Just an idea ...
1) Enable all tracking in your browser
2) Visit Amazon. Research your Christmas shopping
3) Use additional browser tabs to order stuff from eBuyer, WH SMith, etc
Amazon paid just £1.8m in corporation tax in the UK despite racking up a pre-tax profit of £74m on £3.35bn sales in 2011, according to figures the web giant wanted to keep secret. MPs probing the company's minuscule corporation tax bill demanded to see Amazon's profit numbers as well as its sales performance, and published the …
Browsing Amazon is somewhat painful, unless you know exactly what you want.
So I usually browse elsewhere, find what I want cheaper from Amazon, and order it from them.
It's a shame they aren't paying much tax but until they stop being significantly cheaper than the competition, it's not worth the expense of going elsewhere for the sake of making a minor protest.
Is it cheaper on Amazon? I'll buy it there then...
EVERYONE would need to do this to make a difference and that simply won't happen so I'm not going to waste my money chasing a pipe dream.
At the end of the day they are doing everything legally and therefore it is up to parliament to sort this.
So Amazon makes Billions, that's business.
So Amazon pays little tax, there is nothing illegal here.
So the Government tries to claim it is unethical to do this, yet MP's have had their fingers in the till for years but claim 'we Woz just following the rules'.
MP's pretend to sort out expenses but then buy houses and then rent them out to each other so that they can claim housing expenses. Effectively one MP pays another MP rent using tax payers money.
Joe Public is in the middle of a recession and looks for bargains because he can't fund his expenses from the tax payer. If Joe Public find a cheap bargain because of Amazon so what.
MP's and Government need to look in the mirror.
Though titled as a report into HMRC's accounts, it is in fact all about Starbucks, Google & Amazon's accounts : http://bit.ly/Yp3VIA Have a read!
(Full link for those who don't like/scan bit.ly: http://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news/hmrc-accounts-2011-12-report/
Dunno, what are the tax loopholes being used? Can they "be closed"? Eg, Starbucks UK buys its beans from Starbucks Switzerland, at what looks like quite a high price, so that money goes down as outgoings from the UK company, and profit for the swiss company. Coincidentally, tax rates are lower in Switzerland.
How do you close that loophole? You can't buy goods from sister companies in other territories? How would (eg) HP provide laptops to UK staff? Would they buy Dells?
That's one loophole. Hey, lets get the others boxed off before tea, show these cnuts in parliament how easy this stuff really is
Key phrase in your post is "at what looks like quite a high price". There should be no problem with making inter-group transactions (as you say, it would be odd that HP couldn't supply itself with kit), but any such transactions designed solely to move profit from one tax jurisdiction to another should be restricted to normal "market" rates (assuming the business would normally buy such) or even ignored entirely for taxable profit purposes.
These are the sort of transactions, where income tax is involved, HMRC have always paid special attention to. Is the deal made for a reasonable price? What I wonder is whether the IP fees charged by one Amazon component to another are a fair price. Get the pricing wrong, and is shifts from tax avoidance to tax evasion.
On this, proving the validity of the price, or showing it's a fake deal for tax evasion, are difficult problems.
So there's an existing way to go after Amazon, but it isn't easy.
"I'd close it by calling any payment beyond cost price for a good to a company in the same corporate structure a dividend"
I'd bet that the recharge cost for staffing or other part of the process will become quite costly in some parts of the world, or would you want to add more pages to Tolley's to manage the costs of all jobs in all parts of the world?
HMRC could challenge large corporates to prove a genuine business case for unusual arrangements which smell strongly of transfer pricing.
That's what happens with e.g. cross-border leases when it comes to writing down allowances.
a) not be in pocket of big business
b) have some balls
The mistake is at the base of tax system; taxing people on the amount they work or earn in the first place. Our tax system taxes work and production in order to garnish the wages of the poor serfs physicaly stuck doing productive work in the uk. This 'feature' of our tax system also makes taxation more or less optional for the wealthy (they just need to avoid doing any actual work in the uk). Bonkers is an understatement
This isn't a tax loophole. It's actually written into the law. The company is doing exactly what the law says it may do. Explicitly says the company may do.
In order to pay corporation tax in a jurisdiction you must have a permanent establishment in that jurisdiction. And the double taxation treaty with Luxembourg (and with all other 100 of our d-t treaties, and the OECD example one) says that warehouses and logistics chains are not a permanent establishment for the purposes of liability for corporation tax.
Tax avoidance is doing what the politicians didn't intend you to do when they passed the law. Given that the law actually, in detail and explicitly, says that warehouses do not lead to corp tax liability then saying "We've only got warehouses to there's no corp tax liability" isn't tax avoidance. This is just what the law damn well is.
Maybe the law shouldn't say this, that's another matter. But it does.
"Good idea! How should they do that then? Pass a law that says don't use any of the hundreds of tax loopholes that exist, pretty please? If it were that easy, d'you not think they'd have done it by now?"
Well passing legislation would be a whole lot more effective than moralising about people and companies exploiting those loopholes.
> "Good idea! How should they do that then? Pass a law that says don't use any of the hundreds of tax loopholes that exist, pretty please? If it were that easy, d'you not think they'd have done it by now?"
Actually they have already tried exactly that. This summer, Michael Meacher MP introduced a bill with simple wording, to do exactly what you were saying so ironically: to "outlaw any financial transaction for which the primary purpose is tax avoidance/evasion rather than any genuine economic purpose."
