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Taxing corporations in a global economy: is a new approach needed?

The Economic Affairs Committee launched an inquiry into Taxing corporations in a global economy: is a new approach needed? on 9 July 2012. A Call for Evidence was issued with a deadline for submissions by 14 May 2013. The Report was published on 31 July 2013, the Govenment Response was published on 14 October 2013 and the report was debated on 30 October 2013.

Recent high profile cases involving multinational firms have raised the profile of the level of tax paid by large corporations and it has been suggested that for large firms corporation tax is becoming now a voluntary arrangement.

  • Is there a good rationale for the existing system of taxing corporate profits? Who bears the burden of corporation tax?
  • What proportion of total tax receipts should come from corporation tax?
  • How vulnerable are UK corporation tax revenues to recession or tax avoidance?
  • How does corporation tax affect decisions by firms on where to locate, how much to invest and where to declare profits?
  • Should the taxation of SME’s be reformed? Do schemes such as Enterprise Investment Scheme leverage extra investment in the UK and do they represent good value for money?
  • Is there a need to reform the basis of the international allocation of multinational profits between countries? Should this be based on existing conventions as suggested by the OECD or is there a need for more fundamental reform?
  • Is there a meaningful distinction between ‘harmful’ and ‘fair’ tax competition?
  • How successful is HMRC in dealing with large international business?
  • Has the use of aggressive tax avoidance schemes increased or decreased over the last decade?
  • Should the promoters of aggressive tax avoidance schemes be named and shamed?
  • Is there a need for greater transparency by multinational companies in declaring tax paid in different countries?

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