Have heard that....
They have a very good iccountant
Apple didn't pay any corporation tax in the UK last year, according to its latest filings in the country, adding to controversy at home about its imaginative tax planning. The fruity firm's main British subsidiaries Apple (UK), Apple Europe and Apple Retail UK reported pre-tax profits between them of £68m in the year to …
They are paying a stack of tax in the US and either what they have done is legal or illegal - I suspect legal. Everyone would like to think they pay more tax here in the UK but then they are a US company and the US and shareholders would get less.
I wonder how much EE or Three or Google or Samsung pay in the UK? If anything it's the rules that are wrong that allow this.
The money just seems to get hoarded. Pretty sure the shareholders have already been asking why the hell they aren't getting a slice of the action when the company is sitting on MASSES of cash.
It gets stashed to the point of it being less expensive to fund a dividend through debt, as Apple have done, than it is to repatriate their own money for that same purpose.
Let's see - I get taxed at income, I get taxed when I spend money (and when I buy fuel, I get taxed on the tax I pay - yes, to add insult to injury the government charge VAT on fuel duty...)
So to say that companies should not be taxed twice, when citizens are taxed every which way possible...
"citizens are taxed every which way possible". Yup.
And corporation tax is just another tax on citizens - one way or another, the money to pay it comes from the customers and/or the shareholders. At least you can see the taxes you pay personally.
Corporation tax is a nice one for governments as it's easier to hide how much the citizens are really paying. But it seems they've overdone the opaqueness and now the companies are using it to their advantage. I struggle not to laugh
"one way or another, the money to pay it comes from the customer"
No it doesn't. Apple and other corporations make huge profits. They don't need to charge customers more to cover their tax bill, their profits will cover it.
If they could charge customers more, they would. If charging customers more results in reduced sales they won't. Whether that is due to corporation tax or due to them putting their prices up.
In a market of supply and demand whether the goods are luxuries, there is a level of price constraint. An excuse of "VAT" has gone up might be tolerable and will be across the board. An excuse of "we've had to start paying some corporation tax for once" will not wash.
"Dave, are you that stupid, or are you just hoping that we're that stupid?"
Evidently Dave, and politicians of any persuasion, hope we are stupid - and by the look of things their hopes are being rewarded. Over and over and over again.
1. Expense fiddling MPs
2. Out of control banks, bankers and regulators
3. Unacceptable press practices
4. Multinationals paying almost zero tax
5. MPs accepting unacceptable pay rises while all else suffers
6. Putting a 'towel folder' in charge of the economy
7. Eroding people's online privacy
9. No vision or policies that can't show results before the next election
The list goes on.
And yet, we as a people do nothing about it. Except whinge a bit on forums like this and then promptly go about our normal daily business attempting to scrape enough together to pay for the essentials which the politicians that we voted in made so expensive through their incompetent, arrogant and greedy management of the country. And then every four years, we vote in another bunch of experience-less, privileged public school boys come career politicians to carry on fucking up the country. After doing that they write a book about how sincere their intentions were and why the awful state of the country was all the other side's fault, retire in relative luxury and receive a peerage. All parties included.
Not saying I'm any different - but it seems if they brought back slavery we would all shout and scream about it for ten minutes - and then go back to watching the next episode of Big Brother.
Sure Dave, then don't tax me either. Cause I'll pay the tax when I buy stuff, using my tax free income.
Some jurisdictions do exactly that... Bermuda springs to mind. Of course, they cheat by having large import duties, and because they are a little island pretty much everything has to be imported so no-one is really any better off.
Why don't they just close the loopholes? It's all very well naming and shaming, but if the loopholes are there, corporations and wealthy individuals are going to keep on using them.
Or would that just involve a lot of work and time and money in order to close the loopholes and save more money?
OR is it that the politicians all use these loopholes themselves and are still smarting over the battering they got over tax evasion, multiple homes and expenses claims fraud that they'd rather just decry the evilness of big corporations and hope we forget about their past wrongs?
It's hard to define some of the loopholes, I think that's the issue. To steal (and butcher) someone else's analogy -
I own a banana shop, BananaCo Ltd. I make a profit buying bananas from country A and selling in high-ish tax country B, paying 20% of my profit in corp tax.