Plain English, and would give HMRC the power to give giant tax bills to the tax dodgers.
Needless to say, the Tories voted against it. (The super-rich tax dodgers own our governments.) Needless to say, it got almost no coverage in the press. (The super-rich tax dodgers own our media.)
Read about it here: http://bit.ly/Mg5ctu
Perhaps another reason not many MPs voted for Meacher's Bill is that there's a government sponsored one which we expect to see in the draft Finance Bill on 11 December. You can read more about it here: http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm
There's a 'lively debate' amongst tax professionals about whether the HMRC GAAR goes too far, or not far enough; the debate on Meacher's bill is rather more polarised (and not really a debate).
I was interested to note in passing that even Austin Mitchell MP hadn't noticed either Meacher's bill or the Treasury proposals when he asked the head of HMRC if they had any plans to legislate on anti avoidance at the PAC hearing on the Monday before Amazon's grilling - you can see it in all it's glory at http://www.parliamentlive.tv/Main/Player.aspx?meetingId=11707 time 16:06:02
"Good idea! How should they do that then? Pass a law that says don't use any of the hundreds of tax loopholes that exist, pretty please?"
That's pretty much the argument around tax simplification.
Remember only the end customer or staff pay corporation tax.
it's referring to a piece by some uber-right wing shill in the reg last week. desperately trying to justify the stance that corporation tax was unfair and should be abolished. he failed, miserably, and he and his friend spent pretty much all day trying hard to fend off the righteous anger of me and my fellow lilly-liverd-pinko-socialist-loony-left-moron (apparently the British communist party is alive and well and all working in IT - who'd have thunk it) commentards.
Remember only the end customer pays raw material costs - so i guess it's good business practice for companies to support and install a violent thuggish genocidal regime, say in Africa somewhere, where there just happens to be a shitload of, say Coltan (no names no pack drill), then go on to make a killing in the consumer electronics business while washing their hands of the millions of killings they are responsible for elsewhere.
Even Ayn Rand would have blushed! but what do i know, I'm not an _economist_
I can take that kind of attitude from a mathematician or a physicist - they have to pass hard exams - but economists? worse than sociologists...
now where did i leave my blood pressure meds?
Steve, you haven't suggested a practical way to close just one of the available tax loopholes (you're seriously suggesting legislation should tell companies how much they can or can't sell goods for? How do you enforce that on a company like Starbucks Switzerland, which doesn't operate in the UK?)
If you can't suggest a way to do it, why do you think MPs can? Take the obvious point please, it's not as easy to do this stuff as people posting on message boards assume.
"It's referring to a piece..."
Actually it wasn't but having now had a glance they both come from the same premise. But I'm not sure I'd agree in your summation of the comments as most of the objections seemed to be insults. I'd also not agree with what you think is good business practice but I'm guess that's just hyperbole to help you reinforce what you think is a weak argument otherwise you'd let it stand on its own merits. And you set that stall out early by dropping the "shill" bomb.
Anyhow I'm sure you'll be eager to list amazons sources of income that have nothing to do with customers anywhere, and in your rush you must have forgot to put them in your post.
And finally I'm not advocating not paying tax but moving it to something like VAT, obviously there are problems with that but we're not starting from a problem free zone. One being the realignment of profits along the supply chain, another is VAT evasion, but that's something the government has cracked / cracking down on.
Put simply if a company takes £1.00 from a customer, after VAT is deducted they've got 80p turnover, this is split amongst their costs, like wages, rent, source materials, distribution and anything left is profit which is then taxed unless the company can find a way to reduce it...
And even if a company in that chain doesn't deal directly with the end customer no new money is introduced. People who object to this like to bring up business loans, but these are just borrowed against future turnover.
But I'm quite happy for somebody to point out where even the pitiful £1.8 million amazon paid in corporation tax came from if not the customers, and then any company that supplies amazon where does the money come from for them.
Well, the customers were paid by their employers, so logically their employers of amazon's customers footed amazon's tax bill, didn't they? Oh hang on, that's bollocks, follow that logic through to it's logical conclusion and the Bank of England foots everyone's corporation tax bill, because they issue the money that people use.
The tax was paid by Amazon. If they hadn't paid it, then amazon's profits would have been higher. The fact they're not shows amazon paid that bill. They weren't going to give it back to their customers if it turned out they didn't need it for corporation tax.
"Hi, turns out we didn't need your 3 quid, d'you want a cheque or postal order?"
"It's only bollocks if you can't distinguish between paying somebody for their labour and paying a company for a service, and then treating them differently."
Know why I can't distinguish between those two definitions tony? Because they're indistinguishable.
The person provides a service to you.
The company labours to provide their service.
The distinction exists only in your head, to ratify your assertion that corporation tax is paid by end customers. It really isn't. The law says it isn't. My receipts indicate it isn't. My tax returns for the year say it isn't. You say it is, based on a definition of terms you imagined to suit you. Good luck with that.
"That's pretty much the argument around tax simplification."
If the only tax would be a simple sales tax with no exceptions, special rates or other nonsense these companies would be paying their fair share with no extra government oversight. All tax problems and loopholes are coming from complicated tax law used to steer market manually.
I don't think I suggested it would necessarily be easy, but MPs collectively have the power to change tax law. Right now, all they're doing is bitching and moaning about companies doing what's best for their shareholders, when what they ought to be doing is working out how to close the loopholes (or if that's "too hard", start over with a fresh tax code).
