(qlmbusinessnews.com via uk.reuters.com – – Fri, 6 Jan, 2017) London, UK – –
Shares of Toyota Motor Corp (7203.T) fell more than 3 percent on Friday after U.S. President-elect Donald Trump threatened to impose heavy taxes on the automaker if it builds its Corolla cars for the U.S. market at a plant in Mexico.
Toyota dropped as much as 3.1 percent to 6,830 yen ($59.06) in early trade before paring losses, after Trump's tweet on Thursday – “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.”
The tweet was Trump's first broadside against a foreign automaker. He has slammed automakers in the United States for building cars in lower-cost factories south of the border, which he said costs American jobs.
This week Ford Motor Co (F.N) scrapped plans to build a $1.6 billion assembly plant in Mexico after Trump criticized the investment.
Trump's tweet confused Toyota's existing Baja plant with the planned $1 billion plant in Guanajuato, where construction got under way in November.
Baja produces around 100,000 pickup trucks and truck beds annually, including the Tacoma pick-up truck. In September, Toyota said it would increase output of pick-up trucks by more than 60,000 units annually.
The Guanajuato plant will build Corollas and have an annual capacity of 200,000 when it comes online in 2019, shifting production of the small car from Canada.
Other Japanese automakers too have plants in Mexico. Nissan Motor Co (7201.T) has two facilities, producing 830,000 units in the year to March.
Honda Motor Co (7267.T) operates two assembly and engine plants in Mexico with a total annual capacity of 263,000 vehicles. It also operates a transmission plant with an annual capacity of 350,000 units.
Other Japanese carmakers also fell in early trade, with a stronger yen dragging on prices too. Honda fell more than 2 percent before paring losses, while Nissan also shed 2 percent, underperforming the broad Topix .TOPX index.
(qlmbusinessnews.com via news.sky.com- – Thur, 5 Jan, 2017) London, Uk – –
Sterling's weakness will see new car costs climb within weeks, adding to the list of products predicted to grow in price in 2017.
Car prices will start rising within weeks following the slump in the pound, the industry's trade body has warned.
The comments, by the head of the Society of Motor Manufacturers and Traders (SMMT) in an interview with Sky News, add to fears of growing pressure on household budgets already facing rising fuel and retail costs.
Next used a Christmas trading statement to warn on Wednesday that its prices were on course to rise by 5%.
Meanwhile, Bank of England chief economist Andy Haldane said rising prices may see consumers “throttle back” on spending – a key component of economic growth, which has partly been fuelled by rising household debt.
SMMT chief executive Mike Hawes said new car customers would see increases in the first quarter of the year, with rises of 2-3% over coming months.
It would mean a hike of up to about £400 on a new Ford Fiesta Zetec, which currently sells for just over £13,500.
That is in addition to an earlier warning that motorists face paying £1,500 more for imported cars when the UK leaves the EU if the divorce deal results in new tariffs.
Mr Hawes made the latest comments about an imminent price hike as the SMMT published new car registration figures showing a record number vehicles, almost 2.7 million, left showrooms in 2016.
That was 2.2% up on 2015 and the fifth consecutive year of growth, though 2017 is expected to see a fall in sales.
Mr Hawes said that the private market for new cars had declined over 2016 but the market had been bolstered by strong fleet demand.
Meanwhile, diesel cars saw a record number of new car registrations – climbing to almost 1.3 million – despite the fall-out from the Volkswagen emissions scandal.
The SMMT figures showed VW new car sales in the UK fell 7.5% last year on 2015's total.
UK car manufacturing has also been strong, with 2016 figures to be published later this month as the industry aims to hit the 1972 record for number of cars produced.
But it now faces a “double-edged sword” from the collapse in the pound – which has fallen by about 18% against the dollar since June's Brexit vote.
There is a benefit because 80% of cars produced in the UK are exported and the fall in sterling makes them cheaper for overseas buyers.
But 60% of parts that go into cars come from abroad, so the cost of these has gone up.
Meanwhile, more than 80% of cars sold in the UK are imported.
