…was the response by Glaxo Smith Kline (GSK) to last Monday’s BBC Panorama ‘expose’ on the use of ‘round-tripping’ and ‘income stripping’ tax avoidance techniques by UK conglomerates like GSK and North & Shell.
In its defence GSK points out that the company is a global with 95% of its sales outside of the UK with 20% of its tax bill payable in the UK amounting to GBP1bn in corporate and business taxes plus GBP1.3bn in income taxes on its employees.
Refuting the programme’s implication of wrongdoing, GSK went on to say that the tax authourities in both countries are satisfied that GSK paid the 1% tax owed in respect of its Luxembourg subsidiaries and the 28% tax liability on its UK company.
This confirmation notwithstanding Chair of the UK Public Accounts Committee is on record as having doubts about the proper application of the tax laws and questioned the tax ‘settlements’ reached by the HMRC with major companies.
In furtherance of its defence GSK points the finger at differences between UK and EU tax laws which in its view has always created uncertainty for global organisations.
What GSK failed to add, perhaps understandably, is that the problem is not so much ‘uncertainty’ as the means to reconcile the laws to maximise shareholder profits are clear and well-practised, but the opportunities for arbitrage which are at the heart of the tax machinations lately discovered by the BBC.