NGOs – what is their target?

I’ve been thinking about the targets which NGOs choose in their tax campaigns in the light of the BEPS project.
The two main targets have been SAB Miller and ABF. Looking at their accounts, I find this a little odd. Associated British Foods (ABF) has a tax rate of 24.8% with a benefit for rates lower than the UK rate of £19m on a total charge of £178m ( ie reducing its tax rate by 10% from 27.5%). SABMiller has a tax rate of 27.5%.
Now there are plenty of examples of companies with tax rates significantly lower than their blended tax rate so why don’t the NGOs focus on these companies?

Why is there so little coverage of US outbound tax planning despite the outcry from the Public Accounts Committee in the UK?

So my question is why is their such a UK centric focus? If the concern is with Africa, which tax planning reduces African tax receipts the most and why don’t NGOs focus on this?

One Response to NGOs – what is their target?

  1. Andrew Jackson March 18, 2013 at 1:56 pm #

    I agree, it does seem odd.

    Rolls-Royce is the opposite case: the global effective tax rate is above the UK headline rate, but the UK tax charge is low. With that one I wonder if it’s just that UK people looking at UK companies (or companies they think of as UK ones) are only bothered about UK tax. So maybe it’s that people just focus on one area at a time, and ignore the others.

    The Action Aid focus with SAB Miller and ABF is on taxes not paid in Africa. But then the SAB Miller report flags up £76,000 not paid because of interest deductions, which seems a very small amount to be worried about in a £2bn business – especially as you’d expect to get at least some deduction for interest. Even the keenest of HM Inspectors of Tax is happy that 1:1 debt:equity is always fine, so we’re talking about £38k being questionable.

    It smacks to me almost of abusing the law of large numbers. I think any global business is probably making a loss (and thus paying no tax) in at least one or two territories, so you can always find something to attack them about even if they’re squeaky clean and the loss is for genuine commercial reasons. The question out to be whether it’s a major issue that should have been treated differently, or just one end of the bell curve that will regress to the mean over time.

    Also, with SAB Miller a £38k question adds a fourth point to the report and pads it out a bit to look impressive. When I see that sort of thing in the advice a client’s received I always start to wonder whether the previous points were actually all that robust, or whether it’s just spin to justify the fee charged that actually just dilutes the message. Personally, I would probably treat a report with two solid million-pound issues with more interest than one with three apparent million-pound ones and a couple of thousand-pounders with as many column inchers. The exception would be if the thousand-pounders were phrased along the lines of “this could have been a million-pound issue but it’s only four figures so don’t worry too much”.

    That could just be my cynical take on it, of course 🙂

    I do think US tax planning drives an awful lot of odd corporate behaviour. For a country that taxes individuals on worldwide income, the difference in treatment for corporates is stark.

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