The global system for taxing multinational companies is broken, but no country wants to alter it too radically for fear of making it worse. That was my impression after hearing international tax experts gathered in Oxford this week to discuss reform.
Reform of corporate taxation has been thrust onto the political agenda in Europe and by controversy over the tax policies of companies such as Google and Starbucks. The ease with which they can shift intellectual property and royalty payments to low tax regimes has outraged politicians on both sides of the Atlantic.
The attempt by Pfizer to turn itself into a UK company for tax purposes by acquiring AstraZeneca has also drawn attention to the use of “tax inversion” by US companies. They want to use the cash piles held overseas to make acquisitions that allow them to change corporate nationality and reduce their taxes.
But while most countries agree that the system of global taxation in place since the 1920s is flawed, there was no consensus at the conference held by the Oxford University Centre for Business Taxation on how to fix it. Instead, most prefer to play defence. Read more
The New York attorney-general’s complaint against Barclays over the way it ran its dark pool seems to contain clear evidence of institutional investors being misled about the amount of “toxic liquidity” provided by high-frequency traders.
More broadly, however, it raises the question of how the original purpose of dark pools – to allow institutions to make block trades away from public markets where they would move the price – was subverted by investment banks. Read more
It was fitting that when Rebekah Brooks, the former editor of the News of the World, was overcome with emotion at the Old Bailey on Tuesday, having been acquitted of charges related to phone hacking, she was helped by the court matron. Only a tabloid case would feature a figure so reminiscent of old British institutions such as boarding schools and cottage hospitals.
No-one emerges well from the legal battle between Goldman Sachs and Deeb Salem, its former mortgage trader who claims that his $8.25m bonus for 2010 amounted to severe underpayment. It is no wonder that Goldman tried to seal the documents in what it calls an “utterly ridiculous” case.
The problem for Goldman and other Wall Street firms is that they have encouraged that sense of entitlement among employees – one that strikes almost everyone outside Wall Street as delusional. Mr Salem’s claim is merely an extreme example of a much wider problem.
They tell you not to fix a meeting before 11am at the Lions advertising festival in Cannes because the guests will either have been up so late toasting their own creativity, or are so jet-lagged after flying in from Los Angeles, that they will not show up. I should have listened.
Welcome to the World Cup in Brazil, brought to you by Fifa, a corporate governance disaster that is also one of the most successful multinational enterprises on earth.
When China’s Communist leaders under Deng Xiaoping launched their assault on the Tiananmen Square protesters in 25 years ago, they were supposedly following the socialist road and Marxist principles of proletarian rule. “Workers of all lands, unite!” declared Karl Marx and Friedrich Engels in the 1848 Communist Manifesto.
Inefficiency is not a quality usually associated with Amazon but Jeff Bezos’s company is behaving as if it is a small, disorganised bookstore that cannot quite control its stock. “You want that book, do you? Very sorry but we have run out. We can order you another copy but they are taking a long time to arrive at the moment. How about buying another title instead?”
Stephen Immelt, brother of Jeff Immelt, chairman and chief executive of General Electric, has become the second Immelt to lead a multinational organisation – in his case the law firm Hogan Lovells.
Jeff Immelt has given his brother some advice on how to do so. In an interview with The Lawyer magazine, Steve says Jeff has a rule of three-to-five for managing GE: Read more
The Chinese backlash against the US decision to charge five Chinese military officers with cyber-espionage has started. Of the US companies likely to be affected, Cisco is the most obvious.
The New York Times, quoting Caixin magazine and the Xinhua news agency, says China plans to make security assessments of foreign equipment entering the country to ensure that it cannot be used for espionage: Read more
Presumably, although he denies it, Brady Dougan considered resigning as chief executive of Credit Suisse this week when it became the first global financial institution since Crédit Lyonnais in 2003 to plead guilty to criminal felony in the US. In any case, he stayed.
Perhaps the European Court of Justice wants to equal the US Supreme Court in a display of poor judgment. That might explain why it ruled this week that a 19-year-old directive means Google must remove some search results that people do not like.
The collapse of the proposed Omnicom-Publicis merger, a bravado effort to override cultural differences, executive egos and national tax law, does not come as a surprise. The venture had been displaying signs of distress for some time, with both sides admitting to difficulties.
The challenge of getting various tax authorities to agree to a complex and artificial structure – a Franco-US company incorporated in the Netherlands but tax resident in the UK – was one barrier. John Wren, Omnicom’s chief executive, warned investors last month of delays due to tax issues. Read more
On Tuesday in New York, modern art collectors will get the chance to spend tens of millions dollars on paintings such as Gerhard Richter’s “Abstraktes Bild (712)”, which is on sale with an estimated value of between $22m and $28m. Will the painting, which was sold 18 months ago at Sotheby’s for only $17.5m, set a new record for the German artist? It may be difficult to tell.
For students of perverse incentives created by tax, it is a bonanza week. Apple has raised $12bn in bonds to buy back shares, despite having $130bn sitting in cash overseas, and Pfizer wants to turn itself into a UK-domiciled company by acquiring AstraZeneca for £60bn.