“Money goes where it is treated best”: quotes a Spanish proverb Bernard Fay, born in Barcelona and president of UHY, an international network that brings together auditing, tax and labor consultancy firms, in commenting with FIRSTonline on the international regulatory situation on the subject of taxes. On days when the web tax is discussed for the big names on the internet, the issue is more topical than ever and it doesn't just concern digital companies. “There is also the issue of transfer pricing – explains Fay – which is talked about less and which concerns all companies, not only technological and even small ones, which invest and produce abroad, internally transferring goods from one country to another and thus determining where to tax profits”.
Transfer pricing determines the normal value of the prices or profits relating to transactions between two associated companies residing in countries with different taxation (the so-called cross-border), such as for example two counterparties of a multinational company. “Even today, many companies commit what is not right to be called evasion, but certainly avoidance. The OECD has recently set parameters and countries are adapting. Our task as UHY is precisely that of providing consultancy to companies, helping them to compare tax and price regimes and to make preventive agreements with the various countries”.
Agreements between companies and tax authorities are a growing trend and are helping to get out of the impasse, because if it is true that money goes where it is treated best, it is also true that "for taxes, the principle of territoriality applies: where the business, the right taxes have to be paid there”. What if the taxes are very different from one country to another? “It is up to the European Union to standardize tax regimes as much as possible, as the OECD has done by setting the parameters of transfer pricing within the 10-15% profit margin with respect to the production cost of the product in a given country. In Europe we have countries like Ireland with preferential tax regimes, and it is normal that they attract more foreign investment”. Certainly much more than Italy, as emerges from one research published by UHY itself on the occasion of a congress organized in Rome yesterday and today, from which it emerges that we are 36th compared to the first 44 economies in the world as a percentage of FDI on GDP: only 0,7% against the EU average of 2%.
“Investments bring with them injections of technologies, skills and infrastructures. And they help the growth of human resources, he explains Andrea D'Amico, partner of UHY Italy, also admitting that “Italy looks much better today than it did a few years ago. Since 2017 there is a substantial cut, 3,5%, in corporate taxes. This cut now places us in the middle of the table among the major countries. Then there is an intervention in favor of investments in plant and machinery, with super depreciation. But further reforms and incentives would be useful”.
“Low taxes – adds Fay – are one of the key requirements for attracting investments, together with transparency, little bureaucracy, infrastructure (including digital) and legal certainty”. Having said that, it is right that everyone pays them and that they pay them everywhere, including big names like Google or Amazon for which disputes with Brussels are not lacking. Agreements have recently been reached with individual countries, including Italy. “The first step is to certify the income that passes through the network, after which we are seeing that gradually, through individual agreements, these taxes are paid. It will then be up to the EU to establish future rules, also in the same interest of big high tech companies. Let's remember that for companies like Google, reputation is everything: the younger generations, the more digital ones, are very attentive to ethical and environmental issues and companies know this and are running for cover”.
There is an international trend of lowering taxes, even on labour: not only in Italy but even more markedly we have seen it in the USA with Trump, who is bringing them to Reagan levels, or in France in economic program of the new president Emmanuel Macron, which wants to bring the corporate tax from 33% to 25%. So is the way to pay less almost everywhere, to avoid big discrepancies and therefore avoidance or evasion? “Absolutely – says Fay – and this is the trend. But this must be accompanied by a fight against tax evasion, because a system can lower taxes only if it manages to recover all or almost all those evaded".
