"'Immunity from Taxation'? The Anglo-Persian Oil Company, British Industry and Double Taxation After 1918"

In order to support recovery following the First World War, nation-states looked to raise revenue through higher levels of taxation. Businesses with interests that crossed national borders became increasingly concerned about double taxation – the requirement to pay tax in more than one state; historians have considered how such liabilities impacted on corporate strategy and organizational structure (see Jones 2008; Jogarajan 2018; Izawa 2022). According to one authority, multinational enterprises (MNEs) were the pioneers in the creative use of international company structures, offshore financial centres, and tax havens for international tax avoidance (Picciotto 1992). In terms of taxation, the interests of MNEs and the nation-state could be said, therefore, to be diametrically opposed. But what if the state was the owner of the enterprise? On the eve of war in 1914, the UK took an unprecedented step of acquiring a majority shareholding in the Anglo-Persian Oil Company (APOC). Unsurprisingly, little thought was given to defining how to draw the line, in a post-war world, between commercial policy – reserved exclusively for the company – and state policy. After the war, the challenge of reconciling the expansionist, market-driven interests of what was a rapidly developing MNE with the regulatory, political and geo-strategic interests of the state quickly became apparent. But, as the British government began to realise the wealth-generating potential of its shareholding, the Federation of British Industries complained that APOC was enjoying special advantages that allowed it freedom from taxation. This paper seeks to examine the validity of such claims.