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The problem is for highly global, IP based companies it is very difficult to tax profits. You can just create a 'cost' (platform license fee, trademark cost) i

The problem is for highly global, IP based companies it is very difficult to tax profits. You can just create a 'cost' (platform license fee, trademark cost) in another sister company (that is in a low/no tax jurisdiction) and charge it to the UK based one that is equal to the profit. Boom, no profit due to tax. Not really sure what the best solution is. The UK isn't really big (or competent, depending on your outlook) enough to make tech giants like the US, so tech US companies dominate. This has led to a massive outflow of tax revenue to these US giants. Eg, most advertising revenue pre internet would have stayed in the UK and been taxed in the UK. Post internet it is all flowing out to Facebook, Google et al who pay close to zero UK tax on tens of billions of (very high margin) sales.

mattmanser 8y ago
We've had 6 tech companies breakthrough billion $ threshold this year. We're the biggest tech company creator in the EU. Sounds more like you've got a small (or incompetent, depending on your outlook) source of information. In the past year, the UK has added six billion-dollar tech companies worth $12.4 billion to its club of 26, more than any other European market, and has produced the highest number of billion-dollar companies in Europe since 2000 – contributing $64 billion to Europe’s $240 billion ecosystem of billion-dollar tech companies https://www.information-age.com/tech-titans-europe-end-big-tech-123473280/ https://www.information-age.com/tech-titans-europe-end-big-t...
- martinald 8y ago
  Not talking about market capitalisation. Talking about profits. The UK doesn't have anything on the scale of FAANG generating enormous (taxable) profits. We are literally 2 orders of magnitude off.
Nasrudith 8y ago
I wonder if it would be viable to bar the Hollywood accounting style loopholes of profit losing subsidiaries for everyone - specifically barring licensing from profit margin calculations and market rate for other services. Like if it has $5M of marketing fees there had better be equivalent of what $5M of marketing could actually get as opposed to just growing it to eat up all profits. I've heard about such limitations with some convoluted options like charging rent to your corporation being bound to market rates at maximum.

mattmanser 8y ago

We've had 6 tech companies breakthrough billion $ threshold this year. We're the biggest tech company creator in the EU. Sounds more like you've got a small (or incompetent, depending on your outlook) source of information. In the past year, the UK has added six billion-dollar tech companies worth $12.4 billion to its club of 26, more than any other European market, and has produced the highest number of billion-dollar companies in Europe since 2000 – contributing $64 billion to Europe’s $240 billion ecosystem of billion-dollar tech companies https://www.information-age.com/tech-titans-europe-end-big-tech-123473280/ https://www.information-age.com/tech-titans-europe-end-big-t...

martinald 8y ago
Not talking about market capitalisation. Talking about profits. The UK doesn't have anything on the scale of FAANG generating enormous (taxable) profits. We are literally 2 orders of magnitude off.

Nasrudith 8y ago

I wonder if it would be viable to bar the Hollywood accounting style loopholes of profit losing subsidiaries for everyone - specifically barring licensing from profit margin calculations and market rate for other services. Like if it has $5M of marketing fees there had better be equivalent of what $5M of marketing could actually get as opposed to just growing it to eat up all profits. I've heard about such limitations with some convoluted options like charging rent to your corporation being bound to market rates at maximum.