THE ALCHEMIST ABOUT TOWN

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Pay attention to your tax policy   

The corporate tax system is becoming more intertwined with employment  and it is likely to increase.
The Organisation for Economic Co-operation and Development (OECD) estimates that annual losses to tax avoidance by multinationals stands at £68-£164bn and has come up with proposals to fix it, big part of which is that an organisation's tax should be paid where there is economic activity.

One way to identify the economic activity is where the key people are employed so the location of a workforce could/would have a bigger influence on a company's tax bill.
This type of measure would make it trickier for organisations to benefit from being based in low-tax countries or tax havens where they actually do little business.

The European Commission has also proposed a system where multinationals' tax bills would be divided up between member states based on  factors including the size of the wage bill.

Pic from www.shinimax.com

In the next couple of years most governments will formulate a response to the OECD proposals and we will need to see how the responses and consequent legislation will affect businesses' tax strategies.

Corporate taxation is both high on the political agenda and a very sensitive subject for the public as a whole.

Legalities and economics are obviously very important for organisations but equally important should be their external reputation in both their "consumer & employer" brand.