@Steve Foster, Charles Cara at ASR, an investment research firm wrote the following which I think explains what MPs are trying to do, and what they can do, quite succinctly:
"As the OECD highlights, at its heart the problem is that corporate tax is levied at the domestic level and that different countries’ tax regimes can have differences. The overlaps where income is taxed twice are often addressed with agreements to eliminate double taxation. But there are also gaps which results in ‘double non-taxation’. As corporates have become more international, opportunities to take advantage, legally, of these gaps have increased.
The globalisation of companies has also allowed them to structure their business in a way that maximises their costs in high tax rate countries and their revenues in low tax rate countries. For instance, Amazon takes advantage of the single European market and records its sales of books in its Luxembourg subsidiary that has an 11% tax rate, while the expenses of its warehouses and delivery service are allocated to the UK subsidiary that has 24/26% tax rate. Here the ownership of Amazon’s operations and assets are artificially (although legally) split. In forging the European single market and removing capital controls, governments have already effectively given up sovereignty over corporate taxation.
The OECD highlights some methods that are used for profit shifting such as patent licenses, royalties and brand rights, which were highlighted by the UK Commons Select Committee. It goes on to include hybrid financial instruments, captive insurance entities and treasury/financing operations, as well as hybrid financial instruments.
As the OECD sums up, “While these corporate tax planning strategies may be technically legal and rely on carefully planned interactions of a variety of tax rules and principles, the overall effect of this type of tax planning is to erode the corporate tax base of many countries in a manner that is not intended by domestic policy.”"
Somebody is MAKING MONEY and is NOT PAYING THE KING'S MEN!
HOW IS THAT POSSIBLE I DON'T EVEN KNOW!
The problem is the UK has a massive deficit, missing from the fund of money that's used to provide public services like education, health, income support etc etc, and these servics atrophy without necessary cash. Laws were passed requiring companies to pay corporation tax at a procscribed rate. Companies went out of their way to go around those laws and not pay that tax. Services suffer as a consequence.
Here's a poem from the 1700s called "Sorry you're dead Mrs Miggins, we ran out of dialysis machines"
It is possible to have two separate problems which can both be independently addressed and solved, without any requirement to ignore one of them.
We're discussing one of those problems, companies dodging corporation tax. Saying another problem exists is interesting, possibly true, but not actually relevant to the discussion.
"We're discussing one of those problems, companies dodging corporation tax."
Yes but since when did "we" give any shade of a damn about companies not paying tax? It's a problem for the government but they've somehow manipulated us into kicking up a fuss about it - threatening to boycott amazon & starbucks etc. It's not the government's ham fisted attempt at running the economy, no it's all those evil corporations legally avoiding paying tax....
"it's all those evil corporations legally avoiding paying tax"
HMRC are continually stamping on schemes that are ONLY designed to minimise tax paid.
But given that their staff have been reduced by a third over the past five years, and with more going, they are rather overstretched.
If the scheme has no commercial value and is only for the purpose of avoiding tax they can refuse to accept it.
"But given that their staff have been reduced by a third over the past five years, and with more going, they are rather overstretched."
Damn that Gordon Brown man! Who merged IR and C&E to make HMRC. With the express intention, announced at the time, of reducing the head count through efficiency gains.
The plan being to reduce the head count by about the amount that the head count has been reduced.
"Until the economic crash, caused by the financial industry, government expenditure was in step with revenue.
And debt was being paid-off."
So why were we running a deficit prior to the recession? About the only time we weren't running a deficit (and "paying off debt") was a few years in Labour's first term when they were trying to prove they had the economic nous to run the economy without it all ending in tears.
Not that the financial industry gets a free pass in the ongoing shit storm but splitting up the regulatory authority into three wise monkeys didn't help things but at least it gave the politicians some nice early PR about a "Tripartite Regulatory Authority ensuring the banks don't take unnecessary risks".
Along with the Tories who were promising to match Labour's fiscal incompetence in the hope that the public would be stupid enough to elect them.
Basically we've pay a fortune for 650 idiots to tells us lies whilst they get rich. And fools decide to treat the management of the nation like supporting a football team where everything is either the fault or not the fault of the idiots in power. But thats party politics.
And these are the same companies that want you to spend more money to end the 'recession' that apparently is being created by these companies? They are as bad as the banks, if not worse.
I am remembering the names of all the companies who are exposed as tax dodgers and will stop shopping with them immediately until they change their ways. Unfortunate that it is now Amazon, I used to buy plenty from them.
But, the government / law are as much to blame, if they are the ones who set the rules then they cant exactly stand up and shout 'it's not fair' if all they have to do is change the rules?
And over 60 hours a week, maximum of 12 weeks, provide your own protective gear and boots (illegal), NO on-site parking (told to take a bus or train....)
But that £6.19 is what is paid to the worker, the agency gets paid rather more..and don't forget the 12 weeks.
Most agency workers register with several agencies to get continuity of work....but at 12 weeks there would be little holiday pay.
>Costa doesn't charge any more than Starbucks, but they are paying their taxes.
Trifling detail, but Starbucks are usually run as franchises, so it is the coffee shop owner (not Starbucks) who pays tax on a particular shop's profits.
Got to feel kind of sorry for the poor sods who put up a few hundred K of their cash to open one, only to find they are now being boycotted by people who don't understand the business model.
>@Random Handle, it is pretty easily verifiable that Starbucks stores are virtually never run as franchises anywhere in the world...
