Saturday, January 23, 2016

Google to pay £130m UK back taxes, critics want more

Google to pay £130m UK back taxes, critics want more

[LONDON] Google said on Friday it agreed to pay the UK tax authority £130 million in back taxes, prompting criticism from campaigners and academics who said the UK tax authority had agreed a "sweetheart deal".
Google, now part of Alphabet Inc, has been under pressure in recent years over its practice of channelling most profits from European clients through Ireland to Bermuda where it pays no tax on them.
In 2013, the company faced a UK parliamentary inquiry after a Reuters investigation showed the company employed hundreds of sales people in Britain despite saying it did not conduct sales in the country, a key plank in its tax arrangements.
Google said the UK tax authority had challenged the company's low tax returns for the years since 2005 and had now agreed to settle the probe in return for a payment of £130 million.
It said it had also agreed a basis on which tax in the future would be calculated. "The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift," a Google spokesman said in a statement.
A finance ministry spokeswoman welcomed the deal saying,"This is the first important victory in the campaign the Government has led to ensure companies pay their fair share of tax on profits made in the UK and is a success for our new tax laws".
However, Prems Sikka, Professor of Accounting at Essex University said the settlement looked like a "sweetheart deal."
He said that for a company that enjoyed UK turnover of around £24 billion over the period and margins of 30 per cent, the settlement represented an effective tax rate in the low single digits for Google. "This is a lousy number and we need to know more," he said.
Richard Murphy, a tax expert who has advised the opposition Labour leader, Jeremy Corbyn, on economic policy, said the deal was "a disaster" and that, based on the turnover and margins Google enjoyed, "They should have been paying £200 million a year.
In 2014, it had UK revenues of around £4 billion pounds, according to its annual report, but has not yet published its UK tax charge.
Labour's finance spokesman John McDonnell said the government should publish more information about the Google deal.
REUTERS

Some anti-IS partners do 'nothing at all': Pentagon chief

Some anti-IS partners do 'nothing at all': Pentagon chief

[WASHINGTON] Several members of the US-led coalition attacking the Islamic State group in Iraq and Syria are doing "nothing at all" to help destroy the jihadists, US Defence Secretary Ashton Carter said Friday.
His comments mark a departure from the Pentagon's typical depiction of the 65-member coalition, which carries the slogan "One mission, many nations," and is frequently touted to highlight global resolve in the predominantly US effort to defeat the IS group.
"Many of them are not doing enough, or are doing nothing at all," Mr Carter said in an interview with CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.
"We can do a lot ourselves ... (but) we are looking for other people to play their part," he added, without singling any country out.
In a separate interview with Bloomberg TV, Mr Carter called the anti-IS alliance a "so-called" coalition, highlighting frustrations the Pentagon has with some partners - particularly Sunni Arab nations - not doing enough.
"We need others to carry their weight, there should be no free riders," he said.
Mr Carter has spent the past week in Europe, primarily in Paris, where he sought to persuade allies to step up their efforts against the IS group.
He is meeting with representatives from another 26 allied nations next month to make the same appeal.
Mr Carter reiterated calls for one such partner, Turkey, to bolster its fight against the jihadists.
Turkey is allowing the United States to use Incirlik, a geographically vital air base in the south, to strike IS targets in Iraq and Syria, but Mr Carter said Ankara needs to do more to secure its lengthy border with Syria.
"Turkey is a long-time friend of ours," he said during a Davos question-and-answer session.
But "the reality is" that it has a border that "has been porous to foreign fighters." "They're on the list ... it's not a small list, of countries that I think could make contributions that are distinctive, unique and necessary to the defeat of ISIL," he added, using an alternative acronym for the IS group.
Some Arab and Gulf countries including Saudi Arabia are nominally part of the coalition, but are now more focused on fighting Iran-backed forces in Yemen.
The United States has carried out the bulk of the nearly 9,800 air strikes launched in Iraq and Syria since the summer of 2014.
But despite calls for additional help, Mr Carter insists the coalition has the jihadists on a back foot, especially since the recapture of the Iraqi city of Ramadi and the targeting of their financial and illicit oil-selling capabilities.
In the wake of the terror attacks in Paris in November that left 130 dead, France and Britain joined efforts in Syria.
Some of the other nations to have conducted strikes in Iraq or Syria include Australia, Belgium, Canada, Denmark, Jordan, the Netherlands, Saudi Arabia, Turkey and the United Arab Emirates.
Dozens more countries, including Iceland, Italy and Panama, have pledged varying degrees of support, for instance through the training of local security forces.
Mr Carter's exasperation could reflect pressure from Washington, where hawkish critics say the Obama administration is moving too slowly to defeat the IS group.
The coalition has killed thousands of their fighters and reclaimed large areas they once held, but the jihadists are still launching attacks around the world, including in Indonesia, Afghanistan and Paris.
"They popped up in Jakarta, they popped up in Europe. They are global, it's going to require a global response," said Colonel Steve Warren, a Baghdad-based spokesman for the coalition.
The United States, sometimes referred to as the world's policeman, frequently stresses the importance of partnering with other nations in its military interventions.
Ahead of the highly contentious 2003 invasion of Iraq, the administration of George W. Bush was criticised for describing a "Coalition of the Willing" that included tiny countries such as Palau and the Marshall Islands, while major players like France and Germany sat out.
Derek Chollet, former assistant secretary of defence for international security affairs and a senior advisor at the German Marshall Fund, said today's coalition is very different from that pre-Iraq alliance.
"The world was deeply divided over the wisdom and legitimacy of US actions in Iraq," he told AFP.
"With (IS), it's a totally different dynamic. The world is completely together in the importance of fighting ISIL. Now the question is less one of legitimacy ... now it's just a question of how can we bring more of our capabilities into this effort," he added.
AFP

