Page 20 - OCS Workbook - Day 2 Tasks (May 2018)

CIMA MAY 2018 – OPERATIONAL CASE STUDY

EXERCISE THREE (TAXATION)

TRIGGER
Today Roberto Rossi emailed to you the following article from the China Daily, one of the largest
newspapers in China.

China Daily

Luxury Handbag Cheats come under fire

Oaktree the well-known luxury goods manufacturer has come under fire today after it was
revealed that in the last year it only paid ¥1,800 of corporation tax despite having 950
branches through China.
Oaktree is a French-owned company and is the one of the biggest players in the global
luxury goods market. It is believed to have turnover of over in excess of ¥24,000,000 per
year, meaning that it has only paid a rate of less than 0.01% corporation tax despite the
tax rate being 35 %.
The Chinese Minister for the Economy, Andros Velars, told a press conference that “It is
the Government's intention to stamp out this immoral avoidance of tax. If a company
wishes to do trade in China then it must face up to its responsibilities and pay its fair share
of tax.”

A spokesperson for the Chinese Internal Revenue Service has said “This level of
aggressive tax avoidance is totally unacceptable and we fully intend to launch an
immediate investigation.”
No-one from Oaktree was available for comment.

40 KAPLAN PUBLISHING