Really? I thought a third of UK Starbucks outlets were now run by Euro Garages? ...also know that Magic Johnson owned over a hundred Starbucks franchises at one point.....and my local Starbucks is owned by a guy called Phil, who thinks he's going to go bust.
Good Luck with that.... I now never buy from Amazon, or Play.com since being gobbled up by another conglom, good old Ebuyer does me for most stuff, and its local to me so supporting good old East Yorkshire to boot.
Failing that I'l, get off my arse and nip down to an indie store if I can and give my money to the local economy instead of tax dodgers from the old colonies.
I also avoid any TV featuring Jimmy Carr and change stations when a Gary Barlow song comes on.
I might order from Ebuyer a good deal more often if they didn't charge me a truly ridiculous tax for not living in one of the major cities of the UK, every time I want something delivered.
At least Amazon have that right - I live on the Mainland of the UK, no courier will have to pay parking fines to stop at my door, or congestion charges... if you're going to offer free delivery to mainland UK, PROVIDE IT or charge everyone the same rip-off rate and see how your business fares.
Well you could argue the sales figure was valid - i.e. they did make £3.35 beellion in sales - although I appreciate you effectively pay corporation tax on your profits which are much less.
The problem with Amazon is their low prices mean low profits - good for the consumer in one way but those profits head back to Amazon HQ via goodness knows where and for every job they create I suspect one or more is lost from their UK competitors.
" i.e. they did make £3.35 beellion in sales"
No, they TOOK £3.35bn in sales, they MADE £74m profit. In normal English usage, sales are takings, but you MAKE profit. (Although modern dumbed down society doesn't seem to have a clue about the difference between the two if you go by all the recent articles on this stuff.)
can anyone explain what difference it actually makes?
surely I am worse off if they transfer the cost of 26% into the cost of the goods and then I pay more VAT because the price is higher and therefore I have less money to spend elsewhere.
Is it not better for me to spread it around a bit?
beer because it is time for one.
One of the differences it makes is to other companies which are too small/honest/stupid (delete as per your opinion) to be able to wrangle out of paying as much tax as the spirit of the law requires. If Amazon payed full rate, yes their prices may go up, but that would bring them in to line with other companies who pay their tax, which makes the market more competitive, and in theory (ho ho ho) brings prices back down.
I'm thinking of beer, at least...
Yes, that's because their reported profits are a function of the tax they wish to pay on any given year. The rest of their financial statement is a wonderful concoction of make-believe used in modern accounting to shift money to the lowest possible tax while gaining the maximum in government(s) assistance.
It's expensive to do but once a company is a certain size and distributed in enough countries the framework for doing this is available of the shelf.
It's amoral and completely unethical but once it's in place shareholders and senior management whose bonuses depend on it will fight to the death to keep it in place. And the only way to dismantle it would be international re-alignment of tax laws to abolish these practices.
Which is happening precisely never.
What I object to is when a US company comes over here - no problem but when a UK company (for example Tesco) wants to open up in the US they encounter a lot more resistance. Would also be interesting to see if Tesco can siphon off US profits (not that they make any) without paying tax in the US?
Tesco is owned by Tesco PLC, listed on the stock exchange.
A joint venture between Tesco and certain pension funds which owns some of the stores is registered offshore. Tesco pays the rent which goes to Cheshunt. Then the profits come back to the pension funds which, erm, don't pay tax anyway.
Almost any International co with multiple sales-generating geographies will be thinking about doing something similar because their Big4 accountants tell them its a good idea (part of the value-add service you see).
Then the accountants hand the work to organise the necessary compliance documentation to make it fly to their in house Tax Team & generate a fee. Easy Peasy. Pretty creative to get it down so low from such large revenues in this case...
Ref @Jediben you're right, doesn't pass the smell test does it...
I like that they chose to publish the figures as they are entitled to do. Sends a good message. Too long have government types been scared by these guys. I suspect only public shame will bring their position round - all loophole legislation gets steered round if there is a will to do so. It levels the field for the other, smaller players who pay tax and don't squirrel it away into Bermuda. I don't care if amazon leave the UK market (the "deadweight" argument advanced elsewhere) - the same goods will still be sold, but with a small premium to the taxman that falls pretty fairly on those with the disposable income for these inessential items.
The problem is that the people on this site can all complain and say they'll not shop at Amazon again, but in reality Amazon are getting tons of free marketing. Notoriety is not as good as fame, but it's heaps better than obscurity - as they say.
The sad reality is that no matter how Amazon got into the news, in a couple of weeks when people are starting to think 'oh crap, I really need to get the Christmas presents in, but where can I get all this stuff and have it delivered within a day or two so I can keep going to work?', they'll be back on Amazon justifying themselves with 'well, compared to their 3+ billion I'm not really spending much of a dent am I?'. They'll end up on Amazon because the company is a name recently in their minds, and the anger over the tax loopholes will have faded away.
How about passing a law imposing a sales tax of say 20% on all UK sales for companies that sell direct to the public in the UK and are not registered for tax in the UK. That way they'd have to either register for tax promptly or lose out on all UK sales as they would instantly be 20% less competitive. With the added benefit of shoring up the high street.
That was so well written I stared at the comment and still even now wonder if you were being sarcastic or serious.
I think that people tend to forget that UK.gov still gets the VAT on sales. Corporation tax may not have taken vast amounts from them, but the government isn't going to raise too much of an outcry because such big business and numbers of sales means that they're already pocketing a lot.
