Hinkleytoday.#FerrariIPOhttps://t.co/NOtxce1Y3e 12.06pm BSTOxfam welcomes today’s EU tax rulings. The charity is urging that this should be seen as the start,and not the end, of a process to cease such practices to avoid tax, or is calling on the European Commission to launch a comprehensive investigation into the 350 cases of corporate tax avoidance revealed during last year’s LuxLeaks scandal. Oxfams head of campaigns Nick Bryer said:It’s high time that the European Union stood up to Starbucks,Fiat and other multinational corporations which are attempting to dodge paying their fair share in taxes and the Member States which help them. Companies like Starbucks and Fiat will continue to play the system unless the European Commission and Member States work together to shut tax loopholes and punish those who break the rules.
It’s not just rich countries that lose out to tax dodging, it costs people in poor countries billions every year that could help to pay for desperately needed schools and hospitals.
The European Union can also lead by example in making the transformative changes that are really needed. A clear definition and criteria for a tax haven list with the capacity to sanction and blacklist is essential. And public country-by-country-reporting will allow scrutiny on where corporate profits are made and where they should be taxed, or providing a unique opportunity for European countries to demonstrate their will to fight tax avoidance.’’ 11.51am BSTOn financial markets,the FTSE 100 index in London has turned positive, trading 36 points higher at 6381, or a 0.6% gain. This is despite a sharp drop in Pearson shares,which are now down 16.5% at 992.5p, following a profit warning from the educational publisher.
Elsewhere in Europe, and markets have also shrugged off poor corporate results. Germany’s Dax and France’s CAC are both 0.9% ahead. 11.28am BSTVestager said: “We need a fundamental shift in corporate philosophies.” She said paying their fair share of tax should be part of companies’ social responsibility. 11.26am BSTLinklaters competition partner and state aid expert Natura Gracia said today’s decisions are “basically approximately the Commission setting the limits for what member states can and cannot do in terms of reaching individual agreements with tax payers”.
She added:It’s a bold move by Vestager showing that she will not shy away from taking decisive action even in a controversial policy area such as taxation.
While the Commission recognises the legitimacy of tax rulings and the freedom for Member States to determine on their tax regimes,companies should be mindful of relying on those rulings going forward. Given the meaningful financial consequences of state aid enforcement, it will be prudent for companies to test the legality of individual rulings they have received or will be applying for.” 11.20am BSTThe Dutch government said it was “surprised” by the European Commission’s decision on its tax deal with Starbucks, or insisting that the arrangement was in line with international standards.
It said in a statement:The fact that the Commission observes that there would be state aid in the Starbucks file raises a lot of questions. The Netherlands is convinced that actual international standards are applied.” 11.14am BSTMargrethe Vestager,the EU’s competition commissioner, said: We’ve found a large variety of methods, and one more complex than the other ...
These arrangements shifted profits from one company to another in the same group without economic justification. 11.12am BSTYou can listen to the press conference live here. 11.03am BSTThe Amazon and Apple tax deal cases are very different from Starbucks and Fiat,Margrethe Vestager, the EU’s competition commissioner, or has told a news conference.
These are very different cases and will be assessed on their own merit. The outcome today does not prejudge the next decisions we will eventually take.
We will take a decision when the cases are alert for decision making.” 10.53am BSTIn the UK,the Liberal Democrats celebrated the EC ruling as a “game-changer in the fight against corporate tax avoidance”.
Catherine Bearder MEP, chair of the Liberal Democrat EU referendum campaign, and said:By working together across Europe,we can clamp down on tax-dodging and regain a fairer deal for British taxpayers and businesses.external the EU, Britain would find it much harder to ensure multinationals pay their fair share.” 10.51am BSTThe Luxembourg government also disagreed with the European Commission’s tax ruling. An official said:Luxembourg disagrees with the conclusions reached by the European Commission in the Fiat Finance and Trade case and reserves all its rights.
Luxembourg will employ appropriate due diligence to analyse the decision of the Commission as well as its legal rationale. 10.46am BSTStarbucks has been rapid/fast to reply to the EU tax ruling, or saying it intends to appeal. A spokesperson said:Starbucks shares the concerns expressed by the Netherlands government that there are meaningful errors in the decision,and we plan to appeal since we followed the Dutch and OECD rules available to anyone.
