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    B1023 – Corporation Tax (Minimum Level) Bill 2016, barnetlad MP
    The Corporation Tax (Minimum Level) Bill 2016




    A BILL TO



    Set a minimum level of Corporation Tax for larger companies, based on their UK turnover.



    BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-



    A. Definitions

    1. 'Corporation Tax' shall be the same as defined in the Corporation Tax Act 2010.

    2. 'Large Company' shall mean any which had a turnover for UK operations exceeding £100 million in any one or more of the Government Financial Year between 2010-11 and 2015-16.

    3 'Large Group' shall mean a group of companies, partnerships or franchises determined by the Chancellor of the Exchequer to be linked and under common control, either by marketing, supply chain, or ownership of 10% of each by a common person or company, and to which the Chancellor of the Exchequer has determined thus through a Finance Bill or presentation of a Statutory Instrument to the House of Commons.

    4. Finance Bill shall have the meaning ascribed by the Parliament Act 1911.

    B. Minimum Corporation Tax

    1. Any Company or Group defined for the purposes of this Bill as a Large Company or Large Group shall each Financial Year pay a minimum of 1 per cent of their UK turnover in Corporation Tax, regardless of profit or loss.

    2. In the event of a Large Company or Large Group being wound up, payment of Corporation Tax outstanding will be deemed to have preferred creditor status.

    C. Commencement, Short Title and Extent

    1. This Bill will take effect from 1 April 2017

    2. This Bill will apply to the whole of the United Kingdom

    3. This Bill shall be known as the Corporation Tax (Minimum Level) Bill 2016.

    Notes

    1. This Bill tackles the issue of large trans-national or other companies engaging in tax avoidance as highlighted by the Public Accounts Committee of the House of Commons in their report of 23 February 2016 'Corporate tax settlements', which investigated Google's tax affairs. The report noted that 'It is difficult for HMRC to penalise multinational companies for tax avoidance due to the scope for different interpretations of complex tax rules'.

    2. This Bill provides a step to reducing this scope by establishing a floor level, and for example in 2015 Google's UK revenue was $7bn (£5bn approx at the then exchange rate). Under this Bill the floor level, the minimum payable, would be £50m per year.

    3. Another example is Starbucks who paid no Corporation Tax in the three years to 2012 on £1.3bn of sales, which under this Bill would have meant a minimum of £13m.

    4. The clause allowing companies to be deemed part of a Large Group stops the division of existing companies into smaller ones (each store in a large retail chain, for example) to avoid falling within the scope of the Bill. The same applies to franchises where there is a requirement to purchase all stock from one supplier, should the Chancellor of the Exchequer so determine and Parliament agree.

    5. The figure of 1% of turnover is equivalent to a 20% rate on a 5% profit margin.
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    Congratulations on your job destruction

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    Nay. I'm mostly concerned about the effects on international harmony of this - it also, however, has potentially worrying effects for parliamentary sovereignty assuming you don't want this to be repealed every time there's a Finance Act. Furthermore, taxing companies based on revenue is silly, since different industries have wildly different profit margins. If one industry has a 0.5% per-item profit margin, this in itself stops that industry from being capable of profiting until the market adjusts.

    Your definitions are well done, though, and I applaud you for that.
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    Aye unless convinced otherwise.
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    Nay for the economic reasons. Will explain properly when I can be arsed, maybe tomorrow.
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    No, this bill destroys jobs, discourages private investment, moves companies abroad, reduces business activity, and does not help the poorest in society.
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    I can't even
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    Make the minimum turnover to be defined as a 'Large Company' higher and the percentage lower and you might just be able to coax a tentative 'Aye' out of me.
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    Tidy up the definition of large company so it's the preceeding 5 tax years (or 6 as given) rather than a specific set.

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    (Original post by TheDefiniteArticle)
    Nay. I'm mostly concerned about the effects on international harmony of this - it also, however, has potentially worrying effects for parliamentary sovereignty assuming you don't want this to be repealed every time there's a Finance Act. Furthermore, taxing companies based on revenue is silly, since different industries have wildly different profit margins. If one industry has a 0.5% per-item profit margin, this in itself stops that industry from being capable of profiting until the market adjusts.