Security, immigration, guns top US 2016 debate

Security, immigration, guns top US 2016 debate 

[WASHINGTON] From immigration to the thorny issue of gun control, from America's flimsy economic recovery to the fight against jihadists, White House rivals are clashing on multiple fronts as they woo voters.
If the state of the economy dominated the 2012 race in the aftermath of the financial crisis, the debate over keeping Americans safe amid heightened concerns over the threat of terrorism has emerged as a primary topic in 2016.
Here is what the candidates are focused on in the run-up to Iowa, which kicks of the presidential nominations contest on February 1.
After savage attacks in Paris claimed by Islamic State extremists and the killing of 14 people in San Bernardino, California by a US-Pakistani couple, the American appetite for waging war against IS radicals grew dramatically.
The issue vaulted to the top of the list of voter priorities, according to at least two major polls, and White House aspirants - particularly Republicans - seized on the fear.
Republican frontrunner Donald Trump fueled concerns about Muslims, insisting - without evidence - that thousands of Muslims in New Jersey were seen cheering the September 11, 2001 attacks on the World Trade Center.
Mr Trump and other Republicans, including Senator Ted Cruz and New Jersey Governor Chris Christie, increased their saber-rattling rhetoric, slamming President Barack Obama's Syria policy as too weak and demanding both an intensified bombing campaign and more US special forces on the ground there.
Most Republicans also denounced Obama's landmark nuclear deal with Iran. The accord lifts sanctions on Tehran, and Republicans argue Washington gave away too much while receiving little in return.
Among Democrats, whose nomination contest has sparked less intense passion, former secretary of state Hillary Clinton, Senator Bernie Sanders and Maryland's ex-governor Martin O'Malley have highlighted what they say are the dangers of the Republican positions.
Democrats warn that such stances only highlight a "clash of civilizations" that serves as a jihadist recruitment tool.
Security issues recently have spilled into the immigration realm. The Democratic candidates are united in welcoming Syrian refugees, but Republicans say not so fast.
Mr Trump again stands out from the crowd by calling for a ban on Muslims entering the United States - a position that has sparked international outrage.
If Republican rivals believe such a policy is beyond the pale, they agree with him on the need to halt the influx of refugees from Syria and Iraq until the US administration is better able to vet those who apply.
Democrats, for their part, largely favour policies that would legalise most of the 11 million people living in the country illegally, half of whom are from Mexico.
Republicans stand vehemently opposed, although a few, like Jeb Bush, recognize the need for comprehensive immigration reform.
Once again, Mr Trump is the most bombastic of all, declaring he would build a wall on the US-Mexico border and seek to deport most undocumented workers.
It is a uniquely American challenge. After each deadly mass shooting at a school, the topic is resurrected, only to fade away.
Earlier this month, Mr Obama announced a series of executive orders to tighten regulations on firearm sales, including those conducted online.
The president's measures would strengthen the existing background check system, and allow health care providers to report names of mentally ill patients into the database.
The orders were welcomed by the Democrats, who have largely backed his push for stronger gun control.
Republicans, who are historically closer to the pro-gun lobby, reacted with anger, arguing the policies violate the US Constitution.
If Republicans are hitching their 2016 success to national security, immigration and gun rights, the Democrats have made the economic record of the past seven years their rallying cry.
The US unemployment rate is 5.0 per cent, its lowest since February 2008 before the financial crisis.
Since the crisis, more than 13 million US jobs have been created and stocks have rebounded, although the last month has seen a dramatic retreat in US markets.
There is still considerable debate over taxes.
Mr Sanders, a self-described democratic socialist, has proposed tax increases for households earning more than US$250,000 annually, as well as higher burdens for businesses and a payroll tax hike for employees to help fund Sanders's proposed US$1.38 trillion universal health care system.
Mrs Clinton, too, wants to raise taxes on the wealthiest Americans, but she opposes dramatic changes to the existing Affordable Care Act.
Republicans are broadly opposed to tax hikes, but are divided over supporting a "flat tax," a measure championed by Mr Cruz.
His chief rival Trump calls for tax cuts across the board but has suggested an increase in tariffs on Chinese goods.
AFP

