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| Watch the coalition lead the battle against tax havens … such as Britain | Watch the coalition lead the battle against tax havens … such as Britain |
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| Only five months ago, the consensus view among City analysts was that a sale of Vodafone's 45% stake in America's biggest mobile network, Verizon Wireless, to its joint-venture partner, Verizon Communications, would trigger a prohibitive US capital gains tax bill to the tune of $35bn-$40bn. Talk of a deal, they sniggered, was hot air. | Only five months ago, the consensus view among City analysts was that a sale of Vodafone's 45% stake in America's biggest mobile network, Verizon Wireless, to its joint-venture partner, Verizon Communications, would trigger a prohibitive US capital gains tax bill to the tune of $35bn-$40bn. Talk of a deal, they sniggered, was hot air. |
| All of which, we learned when Vodafone agreed last week to the $130bn disposal, was wide of the mark. The deal may have valued Vodafone's Verizon stake at about the size of the Hungarian economy, but the associated US tax bill will be precisely zero. | All of which, we learned when Vodafone agreed last week to the $130bn disposal, was wide of the mark. The deal may have valued Vodafone's Verizon stake at about the size of the Hungarian economy, but the associated US tax bill will be precisely zero. |
| More to the point, the tax bill in the Netherlands, where the Vodafone holding company selling the US stake is based, will be zero. And for good measure, Vodafone added, even if the stake had been divested from a UK holding company, the UK capital gains tax arising would also be zero. | More to the point, the tax bill in the Netherlands, where the Vodafone holding company selling the US stake is based, will be zero. And for good measure, Vodafone added, even if the stake had been divested from a UK holding company, the UK capital gains tax arising would also be zero. |
| The reason is a tax break, common in many European tax regimes, offering major investors a so-called "participation exemption". In the UK the analogous tax break is known as the "substantial shareholdings exemption", or SSE, and it was extended to big-stake disposals of the Vodafone kind in 2002 by the then Labour government. | The reason is a tax break, common in many European tax regimes, offering major investors a so-called "participation exemption". In the UK the analogous tax break is known as the "substantial shareholdings exemption", or SSE, and it was extended to big-stake disposals of the Vodafone kind in 2002 by the then Labour government. |
| Trading companies love it, of course. And indeed the Observer's parent company, GMG, qualified for this exemption in 2008 when, after several years' ownership, it sold half of its interest in the publisher of Auto Trader. | Trading companies love it, of course. And indeed the Observer's parent company, GMG, qualified for this exemption in 2008 when, after several years' ownership, it sold half of its interest in the publisher of Auto Trader. |
| Setting aside the merits or otherwise of such a tax break, as the dust settles on last week's disposal announcement, it starts to look clear that initial shock at the tax-free outcome was, as much as anything, sparked by how poorly the City number-crunchers understood the picture – and how little Vodafone did to correct perceptions that may, at the time, have suited it. | Setting aside the merits or otherwise of such a tax break, as the dust settles on last week's disposal announcement, it starts to look clear that initial shock at the tax-free outcome was, as much as anything, sparked by how poorly the City number-crunchers understood the picture – and how little Vodafone did to correct perceptions that may, at the time, have suited it. |
| Another response to the announcement was speculation that a shrunken Vodafone, after returning $84bn to shareholders, would itself be the target of foreign takeover interest. Without the mighty earnings of Verizon, the doomsayers cautioned, "rump Vodafone" looked a ragbag of businesses focused on low-growth Europe. | Another response to the announcement was speculation that a shrunken Vodafone, after returning $84bn to shareholders, would itself be the target of foreign takeover interest. Without the mighty earnings of Verizon, the doomsayers cautioned, "rump Vodafone" looked a ragbag of businesses focused on low-growth Europe. |
| But if that sounds like a crushing blow for the London capital markets, think again. There are signs that rather than facing a draining-away of multinationals, the UK is about to welcome a new wave of arrivals – many of them, in all likelihood seeking to list here. | But if that sounds like a crushing blow for the London capital markets, think again. There are signs that rather than facing a draining-away of multinationals, the UK is about to welcome a new wave of arrivals – many of them, in all likelihood seeking to list here. |
