07/11/2017 BBC Business Live

This is Business Live from BBC

News with David Eades

and Jamie Robertson.

Tech giant Apple has

a pile of cash worth tens

of billions of dollars in Jersey

where it pays no tax.

Live from London,

that's our top story.

On day two of the Paradise Papers,

fresh revelations from millions

of leaked documents shines

the spotlight on the

offshore tax business.

Also in the programme...

US President Donald Trump

is in South Korea with the North's

nuclear ambitions and trade

high on his agenda.

Let

high on his agenda.

Let us

high on his agenda.

Let us have

high on his agenda.

Let us have a

high on his agenda.

Let us have a look

high on his agenda.

Let us have a look at

high on his agenda.

Let us have a look at the

high on his agenda.

Let us have a look at the markets

high on his agenda.

Let us have a look at the markets as

high on his agenda.

Let us have a look at the markets as

well. The European perspective here,

again everything heading up, as we

have seen right across the globe.

Record highs from Asia right through

to the States. We will keep across

that for you.

And we'll be getting the inside

track on second-hand motors.

The market is booming,

but with tougher emissions rules

coming in, we ask an expert if

buying a used car makes any sense.

Today we want to know,

is it worth buying a second car

-- second-hand car when emissions

rules are getting tougher?

Let us know.

Just use the hashtag #BBCBizLive.

Hello and welcome to Business Live.

There are new revelations

from millions of leaked documents

known as the Paradise Papers.

The technology giant, Apple, has

been managing most of its untaxed

cash reserves offshore,

on the Channel Island of Jersey.

It moved the money to Jersey

after a tax loophole

in Ireland was closed.

Although the company has

done nothing illegal,

its tax arrangements have been

criticised by EU and US officials.

Our business editor,

Simon Jack, reports.

A rapturous reception for the latest

iPhone, the most popular and

profitable consumer product of all

time, generating hundreds of

billions in profit for Apple since

it was introduced ten years ago.

What these papers show is just how

determined Apple has been to keep

the tax bill as low as profitable

and how keen some governments,

lawyers and advisers have been to

help them do it. For many years,

Apple sent profits made outside of

the Americas to Ireland where an

elaborate corporate structure meant

it paid nearly no tax on the

billions it was making. Taxes that

would have been due to the US where

politicians started applying

pressure to a defiant Apple CEO.

We

pay all the taxes we owe, every

single dollar. We not only comply

with the laws, we comply with the

spirit of the laws. We don't depend

on tax gimmicks.

No more fiendishly

complex tax arrangements, right?

Wrong. Documents obtained from the

law firm Appleby based in Bermuda

showed that when Ireland shut the

scheme down, the company went

shopping for a new way to keep the

tax bills low. A questionnaire was

sent to the offices of Appleby in

seven tax havens, all British,

including questions that may the

intention clear. Can you confirm an

Irish company can conduct management

activities without being subject to

taxation in your jurisdiction? After

this offshore beauty parade, Apple

plumped for Jersey and company

accounts published since its show

there has been no discernible

increase in the rate of tax paid

worldwide. Apple has done nothing

illegal, but hundreds of billions of

dollars remain entangled in a web of

low tax jurisdictions seemingly

beyond the reach of any government.

The tax equivalent of outer space.

As the documents show, it is a

system that has continually eluded

international attempts to reform it.

The boss of the international

organisation trying to fix this

problem admits it is a work in

progress.

Changing the rules that

make it legal that today many of

these companies actually pay very

little or no tax at all, this is

what it is about, this is what is

happening and this is what we are

working on.

Apple pays a lot of tax,

more than any other company in the

world, but not as much as many think

it should. It is not alone. Other

multinationals use similar

structures and US companies alone

are estimated to have over $2

trillion stashed offshore. The

Paradise paper showed the lengths to

which they and their advisers are

prepared to go to keep tax bills

low.

Andrew Walker, our

economics correspondent.

How much money are we talking about?

The Paradise Papers, the Panama

Papers, as opposed to that, what

order of magnitude are we talking

about?

The question of corporate

tax, that is what the Apple aspect

is about, the Organisation for

Economic Co-operation and

Development, its head was in the

package of Simon's just then, they

have published estimates, they

reckon that the shopping around for

tax jurisdictions and using clever

means to avoid corporate taxes, they

say it accounts for something

between 4-10% of corporate tax

revenue.

Paid around the world?

