Please Sir, I Want to Give Some More

121203121037-starbucks-tax-avoidance-story-topBizarre.

Is this a sign of the new times we are in? In Europe governments need ever more copious amounts of revenue (tax) so that it can make its investments (transfer payments). When a corporation calculates its tax liability the formulas are fairly simple:

  1. GROSS INCOME less ELIGIBLE BUSINESS EXPENSES equals NET INCOME
  2. NET INCOME x CORPORATE TAX RATEĀ equals INCOME TAX

So when Starbucks UK was audited, we can only assume that the auditors utilized those extremely complicated formulas to verify that the income tax liability was reasonable. But now it seems that even with no net income a corporation should really be paying income tax in any case. Now certain countries have made provisions for this with a minimum tax, but this is still calculated within the above framework.

So what gives? Is Starbucks saying that income tax should be calculated both at the gross income line as well as the net income line on their corporate tax returns? Totally bizarre.

http://www.bbc.co.uk/news/business-20624857

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s