European Gaming Lawyer magazine Spring 2014 | Page 16

Taxation
– a question of morality?
By John Le Poidevin, former Head of Consumer Markets at BDO UK

John Le Poidevin

Moral guardians
Anyone who’s seen the UK television programme,
“Have I Got News For You”, will be familiar with their
Odd-One-Out round. So here’s a starter for ten: Pope
Francis, Rt Hn Margaret Hodge MP, President Obama
and EU Commission President Barroso. Odd-one-out
anyone?
It is of course the Pope. All of the others have
painted themselves as righteous guardians of your well
being, with speeches linking taxation to morality and
painting a picture of “evil” international companies
who immorally avoid their taxation obligations.
Apple, Amazon and Starbucks watch out.
The Pope of course is merely the Supreme Pontiff
and leader of the Catholic Church with at least some
claim to have a voice on moral issues. And while he’s
spoken out on areas such as poverty and excessive
wealth, he’s remained silent on taxation so far…..! So
when did taxation become a moral issue? And what’s
any of this got to do with gaming companies?
The reality is that unless you’re talking from a
philosophical point of view, taxation is not and has
never been a moral issue, despite what the politicians
might like you to think. International legislation
on taxation is scant - if you accept that individual
EU member states retain sovereignty through a
veto over any changes to their common overall tax
framework. There is the OECD and a plethora of
rules and agreements, but this is primarily about tax

16 | European Gaming Lawyer | Spring Issue | 2014

transparency and information sharing – not de facto
international legislation. National tax legislation is a
matter of facts and fact patterns, not moral arguments.
So when looking at tax, something is either right or
wrong, black or white, and whether something is
taxable or not is based on those fact patterns – not
on morality, which is a question of judgement and
opinion, rather than fact.
The Internet age
So why the moral response from the world’s
governments? Firstly, the national and global rules
and framework for taxation were never designed
to cater for the Internet age, which has introduced
many new possibilities of where and how operations
could be carried out by multi-nationals. Secondly,
the global recession and consequent decline in tax
revenues in the developed world has meant that all
governments are looking at new ways to increase their
revenue share and reduce their fiscal deficits. But
whilst the public protestations about tax and morality
are designed to change the agenda and make tax
avoidance “morally repugnant”, the actual response
of government has been to go back to rules, facts and
fact patterns in their attempt to increase tax revenues.
This matters in the world of online gaming because
our industry represents a microcosm of the wider
issues of taxation in a global internet environment.
The historic environment that X[