Latest news with #UK-owned
Scoop
05-05-2025
- Business
- Scoop
New Report Illustrates Tax System Failures
Press Release – Tax Justice Aotearoa The report focuses on the transparency of public funding in the aged residential care sector, and shows how our tax system allows multi-national providers to avoid paying the taxes that the public would expect them to pay, demonstrating this through … Tax reform advocacy group Tax Justice Aotearoa is calling on the Government and opposition parties to remedy the failures in our taxation system illustrated by a new report from the Centre of International Corporate Tax Accountability and Research, which looks at transparency and corporate tax issues in the heavily public-funded aged care sector. 'Instead of talking about the possibility of reducing our corporate tax rate of 28 per cent, the Government should be finding ways to increase financial transparency, and ensuring that multinational corporates pay their fair share of current corporate tax by reviewing the thin capitalisation rules,' says Glenn Barclay, Chairperson of Tax Justice Aotearoa. 'This is particularly urgent where public funds are paid to multi-national corporations delivering services on behalf of the government.' The report focuses on the transparency of public funding in the aged residential care sector, and shows how our tax system allows multi-national providers to avoid paying the taxes that the public would expect them to pay, demonstrating this through the example of UK-owned BUPA. BUPA had an average effective corporate tax rate over the past decade of only 4 per cent, much lower than the headline rate of 28 per cent, driven largely by tax-free capital gains. In addition, the company appears to have used inter-company interest payments on a substantial loan to an Australian-incorporated BUPA company, which may have reduced taxable income by around $151m over the decade, trimming tax revenue by as much as $27 million over that period. 'This ability of multi-nationals to set up loans between subsidiary companies in different countries and then claim tax deductibility on the interest from those loans is a major issue,' says Glenn Barclay. 'While entirely legal, this 'thin capitalisation' is an approach that most members of the public would find questionable. It also gives multi-national players an advantage over wholly New Zealand-owned companies in competitive markets.' 'New Zealand does have thin capitalisation rules that are supposed to prevent this kind of activity, but this example shows that they are simply not strong enough,' says Glenn Barclay. 'We note that Australia and the UK have introduced a 'fixed ratio' test for interest payments on related party debt which limits allowable interest deductions in any one year to 30 per cent of gross earnings and this is the kind of measure that we should also seriously consider.' 'On a related matter, we note that IRD is looking at relaxing the existing thin capitalisation rules for infrastructure projects as part of its work programme agreement with the Minister of Revenue. This could well be in the Budget and would be a big step in the wrong direction,' says Glenn Barclay. 'We urge the Government not to go down this route, but instead look at tightening this provision across the economy.' The report questions the tax exemptions in the sector for capital gains arising from revaluations of assets, which is significant given the amount of real estate that companies in the sector own. 'It seems that aged residential care providers are intentionally using the capital gains they make from selling both rights to occupy properties to new residents, and sometimes the properties themselves, as part of their income streams,' says Glenn Barclay. 'If this is true, then the current law, which says that capital gains on sales made intentionally for that purpose are taxable, should be enforced. If, for some reason, it is not enforceable, then the law should be clarified. A comprehensive tax on capital gains would resolve these issues in a much clearer way.' The report also raises questions about the level of funding for the aged care sector and the extent to which unaccountable multi-national and other private providers should be involved in service delivery. 'The report indirectly supports the need for more funding for aged care generally as the population ages and this is yet another example of a demand for services that only a more progressive tax system that properly taxes wealth can address,' says Glenn Barclay.