“Ultimately, a fall in sterling is going to flow through to an increase in pricing, probably of the magnitude of two or three per cent over the coming months,” Mr Hawes said.
“I think we will see increasing prices certainly in the first quarter.”
Mr Hawes said it was too difficult to pencil in forecasts after that.
He added that the industry wanted to remain in the customs union, which would mean tariff-free trade as well as other “clear benefits” such as moving cars and parts quickly.
Additional costs would make it much harder to compete with other plants in Europe.
The SMMT warned in November that new tariffs, should the UK go for a “hard Brexit” split from the single market, could add billions to both import and export costs resulting in rising prices.
(qlmbusinessnews.com via newstalk.com – – Tue, 3 Jan, 2017) London, Uk – –
Britain's EU ambassador has unexpectedly quit just months before the formal Brexit talks are due to get under way.
Ivan Rogers, who was not due to leave his post until October, has announced he would step down from his post early.
British Prime Minister Theresa May has said she would trigger formal negotiations for leaving the EU by the end of March.
Rogers, who was appointed to his Brussels role by David Cameron in November 2013, is one of Britain's most experienced diplomats on EU affairs.
While his resignation has been welcomed by Eurosceptics in providing a clean break from the previous administration ahead of the crunch talks, his loss of expertise during what are likely to be complex and fraught negotiations has been described by others as “a body blow”.
Rogers sparked controversy at the end of last year after he privately warned the British government a post-Brexit trade deal could take a decade to finalise and even then may fail to get approved by member states.
He faced criticism at the time from prominent Leave campaigners who accused the “scarred” diplomat of “gloomy pessimism”.
But Downing Street had come to his defence arguing he was simply passing on the views of other EU nations and was “doing the job of an ambassador”.
Confirming his departure, a UK government spokesman said: “Sir Ivan Rogers has resigned a few months early as UK Permanent Representative to the European Union.
“Sir Ivan has taken this decision now to enable a successor to be appointed before the UK invokes Article 50 by the end of March. We are grateful for his work and commitment over the last three years.”
Responding to his resignation, Hilary Benn, Labour chair of the cross-party Brexit select committee, said: “This has clearly taken everyone by surprise and it couldn't be a more difficult time, to lose someone of his experience and insight.”
Highlighting the timescale set by Mrs May to trigger the formal Article 50 process for leaving the EU, Mr Been said finding a replacement should be an “urgent priority” for the government.
UKIP donor and Leave.EU chairman Arron Banks said: “This is a man who claimed it could take up to 10 years to agree a Brexit deal.
Rogers was awarded a knighthood last year for services to British, European and international policy.
China’s multi-billion dollar One Belt, One Road plan is a strategy launched in 2013 and focus on infrastructure and trade network connecting Asia with Africa and Europe along old Silk Route trading routes in an effort to boost trade and economic growth.
With that in mind China launched its first freight train to London, which will travel from Yiwu West Railway Station in Zhejiang Province, Eastern China to Barking, London, taking 18 days to travel over 12,000 kilometres.
The route runs through Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France, before arriving in London. The UK is the eighth country to be added to the China-Europe service, and London is the 15th city.
China estimates that it will gain heavily from opening the ancient trade routes which will, in turn, boost regional cooperation and better relations between countries that lie along the Silk Route.
(qlmbusinessnews.com via uk.reuters.com – – Mon, 2 Jan , 2017) London, UK – –
Britain's government announced plans on Monday to build 17 new towns and villages across the English countryside in a bid to ease a chronic housing shortage.
The new “garden” communities – from Cumbria in the north to Cornwall on England's southern-most tip – would be part of a scheme to build up to 200,000 new homes, housing and planning minister Gavin Barwell said in a statement.
That would still be a fraction of the million houses the government has said it wants to see built from 2015-2020 in an already densely populated nation.
Successive governments have promised to tackle a shortage that has seen house prices spiral in London and other major cities, out of the reach of many buyers.
But developers have complained about a lack of available land and strict planning laws that outlaw development on “greenbelt” land around existing towns and give local councils the power to block construction.