| Why here? Why now? The answer lies in a crescendo of tax reforms that can be traced back 14 years to the then Labour government and the abolition of advance corporation tax, followed later by measures such as the introduction of SSE, and by further tax breaks on dividends (2009) and on foreign branch companies (2011). | Why here? Why now? The answer lies in a crescendo of tax reforms that can be traced back 14 years to the then Labour government and the abolition of advance corporation tax, followed later by measures such as the introduction of SSE, and by further tax breaks on dividends (2009) and on foreign branch companies (2011). |
| More recently, George Osborne has been presenting corporate tax accountants with yet more sweeteners. These include more generous tax deals for research and development companies in the UK; a special low-tax regime for patent-owning businesses; and a fresh, multinational-friendly approach to offshore finance subsidiaries. | More recently, George Osborne has been presenting corporate tax accountants with yet more sweeteners. These include more generous tax deals for research and development companies in the UK; a special low-tax regime for patent-owning businesses; and a fresh, multinational-friendly approach to offshore finance subsidiaries. |
| Add to that the chancellor's staggered reduction of the main corporation tax rate – scheduled to tumble to 20% by April 2015 – and the cumulative effect is starting to turn the heads of business leaders around the world. | Add to that the chancellor's staggered reduction of the main corporation tax rate – scheduled to tumble to 20% by April 2015 – and the cumulative effect is starting to turn the heads of business leaders around the world. |
| However, the blossoming appeal of London to foreign multinationals has not gone unnoticed in Washington, where politicians are engaged in their own debate with big business about a potentially huge package of corporation tax reforms. While the Obama administration wants to secure the best outcome for the US public purse and for non-corporate taxpayers, officials are concerned about whispered threats from US multinationals that they might consider decamping to London. | However, the blossoming appeal of London to foreign multinationals has not gone unnoticed in Washington, where politicians are engaged in their own debate with big business about a potentially huge package of corporation tax reforms. While the Obama administration wants to secure the best outcome for the US public purse and for non-corporate taxpayers, officials are concerned about whispered threats from US multinationals that they might consider decamping to London. |
| What particularly angers Americans is seeing David Cameron join German and French leaders on the G20 stage on Friday to high-mindedly champion international tax co-operation initiatives, through the OECD, aimed at halting big-businesses tax avoidance. | What particularly angers Americans is seeing David Cameron join German and French leaders on the G20 stage on Friday to high-mindedly champion international tax co-operation initiatives, through the OECD, aimed at halting big-businesses tax avoidance. |
| Cameron and the UK are increasingly part of the tax problem, not the solution, the Americans privately grumble. Justifiably so. Cameron and Osborne need to be more honest about their aggressive tax competition policies. | Cameron and the UK are increasingly part of the tax problem, not the solution, the Americans privately grumble. Justifiably so. Cameron and Osborne need to be more honest about their aggressive tax competition policies. |
| Apple seeks a new core market in China | Apple seeks a new core market in China |
| Apple is expected to show off a new lineup of iPhones on Tuesday at its headquarters in Cupertino, California, including a "champagne-coloured" device with a fingerprint sensor and a new range of brightly coloured "cheap" models to go with its new, brightly coloured iPhone software. | Apple is expected to show off a new lineup of iPhones on Tuesday at its headquarters in Cupertino, California, including a "champagne-coloured" device with a fingerprint sensor and a new range of brightly coloured "cheap" models to go with its new, brightly coloured iPhone software. |
| It will be the first time since it introduced the iPhone in 2007 that the company has released more than one model at a time. Unlike more experienced handset makers, which kill off old models after a year and introduce fresh ones, Apple has until now simply kept the previous two years' models going, offering them as its "low-end" phones. | It will be the first time since it introduced the iPhone in 2007 that the company has released more than one model at a time. Unlike more experienced handset makers, which kill off old models after a year and introduce fresh ones, Apple has until now simply kept the previous two years' models going, offering them as its "low-end" phones. |