Scoop
05-05-2025
- Business
- Scoop
New Report Illustrates Tax System Failures
Tax reform advocacy group Tax Justice Aotearoa is calling on the Government and opposition parties to remedy the failures in our taxation system illustrated by a new report from the Centre of International Corporate Tax Accountability and Research, which looks at transparency and corporate tax issues in the heavily public-funded aged care sector. 'Instead of talking about the possibility of reducing our corporate tax rate of 28 per cent, the Government should be finding ways to increase financial transparency, and ensuring that multinational corporates pay their fair share of current corporate tax by reviewing the thin capitalisation rules,' says Glenn Barclay, Chairperson of Tax Justice Aotearoa. "This is particularly urgent where public funds are paid to multi-national corporations delivering services on behalf of the government." The report focuses on the transparency of public funding in the aged residential care sector, and shows how our tax system allows multi-national providers to avoid paying the taxes that the public would expect them to pay, demonstrating this through the example of UK-owned BUPA. BUPA had an average effective corporate tax rate over the past decade of only 4 per cent, much lower than the headline rate of 28 per cent, driven largely by tax-free capital gains. In addition, the company appears to have used inter-company interest payments on a substantial loan to an Australian-incorporated BUPA company, which may have reduced taxable income by around $151m over the decade, trimming tax revenue by as much as $27 million over that period. 'This ability of multi-nationals to set up loans between subsidiary companies in different countries and then claim tax deductibility on the interest from those loans is a major issue,' says Glenn Barclay. 'While entirely legal, this 'thin capitalisation' is an approach that most members of the public would find questionable. It also gives multi-national players an advantage over wholly New Zealand-owned companies in competitive markets.' 'New Zealand does have thin capitalisation rules that are supposed to prevent this kind of activity, but this example shows that they are simply not strong enough,' says Glenn Barclay. 'We note that Australia and the UK have introduced a 'fixed ratio' test for interest payments on related party debt which limits allowable interest deductions in any one year to 30 per cent of gross earnings and this is the kind of measure that we should also seriously consider.' 'On a related matter, we note that IRD is looking at relaxing the existing thin capitalisation rules for infrastructure projects as part of its work programme agreement with the Minister of Revenue. This could well be in the Budget and would be a big step in the wrong direction,' says Glenn Barclay. 'We urge the Government not to go down this route, but instead look at tightening this provision across the economy.' The report questions the tax exemptions in the sector for capital gains arising from revaluations of assets, which is significant given the amount of real estate that companies in the sector own. 'It seems that aged residential care providers are intentionally using the capital gains they make from selling both rights to occupy properties to new residents, and sometimes the properties themselves, as part of their income streams,' says Glenn Barclay. "If this is true, then the current law, which says that capital gains on sales made intentionally for that purpose are taxable, should be enforced. If, for some reason, it is not enforceable, then the law should be clarified. A comprehensive tax on capital gains would resolve these issues in a much clearer way." The report also raises questions about the level of funding for the aged care sector and the extent to which unaccountable multi-national and other private providers should be involved in service delivery. 'The report indirectly supports the need for more funding for aged care generally as the population ages and this is yet another example of a demand for services that only a more progressive tax system that properly taxes wealth can address,' says Glenn Barclay.
The Independent
01-05-2025
- Business
- The Independent
Data is driving trade deal pursuit, not ‘post-imperial delusion', minister says
The UK is not seeking trade deals based on a 'post-imperial delusion', the Government has said, as it faced calls to finalise agreements with the European Union and the United States. Trade minister Douglas Alexander said the Government was using data to determine what partnerships to pursue, as he said the Conservative Party's implementation had 'buried' some businesses in red tape. MPs heard more than two billion pieces of paperwork had been added to UK exporters. Meanwhile, Business Secretary Jonathan Reynolds said the Government was not going to pick one trade partner over the other, as he said the UK was 'pragmatic' about its national interest. Mr Alexander was urged by Liberal Democrat MP James MacCleary (Lewes) to make the most of the UK's summit with the EU on May 19, and said it would be a 'missed opportunity' if progress was not made. Mr MacCleary said: 'This is a moment for Britain to show it's serious about forging a renewed and reinvigorated relationship with the EU, still our largest trading partner. 'If the forthcoming summit ends up as another in a long line of missed opportunities, there's a real danger that Brussels is just going to move on to other priorities. So, can ministers tell me what concrete measures businesses can expect to come out of the summit to cut red tape and the barriers holding back British growth and prosperity?' Mr Alexander told Mr MacCleary the Government was looking to rebuild relationships across Europe, and added the Government was looking to find areas which are 'transparently win-win'. He added: 'I'd be inclined to wait for the summit before declaiming it as a disaster.' Liberal Democrat trade spokesman Clive Jones said new regulations that businesses were required to follow since Brexit had produced enough paperwork to wrap around the world 15 billion times. Mr Alexander replied: 'We are consciously pursuing a trade agenda based on data, not post-imperial delusion, and regrettably the data is pretty devastating in terms of the damage that was done by the way that Brexit was implemented by our predecessors.' He said an Aston University study showed small and medium-sized exporting businesses had been 'buried under red tape' since Brexit. MPs later heard reports that the US were now considering the UK as a 'second-order priority' in trade deal talks. It followed a Guardian report on Tuesday, which cited sources who said Britain was now placed in the second or third level of urgency, with South Korea now considered more appealing to the White House. MPs heard that the US is the UK's largest single country trading partner, with total trade worth £315 billion in 2024. It is equivalent to 18% of total UK trade. More than one million Americans work for UK-owned companies and vice versa, Mr Reynolds said. Tory shadow business minister Dame Harriett Baldwin said: 'With the tariff clock ticking I am sure that the Secretary of State recognises that the US deal is surely the most urgent with the many UK jobs at risk and yet we heard recently from the Chancellor, when she was in the States, that her bigger priority is discussions with the EU where we already have zero tariffs and zero quotas.' Mr Reynolds said: 'The entirety of this Government has been clear – this is not about seeking to pick between one market or another. Both are absolutely fundamental. 'The Chancellor's comments specifically relate to the fact that it's simply true that our UK-EU trade is a much greater quantum than UK-US trade.' Conservative MP Blake Stephenson (Mid Bedfordshire) said: 'With Trump now reported to have made the UK a second order priority to Asia, and the UK possibly on the verge of giving up its Brexit freedoms in favour of EU alignment, how confident is (he) of achieving a comprehensive free trade deal with the US in both goods and services?' Mr Reynolds said he wanted to 'push back on anyone attempting to put the case that the decisions that we make have to be based on either the EU, or the US, or any other partner being our principal partner. He added: 'The role for the UK is to position ourselves in this very challenging world with a genuine, strategic advantage because we do things that improve our trading relationship with the EU, we secure this US deal, we secure the deals with India, with the Gulf and other key markets, and are pragmatic about where the UK's national interest lies. 'I'm absolutely confident that it's possible and desirable.'