Britain asked local authorities last year to say if they were interested in having new garden developments – based on a 19th century idea of housing growing populations in self-contained towns surrounded by countryside.
Barwell announced the locations for the first time on Monday and said the state would loosen planning restrictions and give 7.4 million pounds ($9.10 million) to help fund the building.
The three newly announced towns, with more than 10,000 homes each, will be built near Aylesbury, Taunton and Harlow, the government said.
The new garden villages, including Bailrigg in Lancaster, Long Marston in Stratford-on-Avon, Welborne in Hampshire and Culm in Devon, would each have 1,500-10,000 properties.
Together with seven other garden towns already announced, the new developments could provide almost 200,000 homes, Barwell said.
Having risen in value in 2016 by 125 percent the digital currency started the new year by jumping above $1,000 for the first time in three years.
As most bitcoin trading is done in China, analysts linked that to the fall in the value that country's currency – the yuan. Last year the yuan slipped seven percent, it's weakest showing in over 20 years.
The New Year is a time to reflect on what has passed and to look ahead to the opportunities to come. And this year, as I consider all that 2017 has in store, I believe those opportunities are greater than ever. For we have made a momentous decision and set ourselves on a new direction.
And if 2016 was the year you voted for that change, this is the year we start to make it happen. I know that the referendum last June was divisive at times. I know, of course, that not everyone shared the same point of view, or voted in the same way. But I know too that, as we face the opportunities ahead of us, our shared interests and ambitions can bring us together. We all want to see a Britain that is stronger than it is today.
We all want a country that is fairer so that everyone has the chance to succeed. We all want a nation that is safe and secure for our children and grandchildren. These ambitions unite us, so that we are no longer the 52% who voted Leave and the 48% who voted Remain, but one great union of people and nations with a proud history and a bright future. So when I sit around the negotiating table in Europe this year, it will be with that in mind. The knowledge that I am there to get the right deal, not just for those who voted to Leave, but for every single person in this country.
Of course, the referendum laid bare some further divisions in our country; between those who are prospering, and those who are not. Those who can easily buy their own home, send their children to a great school, find a secure job, and those who cannot.
In short, those for whom our country works well, and those for whom it does not. This is the year we need to pull down these barriers that hold people back, securing a better deal at home for ordinary, working people. The result will be a truly united Britain, in which we are all united in our citizenship of this great nation. United in the opportunities that are open to all our people, and united by the principle that it is only your talent and hard work that should determine your future. After all, it is through unity that our people have achieved great things. Through our precious union of nations – England, Scotland, Wales and Northern Ireland. Through our union of people – from sports teams to Armed Forces, businesses to charities, schools to hospitals. And, above all, through our union of communities and families.
Of course, it isn’t just big, global events that define a year – it is the personal things. 2017 might be the year you start your first job or buy your first home. It might be the year your children start school or go off to university, or that you retire after a lifetime of hard work. These things – life’s milestones – are the things that bind us, whoever we are. As the fantastic MP Jo Cox, who was so tragically taken from us last year, put it, “We are far more united and have far more in common than that which divides us.” We have a golden opportunity to demonstrate that – to bring this country together as never before, so that whoever you are, wherever you live, our politics, economy and society work for you, not just a privileged few.
So as we look ahead to a year of opportunity and unity, let me wish you and your family a peaceful, prosperous and happy New Year.
A statue is pictured next to the logo of Germany's Deutsche Bank in Frankfurt, Germany September 30, 2016. Deutsche Bank has agreed to a $7.2 billion settlement with the U.S. Department of Justice over its sale and pooling of toxic mortgage securities in the run-up to the 2008 financial crisis. The agreement in principle, announced by Deutsche Bank's Frankfurt headquarters early Friday morning, offers some relief to the German lender, whose stock was hit hard in September after it acknowledged the Justice Department had been seeking nearly twice as much.
(qlmbusinessnews.com via telegraph.co.uk – – Thu, 22 Dec, 2016) London, Uk – –
Businesses are growing at their fastest pace of the year, as strong consumer growth and recovering confidence gives the economy some Christmas cheer.