    Your definitions are well done, though, and I applaud you for that.
    I do not always agree with you but here you are right, taking the airline industry as an example, the profit margin is below 1%, in the USA for every $16400 spent there is $164 in profit. This bill bill makes industries that are barely profitable completely unprofitable, the airline industry is an expensive industry to operate, with operating cost reductions in recent years coming from a fall in fuel prices. Airlines will respond by increasing ticket prices, hurting the poorest in society who are taking a rare flight abroad, but this is unlikely because foreign airlines will have a competitive advantage to allow them to compete at a lower ticket price. The airline industry does not have shops, foreign headquarters, nor foreign CEOs looking after a subsidiary, Britons buying tickets from an American company based in the USA to travel to the USA would not be classified as UK turnover, nor would there be any way to measure UK turnover if HMRC tried to change the definition.

    This bill ruins British airlines, which I believe barnetlad, Aph, and RayApparently would like being environmentalists, but because foreign airlines are being given a competitive advantage by the British government, there would be an exodus of businesses moving abroad to avoid the tax, which causes thousands of job losses, the removal of Heathrow as a major international transit airport, and hands an airport in Continental Europe the crown as being the gateway to Europe.
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    (Original post by Nigel Farage MEP)
    I do not always agree with you but here you are right, taking the airline industry as an example, the profit margin is below 1%, in the USA for every $16400 spent there is $164 in profit. This bill bill makes industries that are barely profitable completely unprofitable, the airline industry is an expensive industry to operate, with operating cost reductions in recent years coming from a fall in fuel prices. Airlines will respond by increasing ticket prices, hurting the poorest in society who are taking a rare flight abroad, but this is unlikely because foreign airlines will have a competitive advantage to allow them to compete at a lower ticket price. The airline industry does not have shops, foreign headquarters, nor foreign CEOs looking after a subsidiary, Britons buying tickets from an American company based in the USA to travel to the USA would not be classified as UK turnover, nor would there be any way to measure UK turnover if HMRC tried to change the definition.

    This bill ruins British airlines, which I believe barnetlad, Aph, and RayApparently would like being environmentalists, but because foreign airlines are being given a competitive advantage by the British government, there would be an exodus of businesses moving abroad to avoid the tax, which causes thousands of job losses, the removal of Heathrow as a major international transit airport, and hands an airport in Continental Europe the crown as being the gateway to Europe.
    And if you go look at BAs accounts (I only saw the 2013 accounts so of might have changed since) they had a pre tax profit margin on about 2.5%, and their operating profit margin is about 7%

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    (Original post by Jammy Duel)
    And if you go look at BAs accounts (I only saw the 2013 accounts so of might have changed since) they had a pre tax profit margin on about 2.5%, and their operating profit margin is about 7%

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    But BA is not the best example because legally speaking it is a foreign airline, domiciled in Spain, with a small operational headquarters in Harmondsworth. This bill should include a definition of what UK turnover is as I do not believe courts would consider a transaction a Briton has with a foreign company UK turnover if the foreign company does not have a subsidiary in Britain, nor is domiciled in Britain. The lack of the author's knowledge is clear when he uses the example of Google paying more corporation tax when a trick Google uses is to classify UK revenue as Irish revenue.
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    (Original post by Nigel Farage MEP)
    But BA is not the best example because legally speaking it is a foreign airline, domiciled in Spain, with a small operational headquarters in Harmondsworth. This bill should include a definition of what UK turnover is as I do not believe courts would consider a transaction a Briton has with a foreign company UK turnover if the foreign company does not have a subsidiary in Britain, nor is domiciled in Britain. The lack of the author's knowledge is clear when he uses the example of Google paying more corporation tax when a trick Google uses is to classify UK revenue as Irish revenue.
    Of course, but citing BA as low profit is questionable

    Definitely is, went and looked at last year, 10% operating profit, 9pc pre tax if we ignore exceptional items.

