A report suggests 5 of the largest investment banks operating around the United Kingdom paid no corporation tax. That is despite booking billions of pounds in profits.
UK CORPORATION TAX: A Reuters report says their tax returns complied with regulations.
But, in 2014 none of these banks paid any corporation tax whatsoever in the United Kingdom:
None of the major investment banks agreed to comment. But, the international money lenders were able to achieve this by using tax breaks. They were also offsetting previous losses against any gains made the previous year.
The report looked at the returns from several other investment banks in the United Kingdom. It revealed that they paid a combined amount of £20 million in corporation duties for that financial year.
Yet, they racked up profits of £3.6 billion on their huge revenues. The big seven investment banks employ around 33,000 staff between them in Britain.
Venture bank filings showed the reason why some of the banking institutions paid no levy. It was because they reported financial losses in London. But, they reported profits in much smaller units in lower tax countries - such as Luxembourg.
Tax campaigners and politicians pointed out they received financial support during the financial crisis. Thus, the banks should pay their fair share of contributions to the country.
The chief executive of the TaxPayers' Alliance commented on the situation. He said the UK's hideous and complex taxation code makes it easier for well-paid accountants to run rings around the taxman.
He also added that the power to make our taxation system simpler lies in the hands of politicians. So, they must stop grandstanding and actually bring about some reform.
European Union banking rule changes from 2013 compel investment banks to publish country-by-country profit and tax accounts. This is how the tax filings became available.
The report comes as an increasing number of American and other international firms are being investigated by the European Commission (EC) over their financial affairs.
In contrast, Starbucks and Fiat were both ordered to repay up to 30 million euros in illegal tax breaks.
The European Commission found that deals struck between the American coffee chain in the Netherlands and the Italian carmaker in Luxembourg 'effectively' amounted to illegal state subsidies.
The deal got seen by many as a landmark ruling. It was a major step forward in the battle against tax avoidance deals used by multinationals. The EC also stated that it was probing tax deals which were 'apparently' agreed between Luxembourg and the US fast food chain McDonald's.
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Investment Banks Use EC Rulings to Avoid Paying Corporation Tax in the United Kingdom