A survey by the Confederation of British Industry showed that the proportion of firms with rising sales outweighed those with falling sales by a margin of 17 percentage points.
That is up from a net balance of 9pc in November and the index's highest level since December of 2015, indicating that more firms experienced growing demand.
Shopping is on the up as enthusiastic households remain confident in the economy, while export growth is improving because the weak pound makes British goods attractive to foreign buyers.
Britons are happy to make major purchases, according to a separate consumer confidence monitor from GfK, which also showed that households were confident in their personal financial situations.
Some of that household spending growth may fizzle out next year, however, as inflation is expected to pick up due to the fall in the pound.
“Against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress of the year to come,” said Joe Staton, GfK’s head of market dynamics.
Shoppers are aware of the likely rise in inflation, and so could be bringing forward decisions to buy expensive items, getting in now before prices go up in 2017.
The latest study of the economy in the final three months of the year by the Bank of England’s regional agents found that “some households were thought to have brought forward purchases of larger items such as furniture and electrical goods in the expectation that prices would rise next year”.
(qlmbusinessnews.com via uk.reuters.com – – Wed, 21 Dec, 2016) London, UK – –
Britain's budget gap narrowed last month, keeping Chancellor Philip Hammond on track to meet his new, less ambitious deficit reduction goals, but the country's fiscal watchdog said future months would pose a tougher test.
Last month Hammond formally abandoned his predecessor George Osborne's goal to run a budget surplus by 2020, as the Office for Budget Responsibility pencilled in a big rise in borrowing and weaker growth after Britain's June vote to leave the European Union.
Official figures on Wednesday showed borrowing in the first eight months of the 2016/17 tax year fell by 11.5 percent compared with a year earlier – more than enough to meet Hammond's new goal to cut the full-year deficit by 10 percent to 68.2 billion pounds, or 3.5 percent of GDP.
But the OBR said this downward trend was unlikely to continue and predicted borrowing over the next four months would probably exceed levels seen a year earlier.
Borrowing over the next four months would only need to be around 500 million pounds higher for Hammond to overshoot the forecast the OBR made just a month ago – which is already nearly 13 billion pounds more than Osborne gave in March.
Weak growth in tax revenue has hampered government efforts to reduce Britain's large budget deficit this year, even before the economy has seen much impact from June's referendum.
The OBR expects this problem to deepen. A surge in corporation tax revenue in October was not expected to persist, and a one-off boost to property sales tax revenue in early 2016 would not be repeated.
Moreover, public spending was likely to rise due to greater investment commitments and the rising cost of servicing index-linked government bonds as inflation picked up, the OBR said.
Britain's finance ministry said there had been “significant progress” in reducing borrowing but it was still too high.
Public borrowing in November alone fell 4.4 percent to 12.6 billion pounds, the lowest for any November since 2007 but less of a drop than most economists had forecast in a Reuters poll.
In the longer term both the OBR and private-sector economists see greater headwinds to deficit reduction.
“The Brexit-related fiscal challenge has yet to really begin,” Investec economist Chris Hare said.
The OBR forecasts growth will slow to 1.4 percent next year from 2.1 percent in 2016, dragging down growth in tax revenue and increasing spending on unemployment benefits.
In total the OBR expects the government to borrow 122 billion pounds more than planned over the next five years as Britain leaves the EU.
Last year's budget deficit was 4.0 percent of GDP – higher than in almost all big advanced economies – and Hammond still expects to run a deficit of 0.9 percent of GDP in 2021, in contrast to Osborne's goal of a surplus by 2020.
(qlmbusinessnews.com via bloomberg.com – – Mon, 19 Dec, 2016) London, Uk – –
The iPhone came out in 2007. So why was Apple still paying taxes like it was 1990?
“The Maxforce” is the European Union team that ordered Ireland to collect billions of euros in back taxes from Apple Inc., rattled the Irish government, and spurred changes to international tax law. You’d think it might have earned the name by applying maximum force while investigating alleged financial shenanigans. It didn’t. It’s just led by a guy named Max.