So I open BananaCo Holdings International (BHI) in low-tax country C and (on paper) have BananaCo Ltd buy all the bananas from there at a markup, keeping the profit in country C and paying less tax. There's still a profit in country B so each year BHI makes a charge to BananaCo Ltd for "brand services" and that swallows up the last of the profit and all tax liability.
Now, so far this has all been a game to avoid taxes and it's pretty obvious that's the case. But what if you have BananaCo GMBH in Germany and BananaCo SARL in France and BHI actually does do the sourcing for bananas from country A? And what if BHI does actually run (or at least finance) trans-national advertising campaigns and therefore does actually legitimately provide "Brand Services" to the various country-level companies?
Suddenly it gets very hard to draw the line as to exactly where the tax avoidance kicks in, what's a legitimate expense, what's just profit transfer and what exactly the taxman ought to be assessing.
It's clear that when the likes of Apple pay zero tax in the UK there is something wrong, but I don't get the impression this is very easy to fix. One way that's mooted is to try and have country C push up its tax rate to the same sorts of levels as country B. But why would they do that? They can have a tiny share of a huge amount, or they can have nothing (the companies wouldn't be there).
The governments who are lambasting the large firms for "exploiting loopholes" in tax law to their advantage don't want to change the law because the repercussions are difficult to foresee accurately. If they try and make the changes revenue neutral, or even favour the govt a little bit so some new tax money comes in, there could be a rebalancing in the market that actually makes the govt tax revenue position worse.
So rather than try and fix the problem (and remember, the govt created the problem in the first place by implementing the exceptions that are now being exploited), they try to shift the blame to the companies.
The sooner the electorate stop buying the male bovine offal shovelled out of the "Public Accounts Committee" or the US equivalent the sooner the problem can be fixed as the politicians suddenly realise their re-election may depend on it.
because it's not that simple. If it was, there wouldn't be any.
Different countries treat the same transaction differently. For example, in the US if a corporation has paid tax in prior years and makes a tax loss this year, it can 'carry back' the loss and get a tax refund from the IRS. This is entirely fair if your idea of what is 'fair' is the simplistic notion that companies should only be taxed on their profits. If you make £100 in profit this year and pay £27 in tax, but in the following year you make a loss of £101 then you should be entitled to a full refund of the £27 because you haven't made a 'profit' - you've made a £1 loss.
The illustration is a simple one but it shows just how ridiculous the concept of a 'fair share' is.
So me as a lowly PAYE employee makes £24000 this financial year and pays tax on it, then next financial year when I spend most of it lying in hospital/home being seriously ill I'm entitled to a refund....
Like fek I am
A corp that makes £1000 profit in one year should damn well pay your 27% tax on it
If I cant evade the tax, if the small business I work for cant evade the tax.. why the damn hell should a big corp be able to?
One reason is because what does the corporation get for paying the tx ? Health Care,m nope, corporations don't use the NHS, Education, nope, and so on. The Employees use those things and pay for them (or some of them do), shareholders also pay taxes.
The only reason to tax companies is because you can, you can fool the sheeple into thinking that it's not them being taxed it's Apple, or Google, or whoever, and most sheeple are too stupid to realize that they do pay that tax, by paying for the products or services of that company, or as an employee by lower wages, or as a shareholder by lower returns.
And who is foolish enough to even try to mention "austerity", the UK government is spending more each year, and face it, austerity DOES NOT equal slowing down the rate of growth. Greedy bastards.
One reason is because what does the corporation get for paying the tx ?
Roads, healthy, educated employees, you know, a society to operate and profit in.
"The only reason to tax companies is because you can, you can fool the sheeple into thinking that it's not them being taxed it's Apple, or Google, or whoever, and most sheeple are too stupid to realize that they do pay that tax:"
Errr, no. The people don't pay the tax. The company does, or rather it should. This is just another libertarian canard. At the moment the money just disappears out of the country, tax would keep some of it in country. An effective tax would also allow smaller, local (to the country) companies to compete with the multinationals and keep even more of the money we spend circulating in our own economy rather than being spirited away.
