- Switzerland
- October 12, 2020
- Reading time: 3 minutes
Reform of global corporate taxation - What are good taxes?
Summary
Only no taxes are good taxes. Especially global companies optimise their taxes excellently. Also thanks to the help of tax havens and tax experts. Prominent economists criticize that this is not sustainable.
Why is this important?
Do companies pay their taxes where they also make their sales?
Companies that show themselves to be reluctant to accept such global tax reforms repeatedly get into social and legal controversies, which have a negative impact on their share price and market value. This is why tax policy is already being incorporated into our Global Footprint today. We use data that shows the regional distribution of tax revenue per company. This distribution is compared with regional sales. The greater the difference, the greater the risk.
The data point "tax transparency" belongs to the Footprint dimension "market and infrastructure". Of our companies, Mettler Toledo, for example, stands out positively in this respect. Of the SMI companies, Swiss Re and Novartis stand out with lower marks.
The Globalance Footprint of Mettler Toledo is positive.
How we evaluate this topic
Basically, we obtain data that document the regional distribution of the taxes paid by all companies. This involves determining the difference between the current ACTUAL distribution and the theoretical TARGET distribution (according to the distribution of turnover and OECD rules). The greater the difference, the greater the risk of controversy ("court of law versus court of public opinion").
In the Footprint Methodology, the criterion tax transparency belongs to the dimension "markets and infrastructure". In sectors for which this dimension is very important, the inclusion of this additional criterion can change the overall score.
How do stocks in our portfolios perform
Our portfolios do not include examples of companies whose Footprint score has deteriorated due to the tax issue.
From the SMI, one could mention Swiss Re and Novartis.
Examples of companies in our portfolios whose Footprint score has improved due to the tax theme are Mettler Toledo or Oracle. Tax transparency - Why it is important - An exciting debate about the future
UCLA economist Gabriel Zucman is resolutely calling for a new global tax order: "Either we get the big corporations to pay appropriate taxes - or globalization cannot be sustained. Especially not in the Covid crisis". And according to Zucman, there are signs of progress. Currently, for the first time, a minimum rate for profit taxes is being seriously discussed within the OECD. For its part, the EU has put the corporate tax problem at the top of its list of priorities with the technology giants. France is one step further. The country has introduced a digital tax for Amazon and Co. Switzerland in a dilemma
Switzerland is in a dilemma. Leading representatives from the worlds of politics and business fear that the new OECD regime will result in massive tax losses for our country, which is repeatedly counted among the tax havens. But they should know that the policy of small compromises and concessions is not particularly promising, as the examples of banking secrecy, potentate funds and dormant funds have shown.
From a sustainable perspective, it therefore makes more sense to offer a hand in global reform of corporate taxation, not least for reasons of global solidarity. Even Facebook boss Mark Zuckerberg announced during a visit to the EU that he would support the revision sought by the OECD and pay more taxes in Europe in future.
Globalance opinion
Tax optimisation is not only a legal matter, but also a social one. We therefore only invest in companies that seek this balance and do not run the risk of becoming the target of controversy by behaving too aggressively
