BEPS and Beyond 18 April 1016 RICS, 12 Great George Street, London, SW1P 3AD
Mike Devereux presented the initial findings from the ETPF’s Uncertainty Survey, which ran from January to March 2016. Fergus Harradence (UK Treasury) responded to the findings. The results of the survey were well received, as empirical data to support claims on uncertainty being harmful are hard to come by. Among other things, the results showed that BRIC countries take up 4 of the top 5 places in corporation tax uncertainty, and the top 4 places in effects of CT uncertainty on business decisions. Additionally, the survey showed that CT uncertainty has increased in 20 out of 21 countries in the last 5 years.
We then had presentations from two academics, Catie Magelsson and Simon Loretz about their papers on Where do Multinationals hold intangible assets, and why? and Co-location of tangible and intangible assets, respectively, with a response from Helen Miller of IFS. Catie’s database of 40,001 data points from transfer pricing reports of over 100 companies allows interesting comparison of different types of intangibles (tacit/codifiable and independent/complementary) and demonstrates that the vast majority of companies holding IP perform value creating activities. Simon’s publicly available data set is much larger and he has undertaken further work to seek to match this to patent registrations to determine which intangibles may actually be involved in receiving taxable royalty returns, and where they are located. Simon’s initial conclusion is that there are more instances of locating intangibles alongside tangible assets than the other way around.
Mike Devereux presented the first of our 2016 Policy Papers, Economic Theory of the Optimal Taxation of Multinational Profit. The paper discusses the traditional approaches of the optimal tax treatment of international investment and concludes that in the modern world it could be more economically efficient to levy tax in the country where goods and services are ultimately sold.
Irem Guceri presented the second of our 2016 Policy Papers, How effective are tax incentives for Research & Development? The paper discusses the existing literature that identify the benefits and costs of different types of R&D incentives, and the broader benefits that spill over into society from R&D. The findings to date suggest there is a positive reaction to R&D incentives of between 4% and 23% of the cost, but that more research is needed to identify more nuanced considerations such as effects of productivity, cross country differences, composition, and whether in an international context the incentives form part of a zero sum game.