The post you are reporting:
3421, Well, yes and no. The quoted eurobond exemption is necessary to enable large companies' debt to be freely traded in the market. What we need to stop is the abuse of the exemption by companies who issue listed bonds to their parent companies purely to take advantage of the exemption. By international agreement, interest on quoted eurobonds is taxed in the country of the holder, and withholding taxes are not applied. If we did away with the exemption unilaterally, British eurobonds would become illiquid, making borrowing more expensive for our large companies, and investors with a tax rate below that of our withholding tax rate would cease to buy them. We would also be in violation of dozens of bilateral tax treaties.
I have often suggested that cross-border payments to connected parties which are not genuine arms-length transactions should be taxed. But it's a problem of enforcement. I'm sure Charlie, with his tax knowledge, could put his thinking cap on and come up with a suitable clause for the next Finance Bill. Alternatively HMRC could get off their fat arses and deem such arrangements artificial. They've done it to the small man where self-employment is concerned, but they seem to be nervous about tackling the big fish. And that's under governments of both colours.
The trouble is that chancellors, and the civil servants who advise them, have been too dim to foresee how people can abuse tax concessions which are usually granted for the right reasons.