A European Commission official gave the nickname to the Task Force on Tax Planning Practices in honor of its chief, Max Lienemeyer, a lanky, laid-back German attorney who rose to prominence vetting plans to shore up struggling banks during Europe’s debt crisis. Since its launch in 2013, the Maxforce has looked at the tax status of hundreds of companies across Europe, including a deal Starbucks Corp. had in the Netherlands, Fiat Chrysler Automobiles NV's agreement with Luxembourg, and — its largest case — Apple in Ireland.
Lienemeyer’s team of 15 international civil servants pursued a three-year investigation stretching from the corridors of the European Commission, the EU’s executive arm, to Ireland's Finance Ministry and on to Apple's leafy headquarters in Cupertino, California. Much of it outlined for the first time here, this story chronicles a growing clash between Europe and the U.S. and a shift in the EU’s approach to the tax affairs of multinationals.
The Maxforce concluded that Ireland allowed Apple to create stateless entities that effectively let it decide how much — or how little — tax it pays. The investigators say the company channeled profits from dozens of countries through two Ireland-based units. In a system at least tacitly endorsed by Irish authorities, earnings were split, with the vast majority attributed to a “head office” with no employees and no specific home base — and therefore liable to no tax on any profits from sales outside Ireland. The U.S., meanwhile, didn't tax the units because they’re incorporated in Ireland.
“I can’t see why the tax liability is in Ireland.” —Irish Finance Minister, Michael Noonan
In August the EU said Ireland had broken European law by giving Apple a sweetheart deal. It ordered the country to bill the iPhone maker a record 13 billion euros ($13.9 billion) in back taxes, plus interest, from 2003 to 2014. One example the Commission cites: In 2011, a unit called Apple Sales International recorded profits of about 16 billion euros from sales outside the U.S. But only 50 million euros were considered taxable in Ireland, leaving 15.95 billion euros of profit untaxed, the Commission says.
Though the EU says its goal is “to ensure equal treatment of companies” across Europe, Apple maintains that the Commission selectively targeted the company. With the ruling, the EU is “retroactively changing the rules and choosing to disregard decades of Irish law,” and its investigators don’t understand the differences between European and U.S. tax systems, Apple said in a Dec. 8 statement.
Apple, which has some 6,000 workers in Ireland, says its Irish units paid the parent company a licensing fee to use the intellectual property in its products. The Irish companies didn't own the IP, so they don’t owe tax on it in Ireland, Apple says, but the units will face a U.S. tax bill when they repatriate the profits. Apple expects to pay about 26 percent of its earnings in tax for the most recent fiscal year and has set aside some $32 billion to cover taxes it says it will face should overseas income be returned to the U.S. “This case has never been about how much tax Apple pays, it’s about where our tax is paid,” the company said. “We pay tax on everything we earn.”
Ireland on Nov. 9 appealed the Commission’s ruling at the EU General Court in Luxembourg, arguing it has given Apple no special treatment. Irish Finance Minister Michael Noonan has said he “profoundly disagrees” with the ruling and that Ireland strictly adheres to tax regulations. The government says Ireland has no right to tax non-resident companies for profits that come from activities outside the country.
“Look at the small print” on an iPhone, Noonan said after the EU released its ruling in August. “It says designed in California, manufactured in China. That means any profits that accrued didn’t accrue in Ireland, so I can’t see why the tax liability is in Ireland.”
In the coming weeks, the EU is expected to publish details of the Maxforce investigation. At about the same time, Apple will likely lodge its own appeal in the EU court. Though Apple will have to pay its tax bill within weeks, the money will be held in escrow, and the issue will probably take years to be resolved.
This story is based on interviews with dozens of officials from the EU, Ireland, and Apple, though most didn't want to speak on the record discussing sensitive tax matters. A Maxforce representative declined to make Lienemeyer available for an interview. Ireland's Office of Revenue Commissioners (the equivalent of the American Internal Revenue Service) says it can’t comment on specific companies.
