Understanding tax and tax avoidance
Recent reports have commented that companies such as Shazam are paying no corporation tax on significant levels of gross profit. This is a little misleading as corporation tax is only due in relation to net profit after allowable expenditure – not the gross profit figure. Allowable expenditure will include large costs such as staff wages, premises rental and finance charges which will put a large dent in gross profit and can often push a company in to a loss making situation. There may indeed be some sharp practice underway in the world of corporate tax payers but it would be good to see the media presenting the facts in a more measured way rather than sensationalising headline numbers that are not really relevant.
Date: 7th January, 2016
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