Instituttlunsj: Revealing the World of Multinational Tax-Avoidance
Gjennomføringsstipendiat Blazej Kuzniacki innleder. Instituttleder Ulf Stridbeck leder lunsjen.
After analyzing data taken from parliamentary hearings in the U.S. and U.K., scholars estimated that Apple, Google, and Caterpillar managed to reduce their effective tax rates on income from 40 to about one, two, and four percent, respectively. Reuters reported in October 2012 that Starbucks U.K. claimed losses in 14 of the first 15 years of its existence in the U.K. and — as a result— paid virtually no U.K. company tax. Similar conclusions can be drawn about dozens of other highly profitable multinational companies (MNCs), such as Microsoft, Hewlett-Packard, and Amazon.
Nobody knows the exact amount of income avoided taxation globally, but the International Monetary Fund estimated in 2012 that $ 20 trillion is sheltered in the bank accounts of tax havens. This sum is equivalent to about one third of the world’s gross domestic product. Though the exact global scale of tax avoidance may be uncertain, there is no doubt that this phenomenon is pervasive.
Naturally, this leads to the question: How it is possible to avoid taxation on such a huge scale? Well, MNEs run their international businesses with a relative freedom, limited mainly by their financial capacity and managerial ingenuity. Consequently, they have access to a variety of international tax avoidance methods — for instance, diverting income before taxation to controlled foreign companies (CFCs) located in low tax jurisdictions and using hybrid-mismatch arrangements.
Would you like to know more about famous tax avoidance schemes, such as “Double Irish with a Dutch Sandwich” (the tax avoidance scheme of Google) or “Double Cypriot Olive with a Polish Potato” (the tax avoidance scheme of very wealthy Polish individuals)? Do you think it might be interesting to know why the largest tax case in Norway – the Transocean case, with 11 years of investigation and prosecution, including charges of tax evasion of NOK 11 billion and a damages claim for NOK 1.8 billion— was in some part a confusion of basic tax concepts, that is to say tax evasion and tax avoidance?
If you would like to learn the answer to at least one of the questions above, you can do so by attending Blazej’s presentation.