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Amazon, Google and Starbucks attacked by MPs over tax avoidance

Report also criticises HM Revenue & Customs for leniency in dealing with corporations that pay little or no corporation tax

Amazon, Google and Starbucks have been accused of an “immoral” use of secretive jurisdictions, royalties and complex company structures to avoid paying tax on British profits by a committee of MPs.

A hard-hitting report released on Monday by the Commons public accounts committee, the parliamentary spending watchdog, also criticises HM Revenue & Customs for being “way too lenient” in negotiations with corporations which pay little or no corporation tax. It calls on the government to draw up laws to close loopholes and name and shame companies that fail to pay their fair share.

The report’s scheduled release, following a humiliating parliamentary session for the three multinationals’ executives, prompted a flurry of media activity over the weekend. On Saturday night, Starbucks announced that it is reviewing its tax approach to Britain with a view to paying more following widespread criticism of the coffee chain’s tax regime.

George Osborne will on Monday announce an extra £77m a year for two years for more staff at Revenue & Customs to pursue companies which avoid paying tax. The chancellor said the extra investment would help secure an extra £2bn a year in unpaid tax.

He is also expected to confirm a deal with Switzerland which the chancellor hopes will raise more than £5bn in previously uncollected taxes from Swiss bank accounts over the next six years.

Danny Alexander, the Treasury chief secretary, said of the Starbucks statement: “I am delighted they are taking this issue seriously and they are listening to the feedback from their UK taxpaying customers.” He too had been boycotting Starbucks. “I might be able to buy a coffee from Starbucks again soon.”

Margaret Hodge, the chair of the PAC, said its report showed that corporations had been allowed to get away with “ripping off” taxpayers because of a weak tax authority, poor legislation and a lack of international co-operation.

“Global corporations with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here. This is an insult to British business and individuals who pay their fair share.

“Corporation tax revenues have fallen at a time when securing proper income from taxes is more vital than ever.

“The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK,” she said.

Executives from the multinationals who appeared before the committee last month were singled out for criticism.

Responses to questions by Andrew Cecil, Amazon’s director of public policy, were “evasive”, “unprepared” and lacking credibility.

The company’s UK website reported a turnover of £207m for 2011, but its tax bill was just £1.8m.

Amazon avoids UK taxes by reporting European sales through a Luxembourg-based unit, MPs alleged. This structure allowed it to pay a rate of less than 12% on foreign profits last year – less than half the average corporate income tax rate in its major markets.

Troy Alstead, Starbucks’ global chief financial officer, claimed that the firm has lost money in the 15 years it has been operating in the UK except in 2006.

The world’s biggest coffee chain paid £8.6m in total UK tax over 13 years during which it recorded sales of £3.1bn.

Alstead’s claim was “difficult to believe” when contrasted with boasts of success sent to shareholders, according to the report.

Starbucks has been able to cut its tax bill, MPs said, by paying fees to other parts of its global business, such as royalty payments for use of the brand.

Google had £2.5bn of UK sales last year, but despite having a group-wide profit margin of 33%, its main UK unit had a tax charge of £3.4m in 2011.

The company avoids UK tax by channelling non-US sales via Ireland, an arrangement that has allowed it to pay taxes at a rate of 3.2% on non-US profits. It also diverts some profits through Bermuda.

Revenue & Customs has been asked by the committee to be bolder in challenging tax avoidance by multinationals and to be ready to prosecute if necessary.

“Top officials need to challenge the status quo and be more assertive, for example in accepting that excessive levels of royalty payments are appropriate when businesses are making a loss,” the report states. Benchmarks for common charges such as royalty payments and intellectual property rights could be published by the Treasury or tax officials. A company’s tax practices should also be made part of its mandatory reporting requirements, which would increase transparency, the MPs say.

The government and the tax authorities should also take a greater lead internationally in closing loopholes and increasing transparency in tax havens, particularly across Europe, the report concludes.

Osborne told BBC 1’s Andrew Marr Show that he will work closely with France and Germany to close tax loopholes. “It will be a big priority for the G7, G8, which we host next year,” he said.

A spokesman for HMRC said it had reduced tax avoidance by large businesses in recent years. “We relentlessly challenge those that persist in avoiding tax and have recovered £29bn additional revenues from large businesses in the last six years, including £4.1bn in the last four years from transfer pricing inquiries alone. These figures speak for themselves.”

Source: Guardian News

Mahmoud Abbas outrages Palestinian refugees by waiving his right to return

Images of Abbas burned by refugees who say he has conceded on one of the most visceral issues on Palestinian agenda

The Palestinian president, Mahmoud Abbas, is facing widespread condemnation and anger in the Palestinian territories and abroad after he publicly waived his right to return to live in the town from which his family was forced to flee in 1948, a repudiation of huge significance for Palestinian refugees.

After his image was burned in refugee camps in Gaza, Abbas rejected accusations that he had conceded one of the most emotional and visceral issues on the Palestinian agenda, the demand by millions of refugees to return to their former homes in what is now Israel.

He insisted that comments made in an interview with an Israeli television channel were selectively quoted and the remarks were his personal stance, rather than a change of policy.

Abbas told Channel 2 he accepted he had no right to live in Safed, the town of his birth, from which his family was forced to flee in 1948 when Abbas was 13.

“I visited Safed before once, he said. “But I want to see Safed. It’s my right to see it, but not to live there.”