Poll king Trump faces Iowa reality check

Poll king Trump faces Iowa reality check

[Washington] Poll-leading showman Donald Trump faces the first test of his meteoric political career on February 1, when voting to elect a new US president begins.
In just over a week, around 120,000 Iowa Republicans will have the first word on their party's White House nominee.
They are telling pollsters Trump is their man.
During a six-month campaign, the 69-year-old tycoon has slapped aside conventional political wisdom, blustering and brawling his way to a lead over his rivals.
"Trumpism" is "a toxic mix of demagoguery and nonsense," said former Texas governor Rick Perry, before crashing out of the Republican race as one of the billionaire's first political fatalities.
Most Americans have looked on with bewilderment as Mr Trump has insulted Mexicans, Muslims and most of the Republican establishment.
But Mr Trump's mix of theatrics, populism and refusal to do politics-as-usual has proven a potent brew.
The latest national polls show he has a 16-point lead over his nearest rival, Texas Senator Ted Cruz.
Grassroots white Republicans appear intoxicated by a candidate who exudes confidence, shuns political correctness and challenges professional politicians they see as too timid, and as ideologically suspect.
He appeals, in the words of David Frum - a veteran of George W. Bush's White House - to "people who are irked when asked to press 1 for English."
Mr Trump has also enthralled ratings-chasing television executives who are delighted to broadcast his rallies live - as long as he delivers eyeballs.
According to statistics from the GDELT Project, Mr Trump receives roughly as much television coverage as all other Republican and Democratic candidates combined.
That leaves those trailing in his wake unable to gain momentum, while saving Mr Trump tens of millions of dollars on paid advertising.
The mogul's improbable political journey was summed up by respected University of Virginia political analysts Larry Sabato, Kyle Kondik and Geoffrey Skelley.
"The political world has moved from disbelieving that he would even follow through and become a candidate, to expecting him to wither on the vine as more conventional choices gained steam, to accepting his nomination as a distinct possibility, to speculating that he will go all the way and defeat Hillary Clinton in November," they wrote.
But come February 1, none of the polls, none of the punditry and none of the noise matter.
The first-in-the-nation ballot will be the first real test of whether Mr Trump can turn celebrity into a political movement.
Doubts remain about whether he has the campaign structure in place to turn fans into voters.
If he can, it would be a political earthquake in the Republican party.
For much of the last eight years, establishment Republicans and the party base have papered over vast differences with similar tough sounding rhetoric and a mutual disdain for President Barack Obama.
Mr Trump has fueled that long-muted battle for the soul of the party.
Many moderate Republicans view Mr Trump as an unmitigated disaster: alienating electorally vital minority groups and likely handing the Democrats a third term in the White House.
For months, their mantra has been "let me know when he wins some delegates." But there are increasing signs of panic.
The National Review, a torchbearer for conservative Republicans, devoted a whole issue to attacking Mr Trump, calling him "a philosophically unmoored political opportunist" who would trash ideological consensus inside the party.
In the face of a Trump victory in Iowa, cooler heads may point out that the state is a notoriously bad indicator of who will become the party nominee, never mind president.
In the last two cycles, Iowa Republicans have backed Rick Santorum and Mike Huckabee, who did not get within shouting distance of the nomination.
If Mr Trump loses, it will be a serious test for a candidate who promised "we will have so much winning if I get elected, that you may get bored with winning." So far Mr Trump has met each dip in the polls with a fresh airtime-earning controversy.
Whatever happens in Iowa, expect more controversy ahead.
AFP

