NEWS,22.05.2013

EU tackles tax evasion

Tax cheats big and small were under the microscope in Brussels on Wednesday, as European Union leaders gathered at a summit to discuss tax evasion amid a fresh scandal involving computing giant Apple.
"All of the questions of tax fraud and tax evasion will be taken up, meaning both those involving individuals and those involving companies," French President Francois Hollande pledged ahead of the talks with his 26 EU counterparts.
"I believe in low taxes for businesses because we've got to encourage investment, we've got to encourage jobs ... But we've got to make sure as we set those tax rates that companies pay taxes," British Prime Minister David Cameron added.
Their comments came a day after politicians in the United States publicly slammed Apple - one of the world's most successful technology companies - for using its international presence to dodge hefty US taxes. The arrangements are legal under loopholes in US law.
Among the allegations is that EU member state Ireland gave Apple a 2% income tax rate - far below its current, already-low corporate tax rate of 12.5%. But Irish Prime Minister Enda Kenny rejected those claims as he arrived for the Brussels summit.
"Ireland's corporate tax regime is very clear and transparent, and we do not do any special deals with individual companies in regard to that tax rate," he said.
The fight against tax evasion and avoidance has become a new global rallying cry, following a media expose on the widespread use of tax havens and scandals involving high-profile people in France and Germany.
The battle has gained traction in Europe amid concerns that painful austerity will be harder to sell if tax cheats are not forced to pay up. It is believed that EU governments lose €1 trillion ($1.3 trillion) annually in uncollected taxes.
The anti-poverty organization Oxfam estimates that more than €12 trillion are stashed away in tax havens within the EU and the territories it controls.
"Most governments claim to have no alternative but to cut public spending and development aid, but ... there's enough potential tax to be had on hidden 'private' money to end extreme world poverty twice over," said Natalia Alonso, head of Oxfam's EU office.
During their meeting in Brussels, the 27 leaders were set to call for progress on tackling "aggressive tax planning and profit shifting" by companies, according to a draft of their final statement seen by dpa.
European Parliament President Martin Schulz has proposed that all multinational companies should have to submit reports detailing what taxes they pay, profits they earn and how many people they employ in any given country.
"It is quite simply unfair that it should be the largest and most successful companies which pay virtually no taxes, even though they benefit enormously from state investment," Schulz told the leaders, according to a copy of his speech.
Various EU parliamentarians and non-governmental groups have called for the leaders to deliver hard-hitting measures, such as a blacklist of tax havens that would be subject to punishment.
But standing in the way of too much aggressiveness are Austria and Luxembourg, bank-secrecy stalwarts that are concerned about losing their attractiveness as banking destinations.
The draft summit statement does not propose any new measures, simply urging more action on VAT fraud, money-laundering and the taxation of the digital economy, along with more information-sharing between tax authorities including the adoption of EU reforms opposed by Austria and Luxembourg "before the end of the year."
Diplomats have argued that the Brussels summit, even without breakthroughs, will contribute to the "global momentum" against tax evasion and convey a united European position ahead of discussions at a Group of 8 summit in June.
German Chancellor Angela Merkel spoke of "a giant step forward."
"Just to be perfectly clear: we are not talking about harmonizing taxes or Europe taxing more or taxing less," EU President Herman Van Rompuy said. "We are talking about jointly fighting unacceptable practices that allow some people to avoid paying taxes altogether."
Also on Wednesday, the leaders were to discuss how energy policies can contribute to reinvigorating growth in the EU, with an unprecedented focus on energy prices. Bringing them in line with other parts of the world is seen as key to appeal to manufacturers.