Lienemeyer began assembling the Maxforce in late spring of 2013 with a mandate of scrutinizing tax policies across Europe in search of any favoritism. Direct subsidies or tax breaks to court a specific company are illegal in the EU to prevent governments aiding national champions. His first hire — the person who would oversee the Apple probe — was Helena Malikova, a Slovak who had worked at Credit Suisse Group AG in Zurich. He quickly added Kamila Kaukiel, a Polish financial analyst who had been at KPMG, and Saskia Hendriks, a former tax policy adviser to the Dutch government.
As the four initial members began their investigations, they got a head start from a U.S. Senate probe of the tax strategies of American multinationals. The Senate’s Permanent Subcommittee on Investigations said Apple shifted tens of billions of dollars in profit into stateless affiliates based in Ireland, where it paid an effective tax rate of less than 2 percent.
At 9:30 a.m. on May 21, 2013, senators gathered in Room 106 of the Dirksen Office Building. Included in the evidence presented that day was a 2004 letter from Tom Connor, an official at Ireland’s tax authority, to Ernst & Young, Apple’s tax adviser. Connor’s question: A unit of the tech company hadn’t filed a tax return; Was it still in business? E&Y responded two days later that the division was a non-resident holding company with no real sales. “There is nothing to return from the corporation tax standpoint,” E&Y wrote. The Senate exhibits didn’t include Connor’s response if there ever was one.
At the hearing, Arizona Republican John McCain castigated Apple as “one of the biggest tax avoiders in America.” Democrat Carl Levin of Michigan peered over the glasses perched on the tip of his nose and said Apple uses “offshore tax strategies whose purpose is tax avoidance, pure and simple.” Crucially, though, Levin told the crowded room that under U.S. law, there was little the panel could do to force Apple to pay more tax. Apple Chief Executive Officer Tim Cook passionately defended the company’s actions, telling the senators “We don’t depend on tax gimmicks.”
The Senate revelations raised eyebrows at the Maxforce’s office in Madou Tower, a 1960s high-rise in the rundown Saint-Josse neighborhood of Brussels. Three weeks after the Senate hearing, Lienemeyer's team asked Ireland for details of Apple's tax situation. The Irish tax authorities soon dispatched a representative carrying a briefcase filled with a bundle of bound pages. The Irish could have simply sent the material via e-mail, but they were cautious about sharing taxpayer’s information with the EU and have a ground rule to avoid leaks: never send such documents electronically.
While the Irish government remained bullish in its public statements, saying Apple hadn’t received any favors, behind the scenes tensions were rising. Through the summer of 2013, the Finance Ministry assured government ministers that the EU investigation would amount to nothing, according to people familiar with the discussions. But those assertions seemed less confident than earlier communications. There was a sense that Apple had worked out its Irish tax position in a vastly different era, and no one remembered many details of the negotiations decades earlier.
In 1980, the four-year-old company — the Apple III desktop had just been released — created several Irish affiliates, each with a different function such as manufacturing or sales, according to the Senate report. Under Irish laws dating to the 1950s designed to shore up the moribund post-war economy, as a so-called export company Apple paid no taxes on overseas sales of products made in Ireland.
To comply with European rules, Ireland finally ended its zero-tax policy in 1990. After that, Apple and Ireland agreed that the profit attributed to a key Ireland-based unit, the division discussed in Tom Connor’s letter, be capped using a complex formula that in 1990 would have resulted in a taxable profit of $30 million to $40 million.
An Apple tax adviser “confessed there was no scientific basis” for those figures, but that the amounts would be “of such magnitude that he hoped it would be seen as a bona-fide proposal,” according to notes from a 1990 meeting with the Irish tax authority cited by the EU. The equation didn’t change even as Apple began assembling the bulk of its products in Asia.
Ireland and Apple started to make changes a few months after the Maxforce began looking into their tax relationship. In October 2013, Finance Minister Noonan announced he would close the loophole that let stateless holding companies operate out of Ireland. The EU said Apple changed the structure of its Irish units in 2015, which the company says it did to comply with the shift in Irish law.