The Independent
20-03-2025
- Politics
- The Independent
I was a nuclear submarine commander – this is what is at stake
We live in a dangerous world. Whatever your thoughts on whether nuclear weapons are inherently evil or not – and, to be clear, they do hold the key to the destruction of humanity – they are here to stay. The nuclear deterrent, Operation Relentless, is exactly as the name suggests: both for the country and the crews that man it. Running since 1969, it is the UK's longest-running continuous military operation. At least one submarine is at sea, armed with nuclear missiles and ready to fire them against any aggressor on behalf of the public. It's not easy. There is no communication with family. You spend months in a small space with no privacy so tensions can run high. But those who do it are a peculiar breed – and, as a member of the command team on a number of patrols, I include myself in that description. The early days of sailing are weighed down by the memory of the people we have left on shore; the last buoyed by the prospect of seeing them again. The weeks in between merge into a mix of routine punctuated by drills, and events that make it bearable. Throughout, you are supported by the knowledge that what you are doing is defending the nation. Those on board are well aware of the importance of their role. That understanding must be being stretched pretty thin, however, with the pressures they now face. Can extended patrols be supported indefinitely? Of course not. Submariners may be a peculiar breed but they are still human. Divorce rates are high – unsurprising, given that today's young people living a 'normal' existence above sea level need everyday contact. It is difficult enough to get over the shift in societal behaviours to recruit future submariners, let alone keep those that we already have. This is an internal cultural battle to be fought alongside the external geopolitical battle that the government is engaging with. In addition, long periods of sea take a huge toll on the submarine itself. We need to invest now to promote more reliable designs and to reduce that pressure, which will be reaching intolerable levels. Combine these human and machine aspects and you face an almost impossible situation. The world stage is now crammed with actors, whether that be the old guard of Nato's permanent members of the Security Council, or power-hungry nations aspiring to dominance over their neighbours. From Russia's annexing of Crimea and the full-scale invasion of the country with the additional contributions of the regional Middle East disaster to the malign intent of China over Taiwan, the last 10 years have left us in a more perilous state than at any time since the Cuban Missile Crisis. That is why our UK-owned nuclear deterrent is more important than ever and more especially that it is delivered through the inviolate nature of submarines – they remain undiscoverable and invulnerable. We must have the ultimate fall-back, ever-present, that will say to any that want to impose their will and potential destruction upon us that we can defend ourselves. Mutually assured destruction is, after all, a powerful message to send and should be heard by all but the insane. This is the base upon which we can build our forces in the longer term, ground, air and increasingly in the asymmetric warfare space, that will first ensure our own survival but then push the message of stability into the wider space, crucially hand in hand with our European and world partners. Sir Keir Starmer's visit to the returning submarine and a public show of support for the new Dreadnought Class is strategically vital. Let's be honest: the crew of a submarine returning from an extended patrol are not particularly interested in the VIP that greets them on arrivals, whatever kind words of thanks are bestowed. What is fundamentally more important is the message it sends. The subsequent visit of Starmer to Barrow-in-Furness sent an equally powerful message. It is home to BAE Systems, Britain's defence industry giant, where the new class of deterrent submarines is being built. Thousands of people are involved in one of the most complicated engineering projects on the planet. A public show of support is crucial to reaffirm our credibility with the world's other major players. Starmer has certainly raised his game since President Trump's unacceptable treatment of President Zelensky. He has become the voice of rational Europe, who, it would seem, has finally woken up to the fact that the USA is not a substitute for having domestic defence capability. For too long we have replaced the first duty of government – to defend its people – with an insurance policy written on the peace dividend of the Second World War of the most powerful nation on earth at our backs. That dividend has run out and we will, quite rightly, have to bear that burden ourselves. It comes down to the fundamental principle that the UK must be militarily strong to be seen as able both to defend ourselves and to help keep the greater peace. We must enhance our defensive position with the proper investment and create our capability across all fronts once again: something that has been whittled away to dangerous levels over the past 30 years. It will be painful financially but we have no choice. If we play the geopolitical game we must pay the entry fee to do so. We continue to put ourselves on that stage. Given the removal of our trans-Atlantic security blanket, we have to find the means to do this ourselves. It is a lot cheaper than the alternative.