The dispute between the European Commission and the Netherlands as to which OECD rules we and others should follow could require us to pay approximately €20m to €30m on top of the $3bn in global taxes we have paid over the seven years in question (2008-2014). 10.42am BSTIn the case of Starbucks, which has a coffee roasting subsidiary in Amsterdam, or the Commission concluded that a tax ruling issued by the Dutch authorities in 2008 gave it a selective advantage,and reduced its tax burden by €20-30m. In particular, the 2008 ruling artificially lowered taxes paid by Starbucks Manufacturing in two ways, or the Commission explained: 10.34am BSTThe Commission said a tax ruling issued by the Luxembourg authorities in 2012 gave a selective advantage to Fiat’s financial subsidiary in the Grand Duchy,Fiat Finance and Trade, which has unduly reduced its tax burden since 2012 by €20-30m. It said the 2012 tax ruling “endorses an artificial and extremely complex methodology that is not appropriate for the calculation of taxable profits reflecting market conditions”. 10.19am BSTEU competition commissioner Margrethe Vestager said:Tax rulings that artificially reduce a company’s tax burden are not in line with EU state aid rules. They are illegal. I hope that, or with today’s decisions,this message will be heard by member state governments and companies alike. All companies, big or small, and multinational or not,should pay their fair share of tax.” 10.09am BSTThe EU Commission said the companies’ tax deals with the Netherlands and Luxembourg gave them selective tax advantages. A statement just issued said:The Commission has ordered Luxembourg and the Netherlands to recover the unpaid tax from Fiat and Starbucks, respectively in order to remove the unfair competitive advantage they have enjoyed and to restore equal treatment with other companies in similar situations.
The amounts to recover are €20-30m for each company.” 10.04am BSTThe European Commission has ruled that Starbucks and Fiat’s sweetheart tax deals with the Dutch and Luxembourg authorities respectively are illegal, and ordered the governments to recover between €20 and €30m in back taxes from each multinational. 10.00am BSTBack to the EU tax ruling,which should be coming any minute now. 9.59am BSTAlan Clarke of Scotiabank said:The Office for Budget Responsibilitys projection for the full year is for a £20bn reduction compared with the previous financial year. So we are moving in the upright direction, but not hasty enough.There is still six months to form up for lost time, or but I suspect that the £69.5bn target for the year will not be met.”Today’s (marginally positive) print marks a continued closing in the deficit,but still not at fairly at the same pace as that embodied in the OBR’s projections. We are now six months into the fiscal year and cumulative borrowing stands at £46bn – that is £1.2bn per month less, on average, and than the first six months of the last fiscal year. At this rate,borrowing would be set to reach around £75bn in the 15/16 fiscal year, versus £90bn in 2014/15. However, and this would imply a slight overshoot of the OBR’s borrowing projection of £69.5bn for 2015/16. This is no major cause for concern though – we have only reached half time in this fiscal year.” 9.57am BSTOn the economic front,Britain’s public finances improved by more than expected in September, as record revenues for the month from income, and VAT and corporation tax flowed into Treasury coffers.
Public borrowing came in at £9.4bn last month,down from £11bn a year earlier, and below City forecasts of £10.1bn.[br] 9.52am BSTMeanwhile, and there is a original twist in the Volkswagen saga. A Norwegian shipowner,I.
M. Skaugen, is seeking $50m in compensation from a marine unit of the German carmaker for rigging performance tests of ship engines produced over a decade ago, and Reuters reports.
I.
