U.K.'s Biggest Optical Group Gives Guernsey Better Tax Vision

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By Ben Stupples

Squinting at your computer screen? You “should’ve gone,” as its slogan goes, “to Specsavers.”

Specsavers, the U.K.'s biggest optical retail chain by market share, will similarly give the island of Guernsey clearer tax vision through the global tax reports it has to file by the end of 2017.

Guernsey, a U.K. crown dependency, has faced criticism for a lack of financial transparency, helping to foster tax avoidance and evasion. However, as one of the jurisdictions collaborating on the OECD’s 15-action project against tax avoidance from multinational companies, it has implemented the organization’s four compulsory measures—including the global tax reports.

Known as country-by-country reporting, the measure is the OECD project’s 13th and most widely adopted action, aiming to provide a transparent picture of multinational companies’ profits and tax paid by jurisdiction.

Guernsey-based Specsavers is currently the only company filing the reports, applying to companies with annual revenue of at least 750 million euros ($839.4 million), to the island’s tax office.

By contrast, around 300 U.K.-based multinationals will have to file country-by-country reports to Her Majesty’s Revenue and Customs, the U.K. tax authority, according to a February 2016 policy paper.

‘One Entity’ for Guernsey

In a June 8 email, a Specsavers spokesman told Bloomberg BNA the company—which is active across Europe, Australia and New Zealand—will file its country-by-country reports in Guernsey.

Gavin St. Pier, meanwhile, Guernsey’s most senior politician, told Bloomberg BNA in a June 10 email that “the authorities are only aware of one entity that will be filing CbCR reports” to the island.

That figure “may change,” though, as the filing date for the reports approaches, he added.

2016 Consultation Process

Guernsey introduced country-by-country reporting after consulting on it through the second half of 2016. According to a Jan. 10 government circular document, it applies to accounting periods starting on or after Jan 1. 2016, making the final day of the 2017 calendar year the deadline for the reports.

If the country where the company is headquartered hasn’t yet implemented country-by-country reporting, the company can choose another country as a substitute parent entity in which to file.

During the territory’s consultation on the introduction of country-by-country filing, two entities suggested they may file country-by-country reports in the island, but one of the companies “subsequently advised it would, in fact, be filing elsewhere,” St. Pier said June 10.

Guernsey does not yet know how many entities may choose it as a substitute parent, he added.

Richard Murphy, a tax justice campaigner and academic who wrote the first draft of country-by-country reporting, told Bloomberg BNA companies will benefit from submitting the reports.

Companies “will greatly appreciate country-by-country reporting as a way of proving that their tax affairs, profit apportionment, and so transfer pricing, are in good order,” he said in a June 4 email.

Highest U.K. Market Share

Set up by two Guernsey residents in 1984, Specsavers had sales of 2.2 billion pounds in the year ending in February 2016, according to its latest annual review. In 2016, the optical retail chain accounted for the highest market share on the U.K.’s high street, according to a March 2017 research report.

On its website, Specsavers describes itself as “the world’s largest privately owned optical group.” In total, the company has more than 1,800 stores. Some 750 of them are across the U.K. or Ireland.

To contact the reporter on this story: Ben Stupples in London at bstupples@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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