Putting a figure on that, the OECD

puts a range of between 100 and $240

billion a year. It is very

substantial money. It is an issue

for any government that wants to tax

businesses, but the OECD makes the

point it is particularly troublesome

for developing countries because

they are more dependent on corporate

taxes, rather harder for them to

raise things like income tax.

What

do we do? None of it is illegal, as

far as we know. What is wrong? What

can you do? You cannot tell a

country, you have to run your taxes

this way.

Exactly. There is work

going on in the OECD, bringing

together many governments around the

world, looking at things like

transparency, exchange of

information between jurisdictions so

that they know what their people are

getting up to overseas. Also, there

is an initiative designed to deal

with some of the loopholes. Things

like mismatches in the way tax

arrangements are devised between

different countries so things can

fall through the cracks. Issues of

transfer pricing when different bits

of a multinational corporation shift

income around within it and they

charge different subsidiaries for

particular services and the prices

can be set in a way that is

artificial with the intention of

avoiding tax. Those are the issues.

The ultimate objective the OECD is

looking for is to try to get to a

system whereby profits are taxed

where the economic activity really

takes place, where the profit is

earned. It is challenging.

Interesting definition, we could

talk about it for hours, but we

don't have ours. Thank you. More

in-depth comment and analysis on

that story. You know where to go.

Just head to bbc.com/news.

We will keep the developments coming

in as well.

Let's take a look at some of

the other stories making the news...

The Japanese car giant Toyota has

reported a 13% rise in net

profit for the first half

of the year.

The car maker made

more than $9 billion

in the last six months.

Toyota says the results

were helped by cost-cutting

efforts and a weaker yen.

There are reports that

Walt Disney is looking to buy

the majority of Fox.

CNBC and the FT say

the deal would involve

the group's movie studio -

20th Century Fox -

along with other global assets,

including National Geographic.

Fox has been struggling

with falling customer numbers

as subscribers switch away

from traditional cable networks.

Indonesia says it will summon

executives from messaging services

and search engines,

including Google,

to demand they remove what it

says is obscene content.

Meanwhile, Indonesia has dropped

a threat to block Whatsapp

after Gif- animating images

were taken off the service

in the country.

US President Donald Trump has

landed in South Korea,

with the North's nuclear ambitions

high on his agenda.

Trade will also be a key focus

for Mr Trump, who wants

to renegotiate the US-South Korea

free trade agreement.

Mark Lowen is in Seoul.

Nuclear or trade, which is topping

the agenda, getting most attention?

Trade is getting some attention and

there have been Thai raids by

President Trump against the free

trade deal, Corus. He has called it

a horrible deal. It seems the two

leaders, President Trump and Moon

Jae-in, trying to get on the same

page to work out a renegotiation

that would work for both countries.

President Trump has talked about how

it has created a trade deficit for

the Korea in terms of cars and other

imports. -- South Korea. The number

one issue is North Korea and Donald

Trump has been speaking, he has

talked about how Kim Jong-un is that

a dictator threatening millions of

lives and we cannot allow North

Korea to threaten everything we have

built. He has given a very clear

message to China and Russia in

particular who he has said must

cease all trade entirely with North

Korea, including the oil and coal

they import from the north. Donald

Trump says that kind of trade with

the hermit state is unacceptable

because it provides financial means

for North Korea to continue to

develop its weapons programme.

Thank

you very much. Another look at the

markets here. You will see an awful

lot of green from everywhere pretty

much. Australia up 1%. A record high

in the ten years, 1.39%. The Dow

behind me, up again. Records,

across-the-board, everyone is up.

Even the FTSE is up, even just a

teeny bit.

And Samira Husain has

the details about what's ahead

on Wall Street Today.

On Tuesday, a hotel chain will be

reporting earnings. The company's

profits will benefit from its

acquisition of another hotel group

and robust demand in business

travel. Investors will be looking

for the company's outlook for the

rest of the year. Also reporting,

luxury handbag maker Tapestry,

formerly known as Coach. The name

change will not helps sales growth.

It pulled back infantry from

department stores that sold bags at

heavy discounts. Analysts have said

the market for handbags is getting

better in North America so that may

help. Finally, consumer credit

numbers will be released by the

Federal reserve and it is expected

to show outstanding credit for US

consumers is up to $18.5 billion.

Compared to 13.06 billion from the

previous month.

Joining us is Jeremy Stretch

from CIBC World Markets.

All of the markets, gangbusters at

the moment, why?

