Going off topic today from VAT specific points, but a worthy subject none the less.
So the OECD has been working on its master plan to fix all the problems it created in conjunction with tax authorities the world over. It seems that following the tax law of the land and actually daring to benefit from rules that you neither wrote, passed in to law or administer is now taboo. Angel Gurria has stated that “today’s commitment by so many countries to implement the new global standard, and to do so quickly, is another step towards ensuring that tax cheats have nowhere left to hide.” – from 6 May of this year.
Well I think the proverbial horse has left the ramshackle barn and will continue to roam the fields doing whatever he or she likes. Simply building a new barn and leaving numerous doors open again isn’t going to do you, the uncaring individual taxpayer (who pays for all of your so called efforts) and tax authorities any good whatsoever. However, I’m sure their will be much more grandstanding and parading of those deemed to have broken a set of reporting rules that serve no purpose than to make a difficult issue more cloudy and murky.
If tax authorities do not want want forward thinking and innovative businesses like Google, Apple, Microsoft, HP, Caterpillar and Amazon to use current tax law in a legal and appropriate manner then I would suggest that you change the law rather than getting the OECD to build some new big stick and wave it around with the menace of a 4 yr girl dressed as Goldilocks. And just so I can be fair and balanced here, I am part of the profession that spends a huge amount of time and effort (and being rewarded for that effort handsomely) in minimizing taxes that corporations and individuals pay. So as someone who has been deeply involved in the global operating structures we see in use today, I can tell you from the inside that we always operated within the law. Additionally, nearly everything that we did was discussed, disclosed or approved by the tax authorities beforehand.
They knew what we were doing and we knew they knew this – but the law is the law and to treat companies that generate billions of dollars of wealth for the people they employ, their shareholders, their vendors and customers in the same way as a business or individual who deliberately and illegally doesn’t pay their taxes due is the crime here. Perhaps all of these companies should simply stop providing their goods and services to anyone employed by the IRS, OECD, HMRC and other tax authorities around the world. Suddenly, not having their morning latte, researching their investment portfolio and reading the new best seller all from the comfort of their tablet would let them look at what these folks have really achieved over the years.
The issue whether you are a tax evader (illegal 50 years ago and still illegal tomorrow) or a tax avoider will never end if laws remain unchanged and governments choose to manipulate figures on successes to bolster their public image of some crime fighting good guy. However, penalties are simply not a deterrent and successful criminal prosecutions are so low that no one is sacred by the downside of actually breaking the law.
Perhaps getting the various tax codes knocked in to shape first would be a better use of the OECD’s time and let tax authorities go after people who really break the law. 20 years for tax evasion – that would focus the mind of folks who are actually breaking the law. Going after those who are, in the view of the publicity seeking politicians, “tax cheats” will just mean more work for people like me and less jobs for those same politicians when they leave public office. I cannot think of a nicer world to live in!