"One reason is because what does the corporation get for paying the tx ? Health Care,m nope, corporations don't use the NHS, Education, nope, and so on. "
This is not correct. Corporations do benefit from health care. Healthcare provides them with healthy workers who generate healthy profits. Healthcare also provides them with healthy customers who earn more money and can afford to pay for their products. The same is true of education, law enforcement, infrastructure.
Wealthy countries lead to wealthy corporations and wealthy corporations should lead to wealthy countries in a virtuous circle.
The problem is that not paying your fair share of tax penalises everyone else but you gain. It is parasitism. In my opinion, the way forward is to load cost onto companies who do not pay sufficient tax with an operating costs to make good the tax losses. Base it on turnover and charge fairly (from the point of view of those who compete with tax avoiding corporations) so that corporations cannot avoid the 'costs of doing business even though they avoid paying tax'.
"In my opinion, the way forward is to load cost onto companies who do not pay sufficient tax with an operating costs to make good the tax losses."
Like some form of Value Added Tax added to the cost at retail, even better, the retailer can collect it on behalf of HMRC & HMRC can give them a percentage cut for their troubles ;)
@AC: "what does the corporation get for paying the tx ? Health Care, nope, corporations don't use the NHS, Education, nope, and so on."
So who paid to educate their workforce and to provide the infrastructure to enable them to get to work? Multinational corporations using these tax avoidance schemes are parasites.
Such Corporations do actually benifit by exploiting their Uk employees with wages only livable on through subsidies from welfare, Nhs, education, they also benifit from using the infrastructure, the legal system (Apples main r&d!) which of course is all funded by taxation from you, me & small medium businesses.
So I do object to seeing my tax being sucked out of our economy,bolstering these corporations profits, giving them an unfair advantage over local competition & increasing the tax deficit.
"A corp that makes £1000 profit in one year should damn well pay your 27% tax on it"
That is the point - they do not make the profit - they siphon it off in licensing fees, other (legal) deductions, loans from one group company to another to ensure the costs lie in high tax jurisdictions (to wipe out any profit) and the profits end up in tax havens / low(er) tax jurisdictions.
If you were a multinational would you setup shop in an area that charged 10% tax or 27% tax if it were all part of the lovely open EU and you could freely ship product within that area?
If only it were that simple.
Legislators are only able to act unilaterally. Mega Global Incs cherry pick national differences and effectively lie about the value of goods and services along their own supply chain.
The holes don't really exist until they are dug out by the teams of accountants used by the tax dodgers.
Apple tell the Irish taxman that many of their Irish subsidiaries have no employees and conduct all of their business outside of Ireland, any profits, under Irish law, are not taxable. It follows that Apple employees elsewhere must be conducting the work on behalf of these subsidiaries. Those employees are effectively loss makers for their true employers, which is great for Apple because it helps them to artificially reduce profits (and taxes) there as well.
It is difficult to see what any single country can do. More complex tax laws will penalise smaller firms that will have to pay more in accounting fees and merely result in the large tax dodgers just paying their own accounts more to find new loopholes.
If tax authorities were allowed to audit the whole supply chain across national boundaries things might be different but they ain't .
Except, when a large number of EU legislators got together and acted multilaterally on this matter, they created something called "The Maastricht Agreement", which states that a company doing business in the EU need only pay tax in one EU jurisdiction. This is the main "loophole" the tax campaigners have been complaining about, and it's not a loophole at all: it's the very intent of the law, not a sneaky way round it. I can't help but notice considerable overlap between people who object to companies using the Maastricht Agreement now and people who objected to anyone suggesting that John Major shouldn't sign it at the time.
The Government wrote the laws and rules for these taxation regulations. Many of these International Corporations have the tax rules originally written in the various treaties between each of these Nations. So if the UK Government doesn't like the tax payments by International Corporations, they only need to change those laws themselves!
The media needs to stop making this look like a Corporate "DODGE JOB", and make it a Government FAILURE TO MANAGE job.
"They're just avoiding double taxation."
They very cleverly just issued shares to pay the dividend with (and a lot more besides)! This meant they didnt have to bring the money on shore and pay tax on it. So they have actually evaded tax entirely!