Global synchronised

recovery. Growth is moving higher

and pretty much in all continents

and regions. We are continuing to

see interest rates relatively low

despite the hike we saw in the UK

last week and hikes in the US and

the upcoming hike in the US before

the end of the year probably. The

economic environment remains

relatively benign, notwithstanding

the political risks, and investors

are looking for opportunities to

invest cash.

Interesting point, the

political landscape is unstable. A

right mess, many would say. This is

almost bucking the direction of

politics.

That is true. In a sense,

looking at the fact President Trump

is in South Korea, it was only two,

three months ago, we were seeing

increased degrees of tensions,

creating some market instability,

but markets are looking through the

short-term political risks and

looking at the broader macroeconomic

trends providing opportunities for

investors but investors have to be

nimble. You have to accept there

will be volatility over periods and

that suggests the upward trend will

not last indefinitely.

What is the

weak spot? Put aside the political

one, as far as political problems

are concerned, it could be anyone of

those things, are any economic

witnesses Murray weaknesses?

Fundamental soundness of the

company? -- economic weaknesses?

Slowing in consumer spending is

something we have to be mindful of.

The uptake we are seeing in the oil

price raises the spectre, low-level,

but the spectre of inflationary

pressure. What will happen in times

of -- in terms of average earnings?

Unemployment has fallen to a

remarkably low levels but no impetus

on average earnings. If earnings go

up because of labour shortages, that

may have an impact in terms of what

central banks will do. Markets

assume they will be relatively

modest in terms of interest rate

tightening cycles over the next

year. If average earnings go up in

conjunction with support from the

oil price, that might be the

catalyst from an economic standpoint

to create instability and suggest

the uptrend has at the very least a

pause if not a modest correction.

Stay there, we will be back with you

to look at the newspapers in a

moment.

Still to come...

Planning on buying a new car?

The second-hand market is growing

fast, but will tougher pollution

rules put the brakes on growth?

You're with Business

Live from BBC News.

Now, the lead up to Christmas

usually has most of us

stocking up on presents.

But new data from Barclaycard shows

that consumer spending fell by

2.4% last month.

One in three said the last

week's interest rate rise

would change their spending habits.

Fran Boait is the Executive Director

from Positive Money joins us

now from our newsroom.

What's the reason why spending is

falling? Can we pin it down to

anything?

Hi. So consumer spending

is still growing, but the growth is

falling and we can see that that is

happening because of forming

factors, families and people are

feeling the squeeze from inflation.

That's hitting 3% in the UK. Also,

obviously, there has been the

interest rate rise and people were

anticipating that. Ongoing

uncertainty on the UK economy with

Brexit and finally the wages

falling. In the UK we have seen

wages falling for the longest time

since the 1800s and wages stagnating

for even longer. So...

Sorry, that's

a bleak picture. But that interest

rate rise nonetheless, we heard Mark

Carney saying very, very gradually

there will be any further increases.

Do you think that most consumers

have yet in a way to take that into

account? They are still fearful

something else is going to happen

tomorrow, next week, the week after

next?

Absolutely. There is a bleak

outlook and if we look at the

consumer spending figures there has

been a higher growth in spending on

the essentials so fuel, food,

etcetera and a kind of reigning in

on the non essentials and obviously

that is happening from these various

factors, but families are having to

borrow to make ends meet with wages

falling and the other concerning

thing is if you look at our economy,

we really grow on consumer spending.

Mark Carney said we have only seen

growth since Brexit due to consumer

spending. With all these different

factors and people having to reduce

their borrowing, they can see that

there is a bleak outlook then, you

know, we have to be kind of

concerned about what our strategy is

for the UK economy with people

having to reign in their spending.

Thank you very much indeed for that.

You can get a lot more on the top

story on BBC News which is about the

paradise papers. You can get more on

our website of the there is a

full-up date on the latest breaking

stories on the Business Live

website.

You're watching Business Live.

Let's have a recap on the markets.

The European markets are opening.

All up. We are seeing this

everywhere. It is not just Europe.

Slower in Europe than in some other

parts of the world. But the FTSE up

1.7, that's a teeny weany bit. The

DAX up and the CAC, but the other

markets we have seen across Asia and

the US, record highs.

And the oil

price as well. That's 64.

Yes.

64.

You were paying attention there.

I

was.

Now let's get the inside track

on the second hand car market.

How do you track down,

and safely buy that dream motor?

