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U.S. banking giant switches billions in debt to Britain to avoid paying corporation tax for 60 years
Posted By aaron On August 15, 2008 @ 7:07 pm In Economic Crisis,Old Infowars Posts Style | Comments Disabled
Merrill Lynch might not pay any corporation tax for the next 60 years, it emerged today.
The giant American investment bank, which employs thousands in the City, has made losses of $29 billion (£15 billion) for its exposure to the U.S. subprime mortgage crisis.
But it has charged the amount to its British arm, meaning it can offset the losses against corporation tax for decades to come.
Accountants say that the move, which is set to spark anger among ordinary taxpayers, is legal but unusual.
Merrill Lynch made dramatic writedowns on investments linked to the U.S. housing market. With millions of Americans now struggling to keep up mortgage repayments, the investments have sunk in value causing an economic crisis across the globe.
All big banks have suffered, but so far Merrill is the only one to charge the entire loss to the UK.
The move will reduce payments to the Government at a time when its finances are in disarray. It will also raise eyebrows in the City and cause consternation at the Treasury.
Robert Willens, a tax expert, said the move is not common. “Merrill will have to be able to say that the UK subsidiary was the owner of those securities.
“It does not matter where the derivatives unit is based or where the trades were executed. “The only thing that matters is who was the owner of the securities,” he told the Financial Times.
The paper calculates that if Merrill starts making profits again at the rate it did in 2006 – a record year – it still won’t have to pay any corporation tax for the next 60 years.
Merrill declined to comment. If the move is followed by rivals it could have a huge impact on government coffers.
This week New York mayor Mike Bloomberg said that many Wall Street firms will pay no tax this year due to their losses.
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