With regard to the "Government's Job", as a qualified tax specialist can easily earn twice as much for the private sector guess where all the brains are. Also, these big companies will easily deploy ten times the number of people to avoid tax as our constantly cut back Civil Service will deploy to hunt it. It's amazing they get anything through the doors these days and with the on going cuts in Civil Service payroll you can expect even less in the future. The bottom line is as long as you have politicians who's next career step is to become directors you aren't going to get legislation to put the thumb screws on corporate tax avoidance.
I mention payroll deplberately as the job cuts lead to an increase in hugely generous redundancy and pension payments to go to non-productive ex employees. Ahhh, but that's a different budget it doesnt matter that it's the same eventual tax fund... That we're not collecting...
"Company's like Apple should be Made to pay the FULL TAX in the country where the profit was made. (BEFORE THEY MOVE IT OFF SHORE)"
Yeah, about that.
How do you decide how much profit is made? What is the correct <FULL TAX> amount is?
The issue is this. Profit = sales-price (ex sales tax) - cost of sale (the wholesale/build cost of the idevice + overheads).
Now the country (UK in this case) does in fact grab the sales tax. The consumer is paying of course, but Apple are collecting it and handing it over to the government. No problems there - hence governments moving increasingly to load up on sale taxes despite customers increasing ability to buy overseas making an ever increasing loophole.
The real problem with your plan is that the cost of sale is whatever Apple claim it is. So if the overheads of rent, power and wages is £1 per iDevice and the theoretical ex-VAT price of device happened to be £100, then all Apple have to do is pay £99 per iDevice to their Irish supplier. Result no profit in the UK, but the £99 goes back to pay the actual £10 build price of the device in a low taxation country. In actual fact Apple and other companies tend to bury the costs not in hardware costs but in brand or IP payments which are relatively intangible.
To challenge the profit being claimed, you would have to have a massive governments department to determine if every transaction claimed as a business cost was valid - and given that the transactions could be anything across any number of countries, this would be a near impossible task. How would the the tax man determine if the Apple brand (i.e. a payment made from Apple UK to Apple mothership) is worth £1 or £1 billion?
"Then if the company chooses to move profit to another country the country it moves the profit to has the choice to tax the incoming transferred profit"
Which means double taxation. And again 'moving profit' - how do you define that when you see a $1 coming into a company in Country A, is it profit, refund, payment or just another transaction?
using anything *deemed* to be a tax avoidance measure, such as (but not limited to):
> artificially induced debts
> paying over the odds for goods from subsidiaries located in other jurisdictions
> paying over-the-top license fees to subsidiaries located in other jurisdictions
is illegal and will:
a) result in the CFO going to prison if the evaded liability is >£250,000, and
b) will result in "tax avoidance" measures not only being treated as though they're not there, but as though they had the *opposite* effect when calculating tax owed
Corporations can protect themselves by being completely honest, open, and up-front with HMRC about any schemes which might look even slightly dodgy, and HMRC can audit them up-front to determine what the effect on the tax liability is, and whether or not it's a legitimate transaction, or if it's designed to avoid paying tax.
That way, anything that isn't declared up front is entirely subjective, and HMRC can go around nobbling corporations left, right, and centre.
>> you cannot blame them for following the law.
Of course you can. If someone was dumping raw sewage in your water supply, and that were within the law, you would probably want the law changed but you'd also want to punch the bastard that was putting sh*t in your drinking water.
"Of course you can. If someone was dumping raw sewage in your water supply, and that were within the law, you would probably want the law changed but you'd also want to punch the bastard that was putting sh*t in your drinking water."
Until you learn the source of the pollution is in an entirely different country who could care less about the pollution since in their country that's a designated dump.
That's a nutshell description of the problem. Multinationals are pitting countries against each other and using the antagonism to their advantage.
"Until you learn the source of the pollution is in an entirely different country who could care less about the pollution since in their country that's a designated dump."
That's really no defence. Even if it's a designated dump in another country, the folks doing the dumping still shoulder the blame for their actions.
If the US were to designate the Colorado River just before it crosses the border to Mexico as a legitimate dumping ground, and ShitCo starