From Mr Frédéric Donnedieu de Vabres.
Sir, Your analysis of WPP’s results (“WPP boosts ad spending with Google to $2bn”, August 31) somewhat glossed over the significant move of the company back to UK shores. The decision for WPP to switch back to the UK just four years after its migration to Ireland in 2008 highlights the fact that true multinational companies are now characterised by their mobility and ability to adapt opportunistically to the changing tax environment that surrounds them.
What is clear is that stable corporate tax regimes remain the most attractive harbour for big business, without the threat of shoot-from-the-hip measures, such as the tax on overseas earnings that scared off WPP in the first place.
There has been much discussion recently of tax “avoidance” and condemnation of companies that have moved abroad seeking more attractive regimes. However, we should all accept that it is incumbent on multinational boards to act in the best interests of shareholders and thus engage in legitimate tax planning activity to ensure the long-term stability of their business and maximise returns through prudent and proper planning as part of their fiduciary duty.
Governments across the globe must take note of WPP’s move back to the UK. The prospect of continual tax code changes does little to promote the stability needed for multinationals’ growth and the potential for tax authorities to penalise certain structures retrospectively, for example, is doing little to encourage investment in an ongoing environment of economic uncertainty.
Frédéric Donnedieu de Vabres, Chairman, Taxand, Paris, France
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