Oxfam: The Netherlands third largest tax haven

The Netherlands, Ireland, Luxembourg and Cyprus are among the world’s 15 worst corporate tax havens, according to new Oxfam research published 12 December 2016. The report ‘Tax Battles’ reveals how these tax havens are leading a global race to the bottom on corporate tax that is starving countries out of billions of dollars needed to tackle poverty and inequality.

Oxfam Novib: Top fifteen tax havens

  1. Bermuda
  2. the Cayman Islands
  3. the Netherlands
  4. Switzerland
  5. Singapore
  6. Ireland
  7. Luxemburg
  8. Curaçao
  9. Hong Kong
  10. Cyprus
  11. Bahama’s
  12. Jersey
  13. Barbados
  14. Mauritius
  15. the British Virgin Islands

The United Kingdom does not feature on the list, but four territories that the United Kingdom is ultimately responsible for do appear: the Cayman Islands, Jersey, Bermuda and the British Virgin Islands.

Oxfam researchers compiled the ‘world’s worst’ list by assessing the extent to which countries employ the most damaging tax policies, such as zero corporate tax rates, the provision of unfair and unproductive tax incentives, and a lack of cooperation with international processes against tax avoidance (including measures to increase financial transparency).

Many of the countries on the ‘world’s worst’ list have been implicated in tax scandals. For example Ireland hit the headlines over a tax deal with Apple that enabled the global tech giant to pay a 0.005 percent corporate tax rate in the country. And the British Virgin Islands is home to more than half of the 200,000 offshore companies set up by Mossack Fonseca – the law firm at the heart of the Panama Papers scandal.

Esme Berkhout, tax policy advisor for Oxfam said: “Corporate tax havens are helping big business cheat countries out of billions of dollars every year. They are propping up a dangerously unequal economic system that is leaving millions of people with few opportunities for a better life.”

Tax dodging by multinational corporations costs poor countries at least $100 billion every year. This is enough money to provide an education for the 124 million children who aren’t in school and fund healthcare interventions that could prevent the deaths of at least six million children every year [1].

Yet Oxfam’s report shows that tax havens are only part of the problem. Countries across the world are slashing corporate tax bills as they compete for investment.  The average corporate tax rate across G20 countries was 40 percent 25 years ago – today it is less than 30 percent [2].

When corporate tax bills are cut, governments balance their books by reducing public spending or by raising taxes such as VAT, which fall disproportionately on poor people. For example, a 0.8 percent cut in corporate tax rates across OECD countries between 2007 and 2014 was partially offset by a 1.5 percent increase in the average standard VAT rate between 2008 and 2015 [4].

Oxfam’s EU policy advisor on inequality and taxation, Aurore Chardonnet, said: “There are no winners when EU member states compete for the lowest corporate tax rate. It is ordinary people in our societies and in developing countries that are footing the bill when governments allow multinational companies to drastically reduce their tax bill.

“EU member states must lead by example, pushing for more tax harmonization and coordination globally. This is the only way to ensure that multinationals pay their fair share of tax, and that governments are in a position to fund essential services such as education and health.”

Oxfam is calling for EU governments to work together to stop tax dodging and the race to the bottom on corporate tax:

  • Stop unfair and unproductive tax incentives and work together to set corporate tax at a level that is fair, progressive and contributes to the collective good;
  • Agree on a strong blacklist of tax havens, which includes key criteria like a zero-percent corporate tax rate and which is not limited to financial transparency, and agree on strong countermeasures;
  • Make sure that all multinational companies operating in the EU must disclose publically where they generate their profits, and where they pay their taxes  for every country in which they operate (public country-by-country reporting);
  • Agree on straightforward and easy-to-implement rules that target companies’ subsidiaries in tax havens (CFC rules).

[1] According to UNCTAD, tax dodging costs developing countries $100 billion a year. The total annual domestic financing gap to achieve universal pre-primary, primary and secondary education in low and low middle income countries is $39 billion per year. There are 124 million children out of school.  $32 billion would fund the key healthcare to save the lives of 6 million children across the world each year.

[2] Figures of average corporate tax rates from the ‘G20 Corporation Tax Ranking’ – Oxford University centre for business taxation.

[3] Corporate tax incentives are estimated to cost Kenya around $1.1 billion per year or KShs 100 billion. Kenya’s health budget for 2015/16 was KShs 60 billion or $591 million.

[4] OECD (2015): Corporate tax revenues falling, putting higher burdens on individuals

Source: Oxfam

Source: NOS

The key ecommerce trends in 2017

A new year is around the corner and we might see some new things in 2017. Four CEOs of leading Nordic ecommerce companies share their thoughts on what they think will be the key ecommerce trends in 2017.