Unless, and I freely admit it's very likely, my knowledge is severely lacking in this area. In which case I'll be pleased to hear non-condescending corrections.
Unless, and I freely admit it's very likely, my knowledge is severely lacking in this area. In which case I'll be pleased to hear non-condescending corrections.
I believe books are currently zero rated - i.e. they don't attract VAT.
But, as noted above, Amazon have attempted 'end runs' round VAT, too.
True, but Amazon's sales aren't down to just books, otherwise they'd be nowhere as big as they are now.
I'm sure that every company tries to find the best workarounds they can (ahah! see what I did there - once a 'loophole' is referred to as a 'workaround' it suddenly seems so much more acceptable...well, to an IT guy anyway). To me it's always been about the big question.
The question goes - have I got enough money coming in to be able to pay for the best and most clever accountants and solicitors who can get me around enough paying taxes that the rewards both pay for them AND earn me an extra-large padded envelope later on this year?
Once a company does have enough, then they seem to hit the sweet spot and take off. Just in my small, narrow view of the world.
> UK.gov still gets the VAT on sales
Not necessarily, as the location of the goods at the time of supply plays a factor in determining the VAT rate and to whom the VAT is paid. Also VAT liabilities are different if the supply is between two VAT registered businesses rather than to a consumer.
duty free at the exit from the country point is exporting the product, and may be taxable at the point of entry into another country (it certainly is when I return to Canada from the US). However, I noticed complaints about product being shipped VAT free from the Channel Islands to the UK. Why is HMC not collecting tax as these items come into the country - Revenue Canada does as product comes into Canada from outside the country - both provincial and federal sales taxes as appropriate. Probably we cannot get at the profits Amazon (or others) make when selling from outside our countries - heck, US states have that problem, but definatly Gov't Revenuers should be able to get hold of some of it.
Because the UK has a special agreement with the Channel Islands that goods below a certain value will not be taxed on entry, originally put in place to help Guernsey's flower exporters. I think the value was reduced in the last budget because of the outcry about Amazon et al exploiting the loophole.
And presumably they want all those people they employ to be able to read and write, count, and have other skills obtained at school? And when their employees are ill they'd like them to be able to see a doctor or go to hospital? And to be able to drive to work on a road, or get a bus which also uses the road? Presumably they'd also like some framework of laws and people to enforce those laws so that their goods don't get stolen from their warehouses, their PCs don't get stolen from their offices, etc. I could go on...
Now, who are we going to get to pay for the schools, teachers, doctors, nurses, hospitals, roads, police, judiciary, prison system etc.
Oh! I know! It could come out of taxation...
> BUT THEY DON'T PAY THEIR FUCKING TAX!!!
The thing is - they *do* pay their fucking tax.
They just don't pay as much tax as most of us want them to. Now we have to work out a way to increase their taxataion without doing something monumentally stupid to the tax system. And that's not an easy task...
The container port here, owned by the state government, has just had it's business rate assessment reduced from $50M to $20 (yes $20 not $20M) by the state government assessment board because it was losing money.
The city council, who the rates money goes to - still have to provide the highway, the bus service, the water, the sewage, the police, the fire service etc ....
This is where the rubber meets the road as far as taxation is concerned. The kind of taxation that can't be avoided without removing yourself from the service area - ie real estate / rate type taxation, has been marginalised in tax policy over the last several decades. We are now left providing essentially 'free' services to sites owned by entities that can easily avoid our stupid 'work taxes' by not doing much work here
The problem is, this is exactly how the EU is designed to work and with good reason. Corporation Tax is a stupid idea because the taxes either get passed on to the consumer or the shareholder and in either case it's easier to tax them at source using either income related taxes or sales taxes.
What we're upset about here is this idea that money is flowing out of the UK but that is nothing to do with tax and more to do with the fact that we sold all out big businesses to the US or China a decade go. All we have left is the banks and we seem to hate them.
Sorry, but all this huffing and puffing from media and MPs is really forgets a reality:
- Large UK companies are doing exactly the same thing overseas. Big banks etc write off huge globally consolidated losses in higher tax jurisdictions to negate paying tax in those countries for years if not decades. BP in fact did this recently in the US, so whilst it is being hit with a fine, it is making sure all the losses count against any future tax payments in the country. Many other large UK multinationals follow similar practices, e.g. Vodafone, Barclays, RBS, Shell, etc.
- The UK has one of the lowest corporate tax rates in the developed world so often is a jurisdiction where profits are declared and in turn hand over money to HMRC.
- The current practices are completely legal and in operation by most corporates. Changing the law cannot just happen in the UK, but will need agreement across the globe, something unlikely to happen anytime soon.
"The UK has one of the lowest corporate tax rates in the developed world so often is a jurisdiction where profits are declared and in turn hand over money to HMRC"
That quite simply isn't true. If you believe it is, please provide examples of corporates who deliberately structure to declare profits in the UK, rather than elsewhere, and explain why amazon, Google, Vodafone, Starbucks etc are doing the opposite. Are they just badly advised?
Here's a KPMG chart comparing corporate tax rates in major territories
So the only thing this big business brings to the UK are figures that make the economy LOOK more vibrant while money is just siphoned out of the country.
Oh and they help keep London property prices high so making more UK business unable to compete in the wider world.
It looks like the business are here for their own good not ours. We would be better off without them - unless you only live to flag wave for capitalism.
HM Treasury is so very greedy that most UK subjects do not even notice how greedy it is.
