Top Stories

February 17, 2014


European VAT reform to hit offshore e-commerce

An EU shake-up in VAT rules means that hundreds of extra millions of tax from e-commerce are to flow into countries including the UK. The changes move taxing rights on cross-border sales of telecoms, broadcasting and digital services to the countries where customers, rather than companies, are based. The changes in international rules will make it harder for companies to escape having a taxable presence in the countries where they make sales, and blunt their ability to move profits to tax havens. The move means that incentives for businesses such as Amazon, Apple and Microsoft to be based in low VAT jurisdiction areas will disappear. The biggest impact will be felt in ebooks, which are overwhelmingly sold out of Luxembourg, where VAT is levied at just 3 percent. The changes, which will impose a big compliance burden on companies, coincide with international pressure to force up the corporate tax bills of digital companies. (FT*)


Tobacco company adverts back on UK TV after 20 years

Tobacco company, British American Tobacco (BAT), will advertise its new e-cigarette on British TV; the first time in over two decades that a tobacco company has screened adverts on UK TV. Adverts for Vype, BAT’s first foray into the rapidly growing e-cigarette market, will be broadcast over the next two months, nearly 50 years after cigarette adverts were first banned in the UK. E-cigarettes have grown from a prototype to a $3 billion product category within a decade, with some analysts saying that e-cigarette usage could overtake tobacco in developed markets within a decade. But e-cigarette adverts have proven controversial, with some health campaigners arguing that they glamorise smoking and will lead to tobacco being “renormalised”. Anna Gilmore, Professor of Public Health at the University of Bath, said that, “while e-cigarettes could represent a real opportunity for public health because smokers would be way better off on e-cigarettes than cigarettes, there is also a danger that the extensive advertising of e-cigarettes, which look almost identical to cigarettes, will re-glamorise smoking and encourage uptake among young people again.” (FT*)


World’s biggest companies admit to failing staff on pensions                         

The world’s biggest companies have conceded that they are failing their staff when it comes to pensions, according to research published by PwC. The research, which covered 114 of the world’s biggest companies that collectively employ 4.7 million people, showed that only 6 percent are willing to continue with so-called defined benefit pensions, which guarantee a set income on retirement. But they recognised that the typical alternative of defined contribution schemes, where retirement income is dependent on investment returns, is failing. While nine in ten companies said it is important they help employees to make “informed decisions” and 83 percent said they plan to give “more flexibility” to staff, only 11 percent think they are currently sufficiently effective at doing this. Marc Hommel, global pensions leader at PwC, warned companies that, “simply providing defined contribution arrangements for employees is not enough – current arrangements are delivering inadequate retirement savings and are not effective for the new world of work.” (Independent)


World’s largest solar thermal project heats up in the Californian desert

The world’s largest concentrated solar power plant has become fully operational in the Californian desert. The Ivanpah Solar Electric Generating System is the largest of its kind in the world, delivering power for up to 140,000 homes. The system works by directing sunlight from hundreds of mirrors onto a central tower, which produces steam to drive a turbine. The project is backed by a series of investors, including $168 million from Google and $1.6 billion from the US government. Tom Doyle, president of NRG Solar who developed the system, said that, “clean-tech innovations such as Ivanpah are critical to establishing America’s leadership in large-scale, clean-energy technology that will keep our economy globally competitive over the next several decades. We see Ivanpah changing the energy landscape by proving that utility-scale solar is not only possible, but incredibly beneficial to both the economy and in how we produce and consume energy.” (Business Green)


UK industry presses for green energy levy cut

Some of Britain’s biggest manufacturers have called on the Chancellor to exempt heavy industry from expensive wind farm subsidies, warning that the charges will put them out of business. Executives from companies such as Tata Steel, Sheffield Forgemasters and BOC Gases, the chemicals giant, have told George Osborne to take action to cut energy bills. The companies argue that the UK Government’s green levies are responsible for raising their energy costs to 50 percent higher than those of their European rivals, making it increasingly difficult for British manufacturers to compete. In a letter to the Chancellor, the signatories warn that unless the Government sets aside money to compensate them for the levies, companies will be forced to close or move overseas where energy costs are lower. They write that, “we support the fight against climate change, but we will all have failed if this is achieved at the expense of driving these industries abroad. Products which are essential to modern life would be made instead by less efficient producers overseas leading to higher global emissions. This makes no sense.” (Times*)



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