As the Maxforce stepped up its probe in June 2014, Irish Prime Minister Enda Kenny was wooing potential investors in California. At a San Francisco event to promote Irish entrepreneurs, Governor Jerry Brown quipped that he had thought Apple “was a California company,” but according to tax returns, “they’re really an Irish company.” News clips show Irish officials looking on stony-faced as the governor makes his jest.
With Lienemeyer’s team digging further into the issue, Apple’s concern deepened. In January 2016, CEO Cook met with Margrethe Vestager, the EU competition chief — and Lienemeyer's ultimate boss — on the 10th-floor of the Berlaymont building, the institutional headquarters of the European Commission in Brussels.
Vestager, a daughter of two Lutheran pastors, has a reputation for being even-handed but tough, cutting unemployment benefits while advocating strict new rules for banks when she served as Denmark's finance minister. While she has acknowledged that her team had little experience with tax rulings — in a November interview with France's Society magazine, she said, “We learned on the job” — Vestager says enforcement of EU rules on taxation is a matter of “fairness.”
In the meeting with Cook she quizzed him on the tax Apple paid in various jurisdictions worldwide. She told the Apple executives that “someone has to tax you,” according to a person present at the meeting. In a Jan. 25 follow-up letter obtained by Bloomberg, Cook thanked Vestager for a “candid and constructive exchange of views,” and reasserted that Apple’s earnings are “subject to deferred taxation in the U.S. until those profits are repatriated.”
Subsequent correspondence became more heated. On March 14, Cook wrote to Vestager that he had “concerns about the fairness of these proceedings.” The Commission had failed to explain fully the basis on which Apple was being investigated, and the body's approach was characterized by “inconsistency and ambiguity,” Cook said.
Apple contended that the EU had backtracked on a 2014 decision recognizing that its two Irish subsidiaries were not technically resident in Ireland, and therefore only liable for taxes on profits derived from Irish sources. Now, Cook said, it seemed the Commission was intent on “imposing a massive, retroactive tax on Apple by attributing to the Irish branches all of Apple’s global profits outside the Americas.”
“There is no inconsistency,” an EU spokesman said in a Dec. 15 statement. Only a fraction of the profits of the subsidiaries were taxed in Ireland, the statement said. “As a result, the tax rulings enabled Apple to pay substantially less tax than other companies, which is illegal under EU state aid rules.”
Cook's entreaties did little to sway Vestager, and in August she phoned Noonan to tell him the results of the Maxforce investigation: The Commission was going to rule against Ireland. Late in the afternoon of Aug. 29, Irish officials began hinting to reporters that Apple’s tax bill amounted to billions and “could be anything.” At noon the following day, Vestager told a packed press conference in Brussels that the Commission had decided Apple owed Ireland 13 billion euros.
Though that would be equivalent to 26 percent of the 2015 national budget, Ireland didn't want the windfall, saying the ruling was flawed because the country hadn’t given Apple any special treatment. The decision sparked a political crisis as left-leaning members of Enda Kenny’s fragile minority administration saw a potential bonanza for taxpayers that the world’s richest company could well afford. Even as Noonan toured television studios vowing to appeal the decision, independent lawmakers demanded that Ireland take the money.
Facing a potential revolt that could bring down the government, Kenny and Noonan eventually bowed to demands for a review of the country’s corporate tax system. But they said they would fight the case, and on Sept. 7, Irish lawmakers overwhelmingly backed the motion for an appeal.
Officials from Lienemeyer’s team and other EU offices say they have gathered tax information on about 300 companies, looking for what they deem to be favorable treatment by governments across Europe. While they don't expect all of those to yield payoffs as hefty as that from their investigation of Ireland and Apple, they say a worrying number require the kind of maximum force that the Maxforce can apply.
“We focus on outliers where you're looking at something that is off the radar screen,” Lienemeyer's boss, 50-year-old Dutchman Gert-Jan Koopman, who is in charge of state-aid enforcement at the EU, said at a Brussels conference in November. “If you're paying a fair amount of tax then there is absolutely nothing to worry about.”
