The decision by technology giant Dyson Ltd to relocate its headquarters to Singapore could see the company enjoy significant tax benefits, depending on where it registers the intellectual property for its next generation of products, a leading tax expert said.
Dyson sent shockwaves across the business and political worlds last week when it announced the relocation from Wiltshire County, England, which would see two senior executives move to Singapore.
Dyson chief executive officer Jim Rowan said that the decision was nothing to do with Brexit or tax, but rather to “make us future-proof.”
Experts agreed the move would have little impact on the tax Dyson pays on its current product lines.
“It is unlikely Dyson will change existing tax structures much,” said Richard Murphy, professor of practice in international political economy at City, University of London, who runs the Tax Research Web site and is a cofounder of the Tax Justice Network.
“There would be a heavy capital gains cost for moving existing intellectual property [IP] out of the UK and the UK patent box is already attractive to the company, but if it hopes to be a market leader in electric cars — and that seems to be its plan — then thousands of patents may follow,” Murphy said.
Where these patents are located might prove crucial to the company’s fortunes, Murphy said.
“Singapore does not tax income earned outside its territory and is fairly relaxed about a company locating income and IP in tax havens. So Dyson could win heavily in the long term, in tax terms, if its electric cars do prove to have a winning technology, which may give rise to largely untaxed income in any new structure,” he said.
“The change is about the movement of two senior executives and the legal entity,” a Dyson spokesman said. “This recognizes the increasing significance of Asia to Dyson. An increasing majority of Dyson’s customers and all of our manufacturing operations and production are now in Asia.”
“This shift has been occurring for some time — which we have long communicated — and will quicken as Dyson brings its electric vehicle to market,” the spokesman said. “There will be no impact on the physical location of any teams, the ownership of IP will not move and our patent-filing strategy will not change. The impact on where Dyson pays its tax is negligible.”
When asked where Dyson’s IP is located, the spokesman said: “All IP generated in the UK will be registered and taxed in the UK. We do also develop IP elsewhere.”
Singapore’s fiscal system has been lauded by a number of senior members of Britain’s ruling Conservative Party and business leaders who have been promoting Brexit.
British Prime Minister Theresa May and British Chancellor of the Exchequer Philip Hammond have said they could turn the UK into a low-tax economy — the Singapore of the West — if a deal with the EU cannot be found.
However, Murphy said it would be difficult for the UK to replicate the Singapore model.
“More than 80 percent of people [in Singapore] live in government-owned housing, so it does not need to tax people; it just charges rent. And many of its largest companies are also state-owned, so, again, local taxes on profits do not matter as much as they do in the UK, because the government gets a large chuck of local profits anyway. It can offer low taxes and not have its revenues threatened,” Murphy said.
“This is fundamentally different to the UK, where the government is dependent on tax,” he said.
Murphy said that other companies might follow Dyson’s lead.
“This could be the start of an exodus. The UK post-Brexit will not be able to impose sanctions on anyone leaving, because it would deter anyone coming in, and we will be desperate for every friend we can find. In that case, there is an increased risk that companies will leave for even lower-taxed locations, which we cannot emulate without abandoning the NHS [the UK’s National Health System], state pensions or state education.”
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Taipei Times: When do you think the hospitality industry can return to how it was before the COVID-19 pandemic? How does Formosa International Hotels Group (FIH, 晶華酒店集團) fare this quarter and beyond? FIH chairman Steve Pan (潘思亮): The virus outbreak will have a serious impact on business travel, driven mainly by meetings, incentive travel, conferences and exhibitions over the past three decades. For the past six months, many businesspeople have grown used to exchanging information on the Internet, where more people can participate. The trend might sustain for three to five years until people are vaccinated and it is safe to
DIGITAL COMMERCE: In 2016, only 2 percent of orders were delivered in Taiwan, but that has risen to 10 percent, Foodpanda Taiwan Co operations director Nick Yu said Online food delivery platforms have seen explosive growth in Taiwan this year, helped by business opportunities related to the COVID-19 pandemic, company executives said at a digital commerce conference in Taipei yesterday. When the threat of COVID-19 kept people from going out to eat, more people experimented with ordering food deliveries online, Foodpanda Taiwan Co Ltd (富胖達) operations director Nick Yu (余岳勳) said. Foodpanda started operations in Taiwan in 2012. “We experienced 5,000 percent growth in the past 24 months,” Yu said. “That’s more than the previous six years combined.” In 2016, only 2 percent of food orders were delivered in Taiwan, but that