Nissan settles tax dispute with Revenue
By James Mackintosh in London
Published: November 10 2004 22:41 | Last updated: November 10 2004 22:41
Nissan has paid the Inland Revenue more than £37m after the Japanese carmaker was accused of shifting profits from its UK factory to countries with lower tax rates.
The settlement is almost as much as the £45m government grant given to Nissan this year and last to secure the future of its factory in Sunderland.
The Revenue, which had threatened court action, is still investigating rival carmaker Honda on suspicion that its profits in the UK are too low because it undercharges its foreign subsidiaries for British-made cars.
The Revenue probe into the two companies was first revealed in the Financial Times in July.
“We never agreed with what they [the Revenue] were saying but we didn't want this to be dragging on forever and ending up in the High Court, which would be very expensive and time-consuming,” Nissan said. “We made a small concession in order to bring this to a close.”
Honda was hit by a similar investigation this summer by the Japanese tax authorities, who accused it of shifting Y25.4bn (£129m) of profits from motorcycles to its Brazilian subsidiary. Japanese tax officials have demanded an extra Y13bn of tax, which Honda said was “totally unacceptable”. The moves reflect fears among national tax authorities that they are losing income to lower-tax regions because of globalisation and the growing power of multinational companies.
The Organisation for Economic Co-operation and Development estimates that more than 60 per cent of world trade takes place within multinationals, and several groups of tax authorities are studying how to ensure they pay the right tax in the right place.
Under its deal with the Revenue, Nissan's UK sales subsidiary surrendered £20m of tax losses, which would usually be set off against future profits, while the factory handed over £12.5m of tax losses and £4.5m in other payments.
Nissan is the UK's largest car exporter but by the start of last year had accumulated almost £100m in tax losses. British-based Honda Motor Europe had losses of £216m last March, the start of its last tax year. Honda's Swindon factory has never made a profit and lost £43.6m last year.
David King, company secretary at Honda, said the Revenue's investigation was a few months behind the process at Nissan, but the company was, nevertheless, confident of its position. The Revenue refused to comment on Wednesday.
(FT.com)
. Looks like it won't cost them much then
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Originally Posted by seedyrom
bigtime, the darker MR ones do look better.
