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Who pays when taxation goes too far?


Some may have no sympathy with multi-nationals caught by the slew of unilateral measures introduced by the UK to counter profit shifting. Think DPT, Digital Services Tax and now ‘ORIP’ the UK’s tax on haven companies’ income from ‘UK related sales’. 

Fair enough? Not always. In some situations, these taxes could all apply, adding up to many multiples of the UK profit – only sustainable if costs are passed on to UK customers. Ironically, ORIP may also stop companies moving IP elsewhere, leaving some with no way to turn.

Is this smart policy or short sightedness? This may depend on whether other countries mimic the UK and introduce similar taxes on the very multi-nationals the UK hopes will fuel its growth. This may explain the UK’s enthusiasm in promoting a multi-lateral approach seen at last weekend’s G20 summit. A case of do as I say, not what I do.