Could off-globe be the next offshore? It might not be quite as ridiculous a question as you think.
With the collapse of tax revenues hitting public purses all over the world, tax arrangements of large corporations have been thrust into the limelight. The number of offshore subsidiaries used by firms has become a kind of ‘index of evil’, as public accounts committee chair Margaret Hodge might dub it after accusing Google of “doing evil” through its tax affairs.
Recent research has found that Barclays has 471 offshore subsidiaries; very evil. Old mutual has 176; not quite so evil. Hargreaves Lansdown has none; not at all evil. It is obviously an imperfect index but it has taken hold in the mind of politicians and the public nevertheless.
So, the G20, the European Union, the OECD and others are falling over themselves to come up with plans to tackle multi-jurisdictional tax avoidance, especially by large corporations.
But the United Nations is boldly going where no international body has gone before. At a meeting of its Economic and Social Council last week one of the items on the agenda was “whether a satellite in geostationary orbit could constitute a permanent establishment” for tax purposes.
American firm SpaceX is aiming to put a man on Mars by 2031 and several organisations offer flights into space. The above photo from Nasa shows how the space around earth is already swarming with satellites. So, the technology is getting there.
The hydra-headed attempt to crackdown on tax havens risks failing because it could simply create a whole new patchwork of rules which can be just as easily gamed as the current lot.
Alternatively, complexities for firms created by new rules could bring about the most unexpected of unintended consequences……… off-globe finance.
In space, no-one can hear you tax plan.
Steve Tolley is a freelance reporter and former Money Marketing reporter