COPORATE TAX AVOIDANCE has been branded "completely unacceptable" by the business secretary, who has called on UK authorities to do more to stop it.
There are "appalling stories of abuse", according to Vince Cable (pictured), but he conceded the issue required international agreement as well as domestic action if it is to be effectively tackled.
His comments, made to the BBC, come a week after the Public Accounts Committee questioned executives from Starbucks, Amazon and Google over their alleged tax-mitigation arrangements – although all three firms insist they pay the tax required.
Cable acknowledged the practice could be particularly damaging for small and medium-sized companies facing competitive pressures from larger firms.
He said: "The best off in society have got to contribute more, and that includes companies.
"There's nothing more galling to small and medium-sized enterprises when they are paying [tax], and others are dodging it. Our own tax authorities have got to be very tough on things like royalty payments, which is where a lot of the subterfuge takes place."
A solution, however, would be difficult to find, he said, particularly given the UK's attempts to make itself more attractive to investment.
"The big question is whether you can get wider [international] agreement," he said.
"It is quite difficult to drill down to what the problems are. Starbucks claims they are actually making losses in the UK. I don't know whether they are not, but you would need some pretty intensive investigation by the Inland Revenue (sic) to establish what exactly is going on, whether their transfer prices and their royalties are being fiddled or not."
All the companies facing criticism insist they operate within the tax rules and pay all tax required of them.
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.