1. 25% tax on profits and my point that they can write off the entire start up and shut down costs off the taxable profits. I presume we don't disagree that they can, as this is part of the deal. I'm also not arguing that this isn't a "cost" either. But, my understanding is that the deal isn't specific enough as to the type and nature of costs that can be used to avoid tax. In my opinion it leaves too much room for some grey accounting that will always be offset as set up costs. This could be training, IT training, relocation costs for staff, and so on. The example of the film industry is just one to show that people can be creative with accounting to demonstrate they never make a profit and pay a tax.
A good friend made this exact point to me, and I couldn't persuade her otherwise. But I will try to be persuasive so here.
The reason that oil and gas companies will declare profits truthfully is that;
1/. They are mostly companies owned by shareholders. If you don't have profits your market share falls drastically.
2/. There is independent regulation around declaring false values on the stock market, and also every country has its own tax fraud team. I can't imagine there is too much tax fraud in the gas and oil industry that goes unnoticed.
3/. There is enormous effort by these companies to protect their name. Their name is an extremely valuable asset. They won't risk that by committing fraud. For example, it is actually cheaper for them to spend millons on protecting the environment than to pollute it. Last year the oil spill in The Gulf of Mexico almost finished BP as a company. They were very nearly bought over.
4/. A corporation is full of people who come and go. Some have loyalty to the corporation, other don't. Nobody comes in and commits fraud on behalf of the a corporation when they know they could find themselves individually criminally liable.
Companies will take advantage and write off as much tax as it should. But the profits are still enormous. And so is the return to the taxpayer.