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Monday, 20 May 2013

Challenge of Transfer Pricing, My comments/data needed to support Eric Schmidt: At Google we aspire to do the right thing. So we welcome a debate on international tax reform | Eric Schmidt | Comment is free | The Observer

At Google we aspire to do the right thing. So we welcome a debate on international tax reform | Eric Schmidt | Comment is free | The Observer:

Despite I did not agree with you last time we encounter re China re reforms, in this instance, I agree with you Eric, but don't envy your challenge as UK like most other governments worldwide are sadly run by popular sentiments (can we blame them!?) and sadly most do not understand the bigger macro/international picture of Transfer pricing (for those of you interested, this 1998 article explains high level what it is: http://www.journalofaccountancy.com/issues/1998/jul/carter.htm ) add the international politics to it, and competitive situation between multinationals and further complicate that with "no one country can legislate for the world"... this sadly means you are in a "no win" situation! 

IMHO (I am probably wrong), contribution of a company is not and should not be measured by ONLY one standard (corporation tax) but a balanced score card approach should be adopted, namely how much "other tax" is Google and others major firms paying? are all the staff paying the right amount of PAYE and other tax? do the Corporations contribute in money and in kind and make a measurable impact to the local/national society?? by all means lets get the real life data/measurements and compare that with the local council (government) vs  other national firms, and multinationals?? 

Indeed, it is not a good excuse for firms not to pay tax, but this is indeed an endemic problem of the capital market, which is highlighted very well by the brilliant book of Prof. Colin Mayers's Firm Commitment.

Talk and accusation by popular culture (press/committee judge & jury) is cheap, "real actions", measurable results and lasting impact speak for itself, no!? Lets find out the real problem and devise a viable solution. 

Please forgive my probably flawed & grammatically wrong post but I hope the central idea was conveyed. 

BR
@GarethWong

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