| But with cheaper Android phones chewing into the low-end market while mid- and high-end phones from Samsung eat away at the premium end, Apple needs to re-energise its sales if it is not to lose crucial share. The answer seems to be coloured phones – once popularised by Nokia in its heyday and also a tactic Apple used with its iMac in 1999, when it offered in five "gumdrop" colours (yes, it really was that long ago). | But with cheaper Android phones chewing into the low-end market while mid- and high-end phones from Samsung eat away at the premium end, Apple needs to re-energise its sales if it is not to lose crucial share. The answer seems to be coloured phones – once popularised by Nokia in its heyday and also a tactic Apple used with its iMac in 1999, when it offered in five "gumdrop" colours (yes, it really was that long ago). |
| The fingerprint sensor sounds very James Bond, but could be useful for mobile payments, suggests Ben Wood of the analysts CCS Insight. "About a year ago Apple bought a company called AuthenTec, which worked on fingerprint technology," he said. "I think that we could see something really interesting there." | The fingerprint sensor sounds very James Bond, but could be useful for mobile payments, suggests Ben Wood of the analysts CCS Insight. "About a year ago Apple bought a company called AuthenTec, which worked on fingerprint technology," he said. "I think that we could see something really interesting there." |
| There's no sign that any of the phones will include NFC, the technology used by Visa and others to try to push mobile payments along, though – which will stymie that initiative for yet another year. | There's no sign that any of the phones will include NFC, the technology used by Visa and others to try to push mobile payments along, though – which will stymie that initiative for yet another year. |
| The big question hanging over the launch is whether Apple has finally secured a deal with China Mobile, the world's largest mobile carrier, with 775 million subscribers. That would send iPhone sales rocketing – and give it a foothold in a country where Google is banned and 90% of Microsoft's Windows software is pirated. It would also be a fillip for a share price that has plummeted from a high of $700 a year ago to just under $500 on Friday. | The big question hanging over the launch is whether Apple has finally secured a deal with China Mobile, the world's largest mobile carrier, with 775 million subscribers. That would send iPhone sales rocketing – and give it a foothold in a country where Google is banned and 90% of Microsoft's Windows software is pirated. It would also be a fillip for a share price that has plummeted from a high of $700 a year ago to just under $500 on Friday. |
| Banks change accounts more often then customers | Banks change accounts more often then customers |
| Say hello, again, to TSB. The name is back on the high street tomorrow as Lloyds Banking Group, under orders from the EU, carves off 630 branches and one sixth of its business. Of course, the brand never really went away, since the group's main retail division has been trading as Lloyds TSB since the takeover in 1995. But now there will be two separate operations, albeit running on the same IT system. | Say hello, again, to TSB. The name is back on the high street tomorrow as Lloyds Banking Group, under orders from the EU, carves off 630 branches and one sixth of its business. Of course, the brand never really went away, since the group's main retail division has been trading as Lloyds TSB since the takeover in 1995. But now there will be two separate operations, albeit running on the same IT system. |
| Does familiarity with the TSB name explain why so few customers – just 4,000 out of 4.6m – have opted out and declared they want to stay with Lloyds? | Does familiarity with the TSB name explain why so few customers – just 4,000 out of 4.6m – have opted out and declared they want to stay with Lloyds? |
| Well, that may be a factor. It's also true that bank account numbers and sort codes will stay the same, so there's another contributor. But the real reason? Inertia. Most people move their bank account only when enraged or lured by a chunky signing-on fee. Being pledged to the Co-op, and then not, and then being repackaged as a TSB customer, seems to be regarded as just a series of everyday events. Odd. | Well, that may be a factor. It's also true that bank account numbers and sort codes will stay the same, so there's another contributor. But the real reason? Inertia. Most people move their bank account only when enraged or lured by a chunky signing-on fee. Being pledged to the Co-op, and then not, and then being repackaged as a TSB customer, seems to be regarded as just a series of everyday events. Odd. |
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