How Should Multinationals Be Taxed?

Dalia Jennings Tax in Professional Services, Market Insight

Brewer Morris were proud to sponsor the recent annual Women in Tax (WiT) debate which featured a panel discussion on ‘How should multinationals (MNC) be taxed?’ Hosted at the London office of law firm Pinsent Masons and chaired by Tax Partner Heather Self, the panel comprised of Anna Elphick (VP Tax Asia and Africa for Unilever PLC); Giorgia Maffini (Deputy Head – Tax Policy & Statistics Division, OECD); Lizzie Arnold (Senior Tax Policy Advisor at HM Treasury); and Alexandra Readhead (International Taxation and Extractive Industries Consultant).

With an audience of tax professionals from a variety of organisations, the event was highly topical and provoked a healthy debate from both the panel and its audience.

How an MNC should be taxed is of great deliberation in current times and the panel shared opinions in their own capacity and not on behalf of their employers.

Lizzie Arnold started the dialogue by commenting on the three aims the UK government considers when taxing an MNC - to make the UK competitive; to make taxation fair; and for an MNC to have certainty. Giorgia Maffini commented on how the evolving business world and economy created new discussions, regulations and approach by tax authorities and this was with particular reference to digital companies. Traditionally, an MNC would be taxed where physically present but digital companies can trade in a jurisdiction without the need to be physically there, therefore, legislation has had to be developed to capture these companies geographically.

Anna Elphick contributed from an MNC perspective and echoed Lizzie’s comment on needing to have certainty in tax legislation and expanded on this from a shareholder perspective, in that for there to be investment there needs to be stability.

Alexandra Redhead brought a different perspective and discussed the influence from developing countries as well as how an MNC should be taxed using a less complex set of rules. Alexandra also commented on the need for consistency between the rules a tax authority imposes and the rules that an “on the ground” tax investigator applies.

The Q&A allowed for different opinions from the floor to be discussed with comments on fairness vs. competitiveness vs. certainty in how an MNC should be taxed, and also the argument that production should be taxed with a move away from taxation on profit.

The debate ended on a final poignant question of ‘are the professions doing enough on tax literacy for there to be a good debate on tax?’ The panel were unanimous and enthusiastic on this being important, with the need by all bodies - government, OECD, CBI, MNCs and NGO’s all needing to do their part. It was agreed that greater communication by all bodies on the decisions they make regarding tax is required and that political parties need to put their politics to one side, and work together on regaining the public’s trust that tax is fair and being managed fairly.

With so much to discuss on this topic the debate could have gone on. We very much look forward to future lively discussions held by the Women in Tax network