McDonalds joins the Taxodus

July 13, 2009 6:28 PM

City AM reported this morning that McDonalds is joining the growing ranks of firms leaving the country.  They are relocating their European headquarters to Geneva from Finchley in North London.  As the newspaper shows in a graphic, they join WPP Group plc, Henderson Global Investors and Shire that have left for Ireland, Regus that has left for Luxembourg and Procter and Gamble, and Kraft foods and Yahoo! that have left for Geneva.


McDonalds argue that this is not a tax avoidance measure, as their annual tax rate is expected to remain between 29 and 31 per cent each year.  However, it is pretty clear that expectations of future tax rises thanks to the proposed double taxation of intellectual property earnings (which would include McDonalds' payments from franchisees) which have forced their hand.


Many companies have to be looking at the projections of massive Government borrowing over the next few years and wondering whether business can escape much higher taxes.  It would be pretty reasonable for them to assume that they'll get to keep more of their earnings if they locate elsewhere.  That will mean more companies moving and much more investment going abroad.  We need spending cuts and we need them quickly to avoid a massive burden on families and businesses now and in the future.

City AM reported this morning that McDonalds is joining the growing ranks of firms leaving the country.  They are relocating their European headquarters to Geneva from Finchley in North London.  As the newspaper shows in a graphic, they join WPP Group plc, Henderson Global Investors and Shire that have left for Ireland, Regus that has left for Luxembourg and Procter and Gamble, and Kraft foods and Yahoo! that have left for Geneva.


McDonalds argue that this is not a tax avoidance measure, as their annual tax rate is expected to remain between 29 and 31 per cent each year.  However, it is pretty clear that expectations of future tax rises thanks to the proposed double taxation of intellectual property earnings (which would include McDonalds' payments from franchisees) which have forced their hand.


Many companies have to be looking at the projections of massive Government borrowing over the next few years and wondering whether business can escape much higher taxes.  It would be pretty reasonable for them to assume that they'll get to keep more of their earnings if they locate elsewhere.  That will mean more companies moving and much more investment going abroad.  We need spending cuts and we need them quickly to avoid a massive burden on families and businesses now and in the future.

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