Tax. Let’s be honest, we all loathe it. Let’s be honest, it is a necessary evil. Let’s be honest, there’s nothing that quite gets the people of Britain’s blood boiling like the subject of tax avoidance. The subject has again made an appearance in the headlines this week when it was reported that Facebook paid less than £5,000 in UK corporate tax last year. This has sparked debate about technology companies that go to extraordinary lengths to cut their tax bill.
The UK and Facebook are not alone – Bloomberg Business highlighted ‘eight of the biggest US technology companies that added a combined $69 billion to their stockpiled offshore profits’. These companies including, Microsoft Corp., Apple Inc. and Google Inc. accounted for more than a fifth of the $2.10 trillion in profits that US companies are holding overseas.
Back in February 2014, Abchurch asked the question why bankers are being demonised for their pay packets and not tech billionaires. Now, a year and a half later, tech is under the spotlight and this is shown by a wide variety of media outlets calling for more regulation when it comes to tax and technology companies. The view is even shared by a number of traditionally right wing publications, such as the Times. If this trend continues, one such result might be the exodus of global tech players from the UK.
However, this recent bad press for tech companies suggests that the trend is changing and discontent is growing amongst the public. The revelations regarding Facebook will reignite the debate about how much UK corporation tax companies should pay at a time when several multinational corporations are being investigated by the European Commission over the tax arrangements they have with European Union member states. According to the BBC: ‘Google, Amazon, a division of the Fiat motor company and Starbucks are all subject to the investigation and the European Commission has said it could widen its probe further.’
One thing is certain, tech companies will no longer fly undetected under the radar. The more this behaviour continues, the more severe the reaction from the British press, and in turn the public and Government, will be.
To avoid making the same mistake as the banking industry, the tech companies need to start taking proactive approaches to rebuild their corporate image before the anger and mistrust of the press and public get out of control. In addition, these tech giants should be communicating frequently and immediately with the public on the initiatives they have taken to align themselves with public expectations, in order to reposition themselves as the public’s partners, not their enemies.
This week, Abchaps Quincy and Philip are attending the IPREX- EMEA Fall meeting in Amsterdam, where we will be meeting with the senior members from our partner firms from the EMEA region to discuss the strategies taken by agencies to meet the challenges of the changing communications landscape in order to achieve growth and to deliver client results.
We also attended the annual charity fundraising event Grouse & Grape Luncheon and hosted a market lunch, which probed lively discussions about UK corporate tax regulations and IPO sentiment in the City.
This week Deutsche Asset and Wealth Management appointed Stefan Krezuka as Chief Executive Officer, Head of Investment Management and member of their Global Executive Committee. Howard Kennedy appointed Jonathan Metliss as a consultant specialising in corporate finance and Matthew Hinxman joined Fieldfisher from Baker Botts as partner in its finance practice, providing experience within energy and natural resources.
“Tax avoidance” - The legal usage of the tax regime to one's own advantage to reduce the amount of tax that is payable by means that are within the law.
For those of you who feel that sleep is overrated, Fabric is turning 16 this weekend, and to celebrate is going nonstop from Saturday to Monday. Finishing at 5am, so there’s still time to be at the desk bright and early.
If you prefer your weekend to be slightly more sedate, Tate Modern is opening the Hyundai Commission with an inaugurating installation called ‘Empty Lot’. Conceived by the Mexican artist Abraham Cruzvillegas, this work aims to create a unique portrait of London.
Finally, a weekend isn’t a weekend without a good meal, and Lyle’s of Shoreditch is offering just that. As winter draws in, take solace in this six course taster of all things game, with chefs from around the world coming together to create an international take on the most British of ingredients.
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