We have all heard the discussions about tax avoidance by multinational companies and clearly we all feel annoyed that major companies can manipulate Tax due by establishing inter company trading processes to reduce their tax burden. Annoying this maybe but it would appear that companies are meeting their interpretation of the Tax rules and therefore the issue should be on government to simplify and modify the tax laws to prevent this occurring.
One impact that is rarely discussed with this intercompany trading is the effect it has on GDP of a country. This intercompany trading can impact the international statistic comparisons of countries like productivity data and GDP. How much of the Austerity program in place today is influenced by these statistics?
The Conclusions and recommendations in the report by the Public Accounts Committee on Tax Avoidance by Google has a number of recommendations for the HMRC and asks accountancy firms to recognise the public mood on tax avoidance.
A lot of work needs to be done to reach a situation that will satisfy companies, governments and the general tax paying population.