Greece's Tsipras facing the music after rollercoaster year in power

Greece's Tsipras facing the music after rollercoaster year in power

[ATHENS] He came to power vowing a debt revolution, but after a rollercoaster year of economic meltdown forcing him to abandon his election promises, a less bouncy but still charismatic Greek Prime Minister Alexis Tsipras is facing the music.
His leftist government has been whittled down to a parliamentary majority of three, his popular appeal is slipping, and Greece's international creditors do not seem to share his urgency for a debt deal to jumpstart the country's recovery.
On Monday, Greece will mark a year under the first leftist government in its history.
A day earlier, Mr Tsipras will address his party in a celebratory speech, promising that the upturn is just around the corner.
"I believe 2016 will be the year that Greece will surprise the world economic community," Mr Tsipras told Bloomberg TV in Davos this week.
"I'm confident that all our partners want a successful and timely concluded review because they can understand that time is part of our strategy," he said.
"If we manage to do it the sooner we'll leave the vicious circle and come back to growth soon." Mr Tsipras was elected in January 2015 after persuading Greeks that they no longer had to grovel to foreign powers for their economic survival.
He argued that debt-hit Greece would never recover if it continued to be tied to international bailouts focused on spending cuts and tax hikes. He promised to aggressively broker a new economic deal.
Within weeks, Mr Tsipras and his firebrand finance minister Yanis Varoufakis had knocked heads with the country's creditors - the European Union, European Central Bank and the International Monetary Fund - and the stage was set for six months of acrimonious talks that nearly saw Greece pushed out of the eurozone.
It wasn't until July that Mr Tsipras - staring into the unknown and a possible return to the drachma - ditched Mr Varoufakis and signed another economic rescue for 86 billion euros (S$132.8 billion) accompanied by more spending cuts.
The decision split his radical leftist Syriza party and the Tsipras government resigned. But the adroit former student sit-in leader weathered the storm and got himself re-elected in September, albeit with a reduced majority.
Still in an improbable coalition with the nationalist Independent Greeks party, Mr Tsipras now has 153 lawmakers in the 300-seat parliament.
Few expect his administration to complete its four-year term, and he faces an imminent challenge in implementing an unpopular pension and tax overhaul mandated by Greece's three-year bailout.
Opinion polls for the first time show Syriza falling behind the conservative New Democracy party which recently elected a liberal reformer as chief.
However, analysts argue that with an unprecedented refugee challenge on the European Union's doorstep and Britain threatening to leave the bloc, Brussels has bigger fish to fry than Tsipras.
"We think the government will manage to carry out the reforms despite its small parliamentary majority, because it wants to begin talks on debt relief," says Natixis economist Jesus Castillo.
Creditors "will not want to go back to an arm wrestling match" with Greece given the deteriorating state of the global economy and continued conflict in the Middle East, he adds.
Standard and Poor's on Friday raised its credit rating for Greek debt by one notch, saying it expected Athens to meet the conditions attached to the latest bailout package.
Greece's sovereign rating went up to B- from CCC+, which removes it from the range of being vulnerable to default.
Nevertheless, Greece's youngest leader in over a century "lost a lot of time to adapt and see reality", argues political analyst George Sefertzis, adding that the 41-year-old premier "is still in search of a new equilibrium".
Mr Tsipras is now locked in a delicate negotiation with an uncertain outcome - exactly what happened with his conservative predecessor Antonis Samaras in his final six months in power in 2014, Sefertzis says.
"We are losing time without obtaining a result, and without having a clear idea of where the negotiations will lead," he adds.
Athens has been waiting since November to begin debating relief measures for its crushing public debt - nearly 200 per cent of GDP - which is a condition the IMF has set for continuing to participate in the Greek bailout as demanded by Germany and other hardline eurozone nations.
Further delay in talks on the evaluation of Greece's reforms and debt relief could ultimately doom the new bailout, the Greek finance minister warned Monday.
"If (the evaluation) is not concluded within a reasonable time frame this programme cannot work," Euclid Tsakalotos said.
AFP