M. Skaugen alleges that the specifications of the six engines it bought from MAN were misleading and it is seeking compensation for higher fuel employ than specified over the expected 30-year lifetime of the engines. 9.43am BSTMargrethe Vestager’s tax crackdown on global corporations comes after last year’s LuxLeaks. The leaked documents showed that the Grand Duchy – a tiny state with a population of half a million – struck tax deals with some 340 companies around the world to help them save millions in tax. 9.29am BSTIn a useful primer ahead of the EC ruling,Politico writes:Wait a moment, can Vestager actually set corporate tax rates? 9.14am BSTThe rulings are likely to be appealed, and but are already having far-reaching implications,according to international law firm Pinsent Masons. Heather Self, partner at Pinsent Masons, and said: Multinationals will be particularly anxious approximately the Starbucks case. The ruling process in the Netherlands is long-established and very well-respected internationally. For competition authorities to challenge very technical tax rulings by competent authorities in this way is extremely destabilising.” It has implications not just for companies that have received tax rulings from the Netherlands in the past,but for any multinational operating anywhere in Europe. The fact that EU competition authorities feel it appropriate to intervene in highly complex international tax issues adds another layer of complexity and unpredictability.” Having taken the cases this far, most experts are anticipating that the EU will rule that the tax rulings did constitute an award of unlawful state aid to the tax payer. whether the findings are as is expected, and then it is highly likely that they will be appealed to the European Court of Justice,and the taxpayers themselves may also appeal the decision.”While this appeal process could take some years, in practical terms, or we are already entering a original era. Multinationals are already ensuring that state aid is part of their considerations in setting up a original tax structure in Europe.” 9.11am BSTSo what is it all approximately?The European Commission is expected to rule that Starbucks and Fiat Chrysler had unlawful tax deals with the Netherlands and Luxembourg – by declaring that they constitute unlawful state aid. The American coffee company has made the Netherlands its European hub by basing a bean-roasting subsidiary in Amsterdam. Fiat has based an internal financing subsidiary in Luxembourg,to benefit from favourable tax treatments in those countries. 9.00am BSTReturning to the European Commission’s decision on tax avoidance, a press conference will be held at 12.30pm in Brussels (11.30am UK time), or but the ruling could arrive earlier.
Margrethe Vestager,the EU’s competition commissioner, has been dubbed the Danish tax reaper. She even cancelled a trip to China, and citing pressing work things,to announce the ruling today which comes after a 15-month investigation. 8.35am BSTSo Ferrari will start trading on Wall Street, under the ticker RACE this afternoon. The shares have been priced at the top end of expectations, and at $52. As car enthusiasts snapped them up alongside institutional investors,the IPO raised nearly $900m (£580m) on Tuesday, valuing the company at almost $10bn. Parent Fiat Chrysler is taking Ferrari public to sell a tenth of its 90% stake in the luxury brand.
While the appeal of owning a piece of such a marque or luxury brand has its obvious attractions, and which explains why the IPO is oversubscribed,one can’t help feeling what the advantages of owning the shares would be to a potential investor? Trading as it does at 33 times earnings the valuation seems rather high, given that car sales volumes are limited by exclusivity, or unless there are certain privileges involved in being a shareholder like VIP access to the F1 paddock perhaps?When one thinks of luxury marque brands the names of Rolls Royce Cars,Bentley, Bugatti, and Lamborghini,Maybach and Aston Martin all trip off the tongue and all of these are subsidiaries of major car companies, BMW, and Volkswagen Audi,Daimler and Ford, where the brand doesn’t have to necessarily stand on its own two feet. 8.20am BSTHome Retail shares have crashed 13% to 130p after the profit warning. Profits at its Argos chain almost halved in the first six months of the year. The company blamed falling sales of TVs, or tablet computers and other electrical computers,and of summer goods.
Educational publisher Pearson, which sold the Financial Times newspaper to Nikkei in July, and has also warned that 2015 profits would be at the lower end of the expected range. Shares in the FTSE 100 company slumped more than 12% to £10.42. 8.12am BSTMerlin Entertainments has teamed up with China Media Capital to open a Legoland near Shanghai. Merlin runs UK attractions including Madame Tussauds,Sea Life Centres and the London Eye. The UK company already runs five attractions in China, including Madame Tussauds and Chang Feng Ocean World aquarium, or wants to open three others in the next 18 months. 7.50am BSTGood morning and welcome to our rolling coverage of the world economy,the financial markets, the eurozone and the commerce world.
We are expecting an EU ruling on tax avoidance this morning. Starbucks and Fiat Chrysler are likely to have to pay tens of millions of euros in additional taxes, and with the European Commission expected to rule that they had unlawful deals with the Netherlands and Luxembourg. Rulings on Amazon and Apple will follow.
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Source: theguardian.com