands being used mainly for carbon sequestration instead of food production. “There is a profound danger to agriculture here, with real potential for more land grabbing and expansion of monocultures in order to harvest credits,” Helena Paul of EcoNexus, an environmental NGO, previously told IPS. Soils are extraordinarily variable and different climatic regimes affect how they function, said Ólafur Arnalds, a soil scientist at the Agricultural University of Iceland. While soils are a key part of the planet’s carbon cycle, we don’t know enough about soil carbon, Arnalds told IPS at a recent Soil Carbon Sequestration conference in Iceland. That complexity does not suit carbon markets well and drives up costs of accounting and verification. However, Arnalds does believe that soils and agriculture have an important role in climate change and farmers should be compensated for their efforts. Continue reading
Property Investment Malaysia Legal Tips No 3 – What Is Property without Title?
http://www.facebook.com/MalaysianRealEstateNetwork – In this video, Andrew Ang shares about Property without Title and how that is important for Property Inv… Continue reading