Referring to the internationally-recognised pre-1967 border, he went on: “Palestine now for me is ’67 borders, with East Jerusalem as its capital. This is now and forever … This is Palestine for me. I am a refugee, but I am living in Ramallah. I believe that the West Bank and Gaza is Palestine and the other parts are Israel.”

The comments sparked protests in Gaza, where people in refugee camps burned images of the Palestinian president. Abbas was denounced on Twitter by pro-Palestinian activists.

Ismail Haniyeh, the Hamas ruler in Gaza, said the issue was not about Abbas’s right to return to Safed but “the rights of 6 million Palestinians”.

He said in a statement: “No one has the right, whoever he is – a common man or president, organisation, a government or authority – to give up an inch of Palestinian land.”

Sami Abu Zuhri, a Hamas spokesman, said the president’s statement did “not represent in any way the views of the Palestinian people”.

The “right of return” is one of the most intractable issues in talks between the Israelis and Palestinians for a resolution to their decades-old conflict. The Palestinians have historically demanded that all those who fled or were expelled from their homes in the period around the formation of the state of Israel in 1948, and their descendants, must be allowed to return to their former homes.

About 5 million Palestinians are registered as refugees in the Palestinian territories and abroad.

Israel rejects their demand, saying that such a move would spell the end of the Jewish state.

Most international diplomats and observers believe that a settlement to the conflict is likely to involve a symbolic number of Palestinian refugees being given the right to return.

Following the broadcast of the interview, Israel’s president, Shimon Peres, said Abbas’s comments were a “brave and important public declaration”. In a statement, he said Abbas had shown he was “a real partner for peace” and that he understood “the solution to the Palestinian refugee issue cannot be in Israel’s territory and to the detriment of Israel’s character”.

Israel’s defence, minister Ehud Barak, described Abbas’s remarks as courageous and clear.

But Israel’s prime minister, Binyamin Netanyahu. dismissed the comments, saying that the Palestinian president had different messages for different audiences. “There is no connection between [his] statements and his actual actions,” he said, calling for Abbas to return to negotiations.

Palestinian sources played down the row, saying Abbas’s comments had been misconstrued. One suggested the president had been ill-prepared for the interview and it had been a mistake to agree to conduct it in English, a language in which Abbas is not fluent.

Ghassan Khatib, an academic at Bir Zeit university in the West Bank and a former Palestinian Authority spokesman, said Abbas had not suggested a change in the official position. “This is an optional right. If an individual refugee does not wish to return, he will be free not to return. We all know that all Palestinians are not going to return. Some understand this, some do not.”

In the interview, Abbas also said that, while he was president, there would be “no third armed intifada [uprising against Israel]. Never.”

He said: “We don’t want to use terror. We don’t want to use force. We don’t want to use weapons. We want to use diplomacy. We want to use politics. We want to use negotiations. We want to use peaceful resistance. That’s it.” He has said that Palestinian negotiators are willing to resume talks with Israel following the submission of a request, expected later this month, to the UN general assembly for recognition as a “non-member state”.

Israel and the US are vehemently opposed to the move, which is expected to be passed by a majority of the UN’s 193 member states.

Source: Guardian News

Israeli poll finds majority in favour of ‘apartheid’ policies

Two-thirds say Palestinians should not be allowed to vote if West Bank was annexed, while three in four favour segregated roads

More than two-thirds of Israeli Jews say that 2.5 million Palestinians living in the West Bank should be denied the right to vote if the area was annexed by Israel, in effect endorsing an apartheid state, according to an opinion poll reported in Haaretz.

Three out of four are in favour of segregated roads for Israelis and Palestinians in the West Bank, and 58% believe Israel already practises apartheid against Palestinians, the poll found.

A third want Arab citizens within Israel to be banned from voting in elections to the country’s parliament. Almost six out of 10 say Jews should be given preference to Arabs in government jobs, 49% say Jewish citizens should be treated better than Arabs, 42% would not want to live in the same building as Arabs and the same number do not want their children going to school with Arabs.

A commentary by Gideon Levy, which accompanied the results of the poll, described the findings as disturbing. “Israelis themselves … are openly, shamelessly and guiltlessly defining themselves as nationalistic racists,” he wrote.

“It’s good to live in this country, most Israelis say, not despite its racism, but perhaps because of it. If such a survey were released about the attitude to Jews in a European state, Israel would have raised hell. When it comes to us, the rules don’t apply.”

The poll was conducted by a public opinion firm, Dialog, which interviewed 503 people out of an Israeli Jewish population of just under 6 million.

Talk of the possible annexation of the West Bank, or the main settlement blocks within it, has increased in recent months as expectations of a negotiated settlement to the conflict have sunk to an all-time low. Israel’s defence minister, Ehud Barak, recently argued for the annexation of land between the internationally recognised Green Line and the Israeli-built separation barrier.

The poll results will bolster the claim of Israel’s Arab citizens, who make up 20% of the population, that they suffer from racist discrimination. Almost half the poll’s respondents said Israeli Arabs should be transferred to the Palestinian Authority, and a third said that Arab towns in Israel should be moved to the PA’s jurisdiction in exchange for Jewish settlements in the West Bank.

According to the Haaretz report, the survey found that ultra-Orthodox Jews held the most extreme views about Arabs, with 70% supporting a legal ban on voting rights and 95% backing discrimination against Arabs in the workplace.

Source: Guardian News