Japan accepts 27 refugees last year, rejects 99%: govt

Japan accepts 27 refugees last year, rejects 99%: govt

[TOKYO] Japan accepted only 27 refugees last year and rejected almost all applications, officials said on Saturday, as rights groups urged the government to allow more people in.
The country has long been nervous about an influx of refugees into its homogeneous society and has tightly restricted the number it accepts.
Of the thousands seeking refugee status, five were Syrian, only three of which were accepted - a far cry from the massive influx of Syrians into Europe from the war-torn Middle East nation last year.
The justice ministry said it received a record 7,586 refugee applications in 2015, meaning more than 99 per cent of requests were rejected.
Other accepted applicants included six from Afghanistan, three Ethiopians and three Sri Lankans.
The ministry said number of refugees accepted last year was a jump from 11 in 2014 and six in 2013.
The Japan Association for Refugees said despite the progress in recent years, more applicants should be accepted.
"We hope that (Japan) will hold discussions with UNHCR and NGOs and swiftly consider measures to certify refugees in line with international standards," the association said.
Human rights activists, lawyers and migrant communities in Japan have complained for years about harsh treatment by immigration officials and about conditions at detention centres.
The UN refugee agency says Japan is home to 2,419 refugees, compared to its Group of Seven ally the United States with 267,222 and Turkey, which has 1.8 million refugees.
AFP

Economic crisis rattles Brazil as Olympic year starts

Economic crisis rattles Brazil as Olympic year starts

[SAO PAULO] Brazil hoped to start 2016 making itself pretty for its turn on the world stage when its hosts the summer Olympics. Instead attention has turned to its deepening economic crisis.
The world's seventh largest economy tipped into recession last year - official figures show that 1.5 million jobs were destroyed.
The downturn is due to last throughout this year, the International Monetary Fund says.
That would be the first two-year recession since the 1930s in Latin America's economic powerhouse.
"This year started with very bad news," said Manuel Enriquez, an economist at Sao Paulo University.
"The economic outlook for Brazil is very bad for 2016 and also for the year after." The IMF said it expected Brazil's economy to contract 3.5 per cent this year and remain stagnant in 2017. It shrank by 3.8 per cent in 2015, according to the fund.
A finance scandal that sparked impeachment proceedings against leftist President Dilma Rousseff has aggravated the crisis.
"There is no confidence in the government. Businesses are mistrustful and people are afraid of losing their jobs," said Mr Enriquez.
"The banks are afraid that loans won't be paid back. All this is creating a negative atmosphere in which there is no way to stimulate demand."
Ratings agencies Fitch and Standard & Poor's have downgraded Brazil, criticizing its failure to clean up its public finances.
Aside from the political chaos swirling around the president, state oil firm Petrobras was engulfed in a corruption scandal last year.
That and the plunging oil price battered the giant company, which has dragged down the Sao Paulo stock market.
"Petrobras shares are cheaper than a cup of coffee," said Mr Enriquez.
When commodity prices were high, Brazil shined for a decade as an emerging star. The glow however faded last year as the price of oil and other raw materials that Brazil exports plunged.
Foreign investors have pulled out of the country, and over 2015 the real currency lost a third of its value against the dollar.
On Thursday the real hit its weakest point ever at 4.166 reals to the dollar, after Brazil's central bank held off from raising interest rates.
Inflation is running at more than 10 per cent, which had raised expectations of a rate rise to rein it in.
The conflicting pressures of inflation and high interest rates put the government and central bankers in a bind.
Analysts said the government feared a rate hike would squeeze the domestic economy at a painful time.
During the bank's deliberations the IMF released its dire economic forecast - and the bank soon after held off on raising rates.
"By setting the market up for a hike in interest rates but then failing to follow through, the Central Bank of Brazil has shot itself in the foot," wrote Neil Shearing, an analyst with financial consultancy Capital Economics.
"The obvious conclusion is that policymakers have bowed to government pressure not to increase rates in the face of rising inflation." Jose Luiz Pimenta Junior, a specialist trade consultant, said Brazil must diversify its exports beyond minerals and grain.
"The internal situation is complicated. The slowdown in China and the rise in US interest rates will take away capital and investments. How will we survive?" he said.
"We should think not only in terms of quantity but also quality, and go looking for growth abroad." The question of whether the impeachment against Ms Rousseff will proceed is likely to be resolved next month when Brazil's legislature reconvenes. That could be a turning point.
"There is a recession, the public accounts are in deficit and inflation is high," said Antonio Madeira, an analyst with consultancy MCM.
"On the other hand, apparently the impeachment drive is losing steam. Perhaps that can help the government recover its strength and concentrate on economic recovery."
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