    The argument should be on the basis of the retail sector really

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    (Original post by Jammy Duel)
    Of course, but citing BA as low profit is questionable

    Definitely is, went and looked at last year, 10% operating profit, 9pc pre tax if we ignore exceptional items.

    The argument should be on the basis of the retail sector really

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    It was you who cited BA in the first place which detracts from the point you are trying to make, however, Virgin Atlantic has a profit margin of 0.5%, in recent years Flybe has had a 0.7% profit margin, the Thomas Cook net profit margin is 0.59% with an operating margin of 2.60%, and BMI Regional's profit margin is expected to be 0.01% if the trend of year on year losses is broken.
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    Nigel and TDA have covered most of the bases on this but I would like to add is: should we really punish companies that pay their staff well and keep prices low, therefore having low profits? Tax profit only, not turnover imo.
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    (Original post by TheDefiniteArticle)
    Nay. I'm mostly concerned about the effects on international harmony of this - it also, however, has potentially worrying effects for parliamentary sovereignty assuming you don't want this to be repealed every time there's a Finance Act. Furthermore, taxing companies based on revenue is silly, since different industries have wildly different profit margins. If one industry has a 0.5% per-item profit margin, this in itself stops that industry from being capable of profiting until the market adjusts.

    Your definitions are well done, though, and I applaud you for that.
    Here's a question nobody has answered:

    Why the hell is there corporate tax at all?

    Why is there beer duty? And sugar duty? And stamp duty? And VAT?

    Why isn't there just a single income tax, no nonsense? Don't break your brain trying to answer the above questions (hint: it's a nickel-and-dime scheme by the government to make the overall tax revenue seem smaller and more compartmentalized than it actually is, because they can't help but spend money on all manner of nonsense like annual Foreign Aid or the Civil Service....)
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    (Original post by Philosopher77)
    Here's a question nobody has answered:

    Why the hell is there corporate tax at all?

    Why is there beer duty? And sugar duty? And stamp duty? And VAT?

    Why isn't there just a single income tax, no nonsense? Don't break your brain trying to answer the above questions (hint: it's a nickel-and-dime scheme by the government to make the overall tax revenue seem smaller and more compartmentalized than it actually is, because they can't help but spend money on all manner of nonsense like annual Foreign Aid or the Civil Service....)
    Because, exactly as you said, it allows them to push an agenda where they can claim tax to be progressive and hide the true tax rate, which is net pretty flat.

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    (Original post by Jammy Duel)
    Because, exactly as you said, it allows them to push an agenda where they can claim tax to be progressive and hide the true tax rate, which is net pretty flat.

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    Wakaaadiwahata WHAT?

    Pretty FLAT? <facepalm> The tax rate, net or no, is EXTREMELY progressive. 20-40-45% increase doesn't sound progressive to you? Are you not capable of elementary maths??
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    (Original post by Philosopher77)
    Wakaaadiwahata WHAT?

    Pretty FLAT? <facepalm> The tax rate, net or no, is EXTREMELY progressive. 20-40-45% increase doesn't sound progressive to you? Are you not capable of elementary maths??
    Apparently you're not, it actually goes 0-12-32-42-47, ignoring the small spikes based on assorted allowances, but on top of that VAT and the other consumption based taxes are highly regressive, as is the likes of council tax. I suggest you look up the definition of "net" and read a few reports on the matter, or you incapable of reading?

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    (Original post by Jammy Duel)
    Apparently you're not, it actually goes 0-12-32-42-47, ignoring the small spikes based on assorted allowances, but on top of that VAT and the other consumption based taxes are highly regressive, as is the likes of council tax. I suggest you look up the definition of "net" and read a few reports on the matter, or you incapable of reading?

    Posted from TSR Mobile
    That's the thing, I'm capable of both. I have a degree in Finance, post-grad from a top 5 university. I'll look this up, but at first glance you're telling me the equivalent of "pigs can fly"
 
 
 
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