Douglas Carswell

27 JAN 2016

Fed up with big corporate tax avoidance? Vote Leave

Google is in the news for avoiding UK corporation tax. It's not the only multinational to do it: Starbucks and Apple have done the same. So how come our Government can't do anything about it? Because of the EU - and for two key reasons.

First, EU law allows multinational corporations to pay tax on European revenue in whichever EU member state they claim to be based. So companies obviously pick the state with the lowest tax rates. This is a tax loophole the EU intentionally created.

So, despite having thousands of employees in the UK, Google denies having a 'permanent establishment' in the UK, instead claiming it is a UK 'branch' of its Irish operation. It therefore avoids tax in the UK.

Second, EU law prevents the UK clamping down on tax-avoidance. One wheeze is for a company to move intellectual property offshore. It then pays licence fees to that offshore entity, shifting its profits from the UK to a tax haven. UK law seeks to prevent this by levying a 25% withholding tax on licence fees transferred to a tax haven.

However, Holland does not apply any such tax and EU law stops the UK applying a withholding tax on transfers to a Dutch company. Therefore multinationals set up Dutch companies to channel licence fees from their UK company to whichever tax haven holds their intellectual property, thereby avoiding UK tax.

Here's the key point: for as long as Britain stays in the EU, we can't close Google's tax loophole, or Starbucks', or Facebook's. Our Government is bound by EU law, and is powerless to change it.

We cannot demand that Google pay its fair share of UK tax unless we take back control of our tax law from Brussels. The British people have the power to change the rules: the solution is to vote Leave.

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Printed by Douglas Carswell of 61 Station Road, Clacton-on-Sea, Essex