The global used car market

is projected to reach

128 million units by 2021.

So, there is much to choose from.

Frontier Car Group started business

last year and now runs marketplaces

for used cars in emerging markets

and while based in Germany it

operates in countries

like Nigeria, Pakistan,

Turkey, Chile and others.

Sujay Tyle, it is your business.

Interesting move on to the emerging

markets. What is it first of all

about them that made you think,

there is a gap here?

I mean emerging

markets have the highest used car,

the highest growth rates of the

entire world. You have this

middle-class that can afford more

and more vehicles. You see new car

OEMs coming into the market.

What's

an EEM?

An original manufacturer,

Toyota, ford, if you can bring in

trust. You can build a big business.

One thing I want to make Clear,

unlike most of the people we have in

this slot, this isn't a tech

company. This is a bricks and mortar

company?

We have built an auction

platform for you if you want to sell

your car in Lagos Nigeria, we can

give you money in 45 minutes.

You

say if I want to sell my car in

Lagos? So you're organising a

localised car auction in these

different countries, but surely the

car auctions exist already, don't

they?

They do not. They do not. You

have a small presence of really

large US or UK vises that are

manufacturer rental car fleets, but

for the average Joe living in

Nigeria or Mexico City you have zero

options to sell your car.

How do you

persuade people to move to you from

let's say honest John or whoever

they know, they come to trust and

here is a new bunch saying and they

don't know you, they don't know you

locally, saying we're going to do it

in a better way for you?

That's why

we have spent so much on building a

brand there. There is, the honest

Joe, there is no honest Joe in these

markets, they have classifieds or

non trustworthy dealers, we are

creating a transparent, trustworthy

process.

That's a big statement to

say there is no honest Joes. People

are trying to run their own

businesses. You are saying we can do

it bigger and better and what offer

more services to people trying to

buy or sell?

You think about

dealers. In the UK or the US floor

plan finances is a $13 billion

market in the US and in Nigeria, for

example, dealers are scrappy and

entrepreneurial and sleazy because

sometimes they don't have the

accesses to financing opportunities.

If you build a market place they can

we can bring financial inclusion and

then you bring trust to the market

and make the dealers trustworthy.

You call some of them sleazy. That

could be an under statement because

we are talking about organised

crime. You are treading in fairly

dangerous water, aren't you?

Well,

the first check we do on any single

vehicle is a stolen vehicle, we

check every level of fraud.

Do they

have the databases in nigh gatheria?

They do. It takes a lot of time to

plug into them.

We get, we are

getting obsessed over here about

issues about diesel though and the

difficulty of shifting diesel cars.

I am presuming in most emerging

markets, that's not an equation for

you at all, is it?

Sometimes, it is

not. Only in tier one cities. I

think it is an indirect benefit for

us. Tier three, thinking about

Nigeria, typically consumers don't

have access to vehicles because they

are expensive. Now, because of

regulation a lot of vehicles are

going to the tier two and tier three

cities.

Thank you very much.

In a moment we'll take a look

through the Business Pages but first

here's a quick reminder of how

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whenever you need to know.

Let's see what the other business

stories are. What the media around

the world has been taking an

interest in.

Jeremy Stretch joins us again.

This is from the Guardian, Trump

advises the trade deal will mean

scrapping EU rules. It means the UK

has to decide whether it is going to

do business with the EU or US?

That's stark.

If you read through

the article, there is talk about an

example of Chancellor rindnated

chicken.

It's the old favourite!

It

is something people can visualise

and find revolting or at least intin

nation is. If you the UK is going to

have a trade deal with the US at

some stage in the future the US will

be dictating the terms and standards

and that may well complicate the

situation with the EU.

That's the

word, "Dictate." It seems to be that

Will better Ross is saying, "You

will take our Chancellor rindnated

chicken."

When you are negotiating

and the US want to negotiate by

lateral deals and when you are

negotiating on a by lateral basis

then there is an ability,

potentially, to dictate more to the

other side of the other party and

that's what the US are trying to do

here at least layout in that per ram

ter. If the UK has a transitional

deal with the EU post 2019, that's

going to complicated by this

particular process.

We have to make

it clear, this is Chancellor

rindnated chicken, and not

coronation chicken. I would sooner

have coronation chicken.

We will

talk about coronation chicken at

some other point.

The wheels are

coming off.

LAUGHTER

Thanks a lot for watching Business

Live.

There will be more business

news throughout the day on the

Business Live web page.