Ireland feels heat from Apple tax row

Ireland called on Wednesday for an international clampdown on multinationals shifting profits around the world to avoid tax, after criticism that Irish loopholes helped technology giant Apple to shrink its tax bill.
A US Senate investigation into the tax affairs of the maker of iPhones, iPads and Mac computers has shone an uncomfortable spotlight on Ireland's tax regime and forced the government to defend itself against accusations of being Europe's onshore tax haven.
Other European governments, notably France, have previously criticised Ireland's low rate of corporation tax - 12.5% - but the revelations from Washington focus on loopholes in the Irish tax code that are more difficult to defend.
Richard Bruton, the minister in charge of attracting foreign companies to Ireland, admitted that companies need to be reined in.
"They play the tax codes one against the other; that is tax planning, and I think we do need international cooperation through the OECD to deal with the aggressive nature of that," he told state broadcaster RTE.
"Tax has always been an element of the Irish offering, and this will continue to be so, but what you have to avoid is what is known as harmful tax competition. We scrupulously avoid that."
Provoking Capitol Hill
The US investigation showed that Apple had paid just 2% tax on $74bn in overseas income, largely helped by Irish tax law, which allows companies to be incorporated in the country without being tax resident. Britain had a similar rule but changed it over 20 years ago to stop tax avoidance.
Unlike Britain, however, Ireland is heavily dependent on foreign companies such as Google, Pfizer and Intel for employment 150 000 of a labour force of around 2 million and for its much-vaunted economic model of export-led growth.
While Ireland has successfully repelled attacks on its corporate tax rate from European neighbours, US pressure is more difficult to ignore.
By closing its own loopholes, Washington could threaten Ireland's status as European hub for multinationals, and economists said it would be better for Ireland to act first.
"In the long run, the US Congress, if they wanted to, could wipe out those 150 000 real jobs, and we don't want to provoke people by over-egging it, by doing things that are clearly upsetting the US," said John FitzGerald, a professor at the Economic and Social Research Institute (ESRI), an Irish think-tank.
Ireland's Prime Minister Enda Kenny will face tough questions at a summit of European leaders in Brussels on Wednesday where the issue of tax avoidance will take centre-stage.
Bruton said scapegoating individual countries was not the answer and pointed to the fierce competition Ireland faces in trying to attract companies.
"When I go into the boardrooms either in Asia or the US, I am followed into those boardrooms by Swiss, by Singaporeans, by Dutch, by Belgians who are offering specially put-together deals on the tax front," he said.
"Ours is not a specially put-together deal; it is absolutely transparent, there are no side deals, no special arrangements."
"We make no apologies for having a regime that is designed to promote employment. It is a regime we have had for close to 50 years."

Japan trade deficit hits $8.6bn in April

Japan's trade deficit expanded a worse-than-expected 70% on year to $8.6bn in April, government data showed Wednesday, as a weaker yen made imports costlier.
The monthly trade deficit came to ¥879.9bn ($8.6bn), 69.7% higher than the year-before deficit of ¥518.4bn, finance ministry data showed.
The deficit was the biggest for the month of April in comparable official data that goes back to 1979 and was also worse than a shortfall of ¥620bn economists predicted on average in a poll by the Nikkei business daily.
Exports in April rose 3.8% to ¥5.78 trillion while imports jumped 9.4% to ¥6.66 trillion.
The yen's average rate was 96.01 to the dollar in April against 82.31 in April 2012, meaning the value of the Japanese currency fell by nearly 17% on year, the data showed.
A lower yen helps Japanese exporters but pushes up import bills.
Higher import costs have been resulting in higher materials and parts prices, which are leading to higher retail prices of various items ranging from foodstuff to laptops.
With the yen hitting multi-year lows against the dollar, some politicians have started voicing concerns over its negative impact on people's lives.
Japan's fuel imports have also stayed high as most of its nuclear reactors remain off-line since the huge earthquake and tsunami in 2011 sparked the world's worst atomic accident in a generation. 

Office bullying video sparks outcry in Singapore

A Singapore company supervisor caught on video slapping a male intern is in trouble after the clip went viral on the web and sparked a public outcry.

Police confirmed to AFP that a complaint had been lodged against the supervisor, who works at a software company, and the manpower ministry said it had also been alerted about the alleged case of workplace abuse.

The 17-second Singapore office bully clip, first uploaded on the video-sharing website YouTube last Friday, showed the boss repeatedly slapping a younger man described by local media as a 29-year-old intern.

A fellow intern who filmed the video said in a posting at an online forum that he had noticed the supervisor "constantly bullying" his co-worker soon after starting his internship.

When he confronted the boss, the supervisor explained that "there is a story behind" the abuse.

"He said that my colleague apparently has an inferiority complex and apparently my supervisor is trying to 'nurture' him to get over it," he said.

"I felt this was stupid, as how can you nurture someone by hitting them? My co-worker is very timid and seems like the kind of guy that will not stand up for himself."

The Straits Times reported on Wednesday that after the video went viral, two former interns in the same company also came out to say they had worked in fear under the supervisor.

Local Chinese-language newspaper Shin Min said the intern, a university graduate, was being paid $400 a month and that his parents may seek compensation from the firm.