—With assistance from Stephanie Bodoni and Aoife White
(Updates with tax figures in seventh paragraph, clarifies effective tax rate in 13th, adds line about compliance in 21st. A previous version corrected fifth paragraph to show 16 billion euro profit was on sales outside the U.S., not just Europe)
(qlmbusinessnews.com via uk.reuters.com – – Fri, 16 Dec, 2016) London, UK – –
London rents, which are amongst the highest in the world, have fallen this year for the first time since 2010 as landlords rushed into the rental market before a tax increase in April, a report published on Friday showed.
Landbay, a property market lender, said private rents in London edged down by 0.3 percent between January and November 2016. That compared with a 1.9 percent rise in rents across the rest of Britain over the same period.
Landbay chief executive John Goodall said he expected London rents to rise in 2017 when tighter controls on bank lending to landlords was likely to slow the number of rental homes coming on to the market. But he expected growth in London rents to remain below the average for Britain as a whole.
Average rents in London peaked at 1,894 pounds ($2,374) per month in April before beginning to edge down in May, a month after the introduction of a higher a tax on landlords buying property to rent, Landbay said.
Rents rose in many suburbs but fell in central areas such as the borough of Kensington and Chelsea where they dropped by 2.3 percent.
London residential property has attracted many foreign investors and has shown little sign of falling in value since the country voted to leave the European Union in June.
In 2014, real estate firm Savills estimated that 32 percent of high-end residential property in London was overseas owned.
London had the sixth most expensive average rent, and the most expensive in Europe, when compared with 14 other global in a report by not-for-profit organization Global Cities Business Alliance and the Centre for Economic and Business Research.
(qlmbusinessnews.com via telegraph.co.uk – – Thu, 15 Dec, 2016) London, Uk – –
Riskier firms will shoulder bigger contributions into the UK's £3.5bn financial compensation fund under a radical overhaul put forward by the City regulator, which has proposed lifting the cap on some claims to £1m.
The Financial Conduct Authority (FCA) has laid out a raft of measures to revamp the way the Financial Services Compensation Scheme (FSCS) is funded and to broaden the industries it covers.
The scheme pays compensation to consumers when financial services firms fail. It paid out £271m in the year to the end of March and received more than 46,000 new claims.
The FCA is now acting in response to concerns that levies have climbed “sharply” for some firms who are covered by the FSCS.
“This has caused concern about the unpredictability of the levies, and led to calls for a re-think of FSCS funding,” the FCA said. “Additionally, in some sectors, a relatively small number of firms have been responsible for a large proportion of FSCS compensation claims.”
While the FSCS should be a last resort, the City regulator is worried the scheme “has increasingly taken on the role of ‘first line of defence’ when a firm fails”.
As part of a sweeping revamp, the watchdog has proposed adopting the principle that the “polluter pays”, meaning those companies that sell products or undertake activities that the regulator deems to be riskier than others pay higher levies.
“Our aim would be for a greater proportion of the cost of the FSCS to be borne by those firms most likely to incur it,” the FCA said.
A so-called risk-based levy differs from the current FSCS funding model, in which the scale of the levies paid by firms are mainly based on their size.
Under the plan put forward by the FCA, firms whose “behaviour reduces risk” would be eligible for discounts on their levies. It wants to start collecting more data from companies about their higher risk products to measure the potential impact of the new model.
In what represents an extensive overhaul of the FSCS, the regulator has also proposed hiking the compensation cap for investments from £50,000 to £1m, as well as lifting the £50,000 limit on pension and life products, in the wake of the recent overhaul of the pensions market.
Furthermore the FCA wants to broaden the compensation scheme to cover some parts of the fund management industry and debt management firms. It has suggested that a company that provided products to an intermediary that subsequently fails should contribute to the fund.
It has also proposed that the Lloyd’s of London insurance market starts paying into the scheme and is examining whether professional indemnity insurance (PII) should be improved, as well as whether buying cover should be mandatory for financial adviser firms.
This would help to relieve pressure on the FSCS by ensuring PII acts as “front stop” when a business is failing before claims are made to the compensation scheme.
A consultation on the FCA’s proposals closes at the end of March and the watchdog aims to issue its new rules next autumn.