Tax Dodgers Database
Naming and shaming corporate tax dodgers
Tax Translator
The world of tax can be infuriatingly complex. On this page you'll find a list of the confusing terms used by tax dodgers, professionals and enforcers. Luckily for you, we've translated them all into English too! If you can't find what you're looking for, use the keyboard shortcut Ctrl + F for PC or Cmd + F for Mac and type in the term. If your query isn't there, please get in touch with the database via the contact page and we'll upload a translation.
Tax
A 'tax' is a financial charge imposed on people, companies and other organisations that governments use to fund their own expenditure. Tax funds anything a government wishes to spend it on, from schools and hospitals to energy and roads. Taxes vary heavily from country to country, so people and companies can be charged more tax or less tax, depending on which country they live/operate within.
Corporation tax
Corporation tax is a form of tax that is levied on the money that a company or legal entity earns. In the UK, corporation tax is currently set at 20% of a company's profits. This means that every company operating in the UK has to give 1/5th of any profits they make to the government, every year.
Tax evasion
Tax evasion is the act of illegally not paying the tax that a government has imposed upon you.
Tax avoidance/planning
Tax avoidance - or tax planning, depending on your viewpoint - is the act of legally using tax laws to avoid paying as much tax as you'd be expected to. This may sound like evasion, but complexity in the global tax system means that it is often very difficult to see a difference between evasion and avoidance.
Tax gap
The tax gap is the difference between how much tax a government should collect and how much tax it actually does collect. HMRC currently measure the UK tax gap to be at £32 billion but many believe the figure to be much higher, somewhere around the £120 billion mark. So that's between £32 billion and £120 billion that the UK government should receive every year, but don't due to either evasion, avoidance or late payment.
Company
A proprietorship, partnership, corporation, or other form of enterprise that engages in business.
Corporation
A corporation is a company that is usually managed by a board of directors, who are chosen by voting stock holders. The most important aspect of a corporation is limited liability. That is, shareholders have the right to participate in the profits, through dividends and/or appreciation of stock, but are not held personally liable for the company's debts.
Subsidiary
A subsidiary company, or daughter company, is a company that this completely or partly owned by another company (the parent or holding company).
Tax base
A tax base is the value of a set of assets or investments that are subject to taxation. Anything that can be taxed has a tax base.
Base erosion
Base erosion is the process of a government's, company's or person's tax base shrinking.
Tax haven
Tax havens are countries, states or territories where certain taxes are set at a low rate or don't exist at all. This is usually done by governments to win business from other countries by encouraging companies to base their operations in a place where they don't have to give as much of their profits away.
Profit shifting
The act of moving profits out of countries that charge a high rate of tax and into low tax jurisdictions. This is done by several techniques, including transfer pricing and inter-company loans.
Transfer pricing
Transfer prices are the charges made between connected companies (i.e. between a parent company and one of its subsidiary companies). As these charges are made between companies that are within the same group, they are often manipulated to lower a company's tax base. Most tax avoidance is achieved by transfer pricing.
Arms length transactions
Arms length transactions are what unconnected companies would reasonably be expected to pay each other for a transaction. Companies using transfer pricing are required to prove to authorities that the transactions they are making with their subsidiaries are "arms length".
Intellectual property
Intellectual property refers to non-physical and intangible assets. Brands, logos and ideas are all examples of intellectual property.
Double taxation
When a person or company from one country earns income by investing in another country, the question arises as to which country gets to tax which bits of the income. To sort this out, countries sign double tax agreements with each other, intended to stop people or companies being taxed twice. Many companies have abused this rule however, manipulating it so that they don't get taxed at all. This is called double non-taxation.
Common Consolidated Corporate Tax Base (CCCTB)
A proposal that the European Union should create a set of rules to determine the tax base of multinational companies operating in several countries in Europe.
Country by country reporting
A proposed financial accounting method that would make multinational companies separately report their annual accounts in every country that they operate in.
General Anti Abuse Rule (GAAR)
The General Anti Abuse Rule is a broad legislative measure aimed at reducing tax avoidance in the UK. It is due to be implemented in 2013.
Public Accounts Committee (PAC)
The committee, led by Margaret Hodge MP, is appointed by the House of Commons to examine the economy, effectiveness and efficiency of government policy. The PAC are currently undertaking a much publicised investigation into tax avoidance.
Her Majesty's Revenue & Customs (HMRC)
HMRC is the arm of UK government responsible for collecting taxes i.e. the tax man.