Quotes attributable to Mario van den Broek and Aad Rozendal from RSM, the seventh largest worldwide network of independent audit, tax and advisory firms. According to the IAB World Survey, RSM is the 5th largest global network for providing tax services.
Mario van den Broek, Partner, International Tax Services, RSM Netherlands, comments:
“We are seeing developments where businesses are becoming more transparent about their entire tax position, which includes more than just corporation tax. For instance, Vodafone has included a statement in its annual report, which breaks down all the different taxes its pays, such as wage taxes and VAT, not only corporation tax. Given the direction the tax evasion debate is going, other businesses may consider this approach since the debate is to some extent fuelled by the perception of opacity, rather than any actual wrongdoing.”
“Businesses in general are responsible for generating different types of tax revenue, from payroll taxes to property taxes and VAT. This needs to be understood more widely, and businesses could help through greater disclosure.”
“The focus on corporation tax is somewhat misplaced when you consider that, in the UK for instance, it is only around 10 per cent of total tax revenue. In total revenue terms the amount of money at stake from corporate tax avoidance is relatively small and governments have to consider how much they stand to lose, both in terms of jobs and employment taxes, if they are too aggressive in pursuing the corporate tax agenda.”
Aad Rozendal, Head of Tax Technical Office, RSM Netherlands, comments:
“International tax law is, amongst other things, based on tax treaties which countries have entered into willingly. For instance, The Netherlands has a new tax treaty with China, which has set the tax rate on dividends at five per cent. Some people may say that is too low, and that it will facilitate tax avoidance, but that is the rate which both countries have agreed."
“Businesses act in accordance with the rules which governments have devised. Part of the problem is that legislation is mismatched internationally, so governments will need to make sure that tax law is more closely aligned. But even in Europe there is very little agreement on what corporate tax rates should be, and without convergence you can hardly blame businesses for favouring lower tax jurisdictions.”
“The problem is that a lot of countries have large public sector debts, and everyone wants a slice of the tax pie. The issue isn’t so much how much tax business should pay, but to whom.”
“There is currently not a balanced debate about the fair share that companies should pay. Look at the media coverage about the alleged tax evasion of Google in the UK in which it is mentioned that only $16 million of corporate tax was paid whereas a turnover of $18 billion was realised. Looking at the amount of tax paid in relation to the turnover is not a proper indicator for tax avoidance as corporation tax is based on profit, not turnover. So to say that a business turned over billions in sales in a jurisdiction, without looking at profitability, is meaningless in the context of its tax liability.”
“Tax evasion is clearly wrong, but no-one pays more tax than they are legally obliged to, and there is no suggestion that any of the multi-national businesses which have been in the headlines recently are guilty of tax evasion.”