Letters: Multinationals are exploiting R&D tax breaks

The unstated story about Apple and taxes (How one Irish woman made $22bn for Apple, 29 May) is the problem of determining where value accrues in a digital transaction. If I import a novel in a country that charges duty, VAT or sales tax, the postal service may intercept it and charge me the taxes. If I buy a digital edition, it arrives via the internet and I pay no taxes. Traditional models of corporate tax, sales taxes, VAT and duties no longer apply. While some may castigate Apple for taking maximum advantage of the failure of tax codes to keep up, they have at least alerted us to the problem, and it’s potentially fixable, if with significant effort. I am disappointed that Apple has played this game to the extent it has, though the company still has a long way to go to be as ethically compromised as other similarly large multinationals.
Philip Machanick
Rhodes University, Grahamstown, South Africa

• One of the greatest benefits the modern state provides international companies, such as Apple and Google, is the protection of their intellectual property rights. These are monopoly rights to exploit a given piece of intellectual property by preventing others from using it in competition. It is against the law for a competitor to sell an exact copy of an iPhone. This is responsible for the huge profits that these companies are able to make, as evidenced by the royalty charges these companies make to their UK subsidiaries. Even a company selling coffee claims it is worth over 5% of its turnover. In Victorian times, companies paid the government for the rights to exploit a monopoly. The present government is now giving tax breaks for the development of intellectual property via its R&D tax credit. Now is the time for the government to start taxing the profits that arise from the exploitation of them. A first step could be to stop allowing companies to treat them as a tax-deductible expense in order to move money abroad to tax havens.
Nick Bion
Reading, Berkshire


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