According to Marcus Fredricsson from Swedish car service portal Mekster, dropshipping is over. Customers have stronger demands, which makes convenient shipping options more important. “Today more customers disqualify online retailers who send goods directly from suppliers, particularly in cases when the goods come from different suppliers since they then need to spend far too much time to collect the goods in different batches”, he says.

Focus more on logistics

The CEO also thinks smaller online retailers must be prepared to partially loosen the customer relationship and focus even more on the logistics so they can successfully offer their products through international marketplaces like Google Shopping and Amazon. “You need a tremendous control of the supply chain logistics to satisfy customers.”

Fredricsson also thinks highly of virtual reality. “Although the ecommerce industry hasn’t found a way yet to utilize the technology, I think they will take on VR in a big way in 2017.”

Cut out the middleman

Christoffer Tyrefors from Cykelkraft, Sweden’s largest online bicycle shop, thinks online retailers can do more themselves and only pay for actual delivery and thus cut out the middlemen. “Ecommerce players should find fundamental profitabilities of their core businesses and therefore needs to stop paying money to intermediaries.”

Rely less on Google and don’t get eaten

He also thinks Google has become way too powerful and online retailers are more dependent on the search engine than ever. “The ecommerce industry is feverishly looking for ways to reduce the importance of search, which in practice means to build brands. To build a brand requires something which happens to be the third major ecommerce trend in 2017 and that is: eat or get eaten”, he says, referring to large online market places that are being rolled out globally and the dominance of Google in the entire purchase process funnel. “Volume will become even more important. It translates to economies of scale, and with economies of scale it is easier to build the brand.”

Performance and sales will align more in 2017

Sven Hammer, CEO of monitoring platform Apica System thinks the B2B shopping experience will become more like B2C, as business-to-business retailers take advantage of all the actions the business-to-consumer industry took to improve their business models and shopping experiences. In less positive news, he thinks DDoS will continue to flood ecommerce website with disruptions and targeted. His third predicted trend is focused on analytics. “A platform that performs faster will lead to higher sales – a 100ms decrease in page load can increase sales by 1 percent. Performance and sales will align more in 2017 as organizations establish KPIs like web/cloud/app performance to increase profits”, he says.

The last CEO, Torkel Hallander from ‘ecommerce factory’ Nordic Etail, thinks SMR, “Sales Man Replication”, will become the new buzzword. “When ecommerce websites start acting like the world’s best salesman, shoppers will get a better experience and spread the world, but retailers will also increase their conversion rates and higher margins as result.”

Mobile engagement will increase influence over ecommerce

He also predicts mobile engagement will increase its influence over ecommerce. “Functionality for shopping mobile will reach new heights, selecting and choosing products, moving between devices, payments will be easier etc… but more importantly, the critical-mass hurdle for people to start realize they can do it in their phone has been passed: once you have purchased one thing in your phone, you will start wanting to do it all in the phone.”

Lastly, he thinks online stores and digital marketing will become even more targeted. In order to satisfy the customer and as a result maximize sales, online retailers will design their website presentation and their offering more for individual customer preferences, behaviors and purchasing power.

Source: Ecommercenews

Europe wants to modernise VAT rules for cross-border ecommerce

The European Commission has proposed a plan to improve the VAT rules for cross-border ecommerce in Europe. With this proposal it should be easier for consumers and companies to buy and sell goods and services online.

The European Commission wants to introduce a EU-wide portal for online VAT payments, thereby extending the current Mini One Stop Shop (MOSS) to cross-border supplies of goods and services. This could be a real game change for online retailers, especially the smaller ones, who sell to other countries, because they can now access all EU countries at an affordable and efficient compliance cost, as they deal with all their EU VAT obligations in one place. VAT on cross-border sales under 10,000 euros will be handled domestically. One of the new rules will also ensure that VAT is paid in the country where the final consumer is living. This should lead to a fairer distribution of tax revenues amongst EU countries.

VAT still one of top barriers when selling cross-border

The proposals are of course still proposals and will be submitted to the European Parliament for consultation and to the Council for adoption. But European ecommerce associations are happy with the proposed rules. “We are convinced that this proposal has the potential to minimize the burdens when selling cross-border that arise from different VAT regimes across the European Union”, Ecommerce Europe says, explaining that according to their research, VAT still is one of the top barriers when selling cross-border in Europe.

“But even with an extended One Stop Shop, online merchants will still have to deal with different VAT rates when selling abroad. The European Union currently has more than 75 different VAT rates and this creates a disturbance of the level playing field needed to foster cross-border trade and to complete the internal market”, the organization says.

‘We hope this helps enables SMEs to sell cross-border’

EMOTA also welcomes the new rules. “You can’t expect an efficient and vibrant digital economy to be mirrored by an equally inefficient outdated paper based system. That’s why we welcome the EU Commission’s proposals and hope the Council will back this proposal and help enable SMEs to trade across borders.”