Company A with sales of £3.4 bn brought in £0.68 bn (£680 MEELLION!) to the Treasury in form of Value Added Tax returns (VAT). Yet the Treasury wants to get nasty because it just does not know how to pay itself and complete its other role as cash generator for UK civil servant perks, bonuses and top-ups.
One Council Chief Executive declared that the private sector is atrocious in many respects and mostly in how it does or more importantly does NOT pay taxes. The same commentard forgot to mention he/she/its package amounted to some £250,000 per year on top of the company car, pension perks and luscious relocation arrangements.
I could go on but I think you get the picture?
"UK civil servant perks, bonuses and top-ups"
What might these be? Top level execs maybe, but for the majority of public sector employees no medical or health insurance, supply your own tea & coffee, definitely no bonus, and a good chance of being sold off in an outsourcing deal. Oh and that top exec will have been taxed on his salary & company car, so even if he is earning a fair bit he's also paying a fair bit back at top tax rates.
You buy from a website hosted in a foreign country, owned by a foreign company, and you pay on a credit card whose offices are overseas, on a clearing system also overseas. The goods are made in a foreign country, and are shipped to the UK by a foreign courier, until they arrive in the UK, when the Royal Mail or equivalent, delivers them. They might stay in a storage unit in the UK for a couple of days before delivery and the staff are paid in the UK, pay UK taxes, the warehouse owner pays taxes, and the company pays NI.
So no, Amazon is not a UK company and doesn't pay much in the way of taxes. If they wanted to be awkward, they could pull out of the UK, close down the distributions centre, and move it to Calais, and post the goods from there, and there still won't be aUK company. there will alos be 10,000? less employees in the UK paying taxes, several more empty factory units, a whole lot less NI payments but at least no "UK companies' are avoiding anything.
There's more than one way to fleece a punter, and Amazon use every trick in the book .
Running a small Microbakery, I buy Flour from them. The Invoice shows them charging Cat at 20% on the goods (Flour), P&P is nil , therefore product = Price+20% vat. But Flour, being a basic ingredient food stuff is not subject to VAT. Complain to Amazon and they quickly refund, as they have done, EACH and EVERY TIME for the past 12 months. Why hurry to change the systems if only a small percentage of punters notice, and those that do , are offered profuse apologies and a refund.
I wonder what happens to the VAT collected from those who don't realise that such goods are not subject to VAT?
If it's cheap on Amazon, I'll buy from Amazon. They have great service.
Here's the thing: I'm done looking down on people and companies for dodging tax in this manner.
We need to stop screwing around and completely disallow trading of foreign companies in this country. That is to say, if you are to trade as a business here, any and all money needs to be taxed as if it was a company in this country, no exceptions.
Sadly, political will is flaccid as an 90 year old with a heart condition, but there it is.
This is a disgrace to end all disgraces.
How far is the UK willing to stoop? What legal or moral justification do they have, for disclosing a companys private, confidential, and commercially sensitive financial affairs. Particularly when there is no evidence that there has been any relevant laws broken by the company in question.
What the hell is going on?
Also from the comments side, the snide idiot count seems to have risen dramatically. One ignorant idiots sarcasm particularly stood out
> And presumably they want all those people they employ to be able to read and write, count, and have other
> skills obtained at school?
Yes, and those peoples parents would have paid income tax, much like Amazon deduct income tax from their staffs salaries to support such noble ends.
> And when their employees are ill they'd like them to be able to see a doctor or go to hospital?
Which is why Amazon provide them with private health insurance.
> And to be able to drive to work on a road, or get a bus which also uses the road?
Are you suggesting that Amazon employees don't pay road tax? Or tax on their car fuel? Or a fare to board a bus?
> Presumably they'd also like some framework of laws and people to enforce those laws so that their goods
> don't get stolen from their warehouses, their PCs don't get stolen from their offices, etc. I could go on...
Please do. Your self-righteous stupidity and ignorance is quite entertaining.
It's a publicly listed company. Their financial records are already, well, on record. What amazon have done is deliberately obfuscate monies earned in specific EU countries (which all have different tax laws), to make it more difficult for anyone to show they're deliberately avoiding corporation tax in different EU countries. UK MPs, trying to establish what tax is due in the UK have said bollocks to that, show us the UK breakdown. That's the moral justification.
Amazon provide warehouse workers with private health insurance? The same warehouse workers being paid £6.19 an hour (UK minimum wage for over 21 year olds). You sure about that? Lets even go along with that lie, and say they do. Private health care doesn't cover every health situation. In many circumstances private health care backs "difficult" cases out to the NHS. It's not an either/or situation, you go NHS or you go private. An example, if you intend to have a baby in a nice private water birth suite, but it's premature, who nurses the baby back to health? It goes to the nearest SCBU unit, run by the NHS.
Calling people stupid and ignorant is easy, but hollow if you don't know what you're talking about.
Their financial records are public record, because they're required to be under US law where amazons shares are listed. Any detail not in those records is confidential unless Amazon decides otherwise. Whatever moral authority HMRC, or UK MPs have for asking for records to look at themselves, I unequivocally fail to see their moral justification for publishing them, and making market specific, non-public information available to amazon competitors.
Im not sure about specific UK positions (and you'll notice I didnt mention any), but I know for the most part, healthcare is part of amazons standard offering for permanent full time employees. Heres their US page http://www.amazon.com/Benefits-Careers-Homepage/b?ie=UTF8&node=239369011. I have no evidence that its the same in the UK, but I also have no reason to suspect otherwise. Besides, even if patients are refered from private care to the NHS, the employee will have paid income tax and national insurance to cover that.
Finally, I think I know what I'm talking about, or at least you've provided no evidence to the contrary.
I think you will find if you are earning 6.19 an hour, you will pay little if any income tax (and may even get tax credits, which means the job is being subsidised by other tax payers). And, as someone pointed out above, the jobs are not permanent, they are 12 week contracts with no holiday entitlement or paid sick leave.
> I think you will find if you are earning 6.19 an hour, you will pay little if any income tax [snip]
> the jobs are not permanent, they are 12 week contracts
Are you smoking crack? Seriously? You think Amazon have no UK staff earning more than £6.19 per hour? Do any of these jobs in Slough look like they're 12-week minimum wage jobs ( http://uk-amazon.icims.com/jobs/search?pr=1&searchLocation=32963--Slough )? That's one page out of 5 of jobs that they're recruiting for in Slough - not including existing staff, or staff elsewhere in the country.
I do not have sufficient information to talk meaningfully about Fulfilment Centre short-term contractors( since I've never worked as one), but I would imagine that if they're available to work for Amazon for 12 weeks, then they're probably on the dole outside of that 12 weeks, in which case, even this one job role contributes to the UK economy by saving the country 12 weeks worth of dole payments.
Let me get this right - we're talking about whether UK employees get paid health care as part of their UK employment package with amazon, because we're discussing whether Amazon should pay corporation tax, for one reason, to help support the NHS.
You asserted that Amazon employees get paid health care. I said no they don't. To bolster your position, you provided a link saying Amazon US staff get paid health care. This would be the same US that doesn't have a national health service, and is a different country, on a different continent from the one we've been discussing till now.
D'you really need hand holding that badly? Sit down, let's see if we can find a way to simplify this for you. Imagine this block is America. And this piece of cheese is the UK. See how they're not the same?
Umm no, we're discussing whether Amazon should have to pay corporation tax to support the services that their employees need. I'm arguing that no, these services should come from income tax, and that for health in particular, that Amazon provided private health insurance.
You then raised the possibility without backing it up in any way that Amazon don't provide health insurance. Accepting that as possible, but unlikely. I could find no evidence of amazon paying or not paying for health insurance in the UK, but I'd be surprised if they didn't since that page shows they provide it in the US, and I know for a fact(from having worked there a few years back), that they provide it in Dublin. To get back to your chalk and cheese analogy, as much as we try to deny it, Ireland and UK are more like Edam and Mozarella. I bolstered that argument with the fact that Amazon employees paid income tax ( and I think national insurance )
Unless somethings changed recently the UK has had rules about transfer pricing and tax for a long time, basically you have to prove transactions are arms-lenghth fair market value, so not sure how Starbucks are getting around the coffee bean costs unless HMRC isnt prepared to challenge them on it?
Personally I'd just ask someone like Amazon to justify why their UK proft and subsequnet tax is at such a different rate from their global company results, if they can explain it by pointing to higher local costs (staff, rent, etc.) then alls good else assess their profit on the same ratio as their global business
Companies pay tax in the country they have their Headquarters, it's very easy to move the profit to that country. Loads of companies choose to pay tax in the UK on profits generated outside of the UK. But of course there's no half witted journalist reporting that because there's no army of morons clambering over each other to be outraged.
Corporation tax is in a race to the bottom, and eventually there will be none, governments will raise money from taxing at the point of sale, or taxing individuals, or wealth etc.
No. I do remember them avoiding £1 billion's worth of tax they allegedly should have been liable to pay in the UK through high interest loans repayments to other divisions of the Vodafone group though;
Also, that statement about companies paying taxes in the country their headquarters are located - what was that all about? They will do, but they're also liable to pay taxes in all the other countries they operate in. I'm not even going to bother googling, just go out on a limb and guess Vodafone's headquarters aren't to be found in Luxembourg.
You Breeteesh ar so seemplz an so shtoopeed no?
Your seeveel servants flees you an you want to geev em more no?
You work hard for your pennies an want to geev them to meeleeonairz such az fooballerz, seengerz an feelm starz but not for elth or keepeen you kleen.
Per'aps you erthleengz get wot you deserv yes?
So why not abolish corporation tax and significantly increase the minimum wage? If this was done to make the change for UK companies like John Lewis almost neutral, then those paying fair now would be no worse off, and those dodging their share would see an increase in employment costs, bringing in more cash. If it is not enough then increase minimum wage further still, based on a companies turnover, a large corporation should be able to pay more. Employees would then pay more income tax, have more cash to spend and hopefully keep the cash in the UK economy and not overseas.
There would also then be no need for all the different tax credits and the bureaucracy that goes with it, saving central government more money.
Isn't the most surprising thing here the absolute pittance that Amazon make! 3.35Bn sales vs 74m Profit! Seems like Amazon work hard for not much, given the scale of their operation and the number of people involved. I suppose this is post wages and bonuses etc.
Slavery used to be legal.
It also used to be legal to rape a woman [in the UK] as long as you married her first (as recently as 1991!)
Laws can be changed, and they often are when the behaviours that they permit are deemed to have become intolerable by the society governed by those laws.
There's one big difference there. Slavery and rape are immoral. Tax efficiency isn't.
Besides not that it's relevant ( since tax is a legal rather than a moral issue ), but Amazon pay plenty of UK taxes ( including Income tax and VAT ).
In fact Amazon NOT taking measures to optimise their tax liability would be in violation of laws requiring them to optimise value for their shareholders.
Morality is subjective. I believe Slavery and rape to be immoral. I also believe tax efficiency to be immoral. You may disagree, but your opinion's worth no more than mine.
Which laws specifically say Amazon should seek to pay as little corporation tax as possible, and please tell us which legal jurisdiction you're thinking of, and explain how that applies to their conduct in the UK. Cheers.
An opinion that puts tax efficiency on the same ballpark as slavery or rape is idiotic, and therefore, by default is less valuable than mine.
Amazon is a US company, and as such are subject to US law, which requires them to maximise value for shareholders. Obviously this obligation doesn't extend to breaking the law, or doing something that a _reasonable_ person would find immoral, therefore bringing the company into disrepute.
Amazon is taking reasonable prudent measures to minimise its corporation tax bill. It pays enough other taxes already.
> Laws can be changed
Indeed they can.
The issue here is that, for new tax laws to be effective, we'd need other countries to do the same thing. And some of those countries have a vested interest in *not* doing that same thing.
To do this unilaterally is to spark off a goodly number of trade wars. It's unlikely we'd win.
Tax on sales turnover, tax on income earned by employees, tax on profit, ...
The Treasury is probably making more out of Amazon than either Amazon's shareholders or its UK employees?
Does anyone think that the present taxation model is no longer justifiable?
Is there any worldwide corroboration in data to show that tax dependent nations have an efficient / inefficient / elitist / (put your own bit here) bunch of people dependent upon those tax revenues?
"The Treasury is probably making more out of Amazon than either Amazon's shareholders or its UK employees?"
That's a good way to form a rational argument, make shit up, and develop your point from there.
The Triads are probably making more out of Amazon than Amazon's shareholders, it's employees AND the UK treasury put together.
Does anyone think the Triads aren't as nice as everybody makes out?
I'm sure an economist will shoot my idea down in flames, but...
I understood that VAT had to be charged based on the value of an item. So if I was a motor dealer I could choose to sell you a car worth £10k for £1, but the price still has to include VAT on £10k, i.e. £2k. So if I really did sell you the car for £1, I'd be liable for the other £1999 of VAT I need to pay HMRC. I assume HMRC look for instances where the value of an item is marked down to avoid VAT.
I assume the VAT on items bought (where the VAT can be reclaimed) operates the same way? So when Starbucks pay £100M for over-inflated coffee beans only really worth £20M they get the double benefit of getting profit out of the UK to a subsidiary in a low tax region AND a whacking great amount of VAT to offset against UK VAT income. If HMRC only allowed them to claim VAT against the true value of the coffee then at least we'd get some extra VAT income which would be direct to the UK Gov coffers. At the very least we'd get some laughs at seeing how Starbucks tried to justify their coffee beans costing more than gold ;-)
Intellectual Property payments are another crafty way of getting money out of the UK for free. Why not create a new IP Tax (no...not a network tax!) where IP flowing into the UK (money flowing out) gets taxed and IP flowing out of the UK (inbound money) gets a refund (a bit like VAT). That gives an incentive for IP rich companies to come to the UK and maybe bring more business with them. There would need to be rules preventing companies from just sheltering their IP divisions here though.
If a company like Argos was actually able to compete with Amazon I would much rather do business with a UK based company that pays UK tax and complies with UK data protection laws. Amazon.co.uk's data controller is based in Europe so as soon as you start using their services your rights as a UK citizen are not being upheld.
The law should be changed so that any company operating a .co.uk website should be based in the UK, pay the proper tax and comply with our laws.
Thankfully not everyone has your narrow-minded, protectionist viewpoints. If the likes of Argos can't compete with Amazon, and I've no reason to believe they can't, then it's because they're less efficient. Inefficiency isn't something that we as a society should be rewarding.
As for data protection, do you honestly believe that Irish data protection laws, where amazon.co.uk is hosted ( http://network-tools.com/default.asp?prog=express&host=amazon.co.uk ), are weaker than the UKs?
If you believe that only UK based companies should have a .co.uk domain name, would you by corollary believe that UK companies should not have foreign domain names. Should the likes of Tesco and Vodafone be denied .ie, .fr, .pl, and .de etc domain names?
What law exactly do you plan on changing, so that companys operating in the UK "comply with our laws"? Surely ( by definition ) it's already illegal not to comply with the law.
Amazon is probably a drop in the ocean compared with some of the big players. The amount of wealth going through those tax havens is incredible. Every big business and wealthy individual will be paying top accountants to minimize their taxes.
In a world of globalization, where the new superpowers exist cross-border - who exactly do they pay their tax to?? There is no global tax man.
Agreed - but it seems the UK model of many depending upon taxation for elaborate lifestyles (I take the point that not all are on high incomes but that just seems to be a form of human shield protecting those on too much dosh).
And if it is okay for multinationals to play the market what can't consumers play the market too?
Do I really need to pay UK tax on something bought from another country - is it not sufficient to pay tax once say in the place it was purchased from?
If the Treasury seeks my support (can't think why tho) why can't it summarise all the tax revenues direct and indirect including local taxes and council taxes paid by Amazon, its employees and third parties dependent upon Amazon for at least some turnover.
My guess is that in top-heavy, fat cat, over taxed UK the Pay As You Earn taxpayer is being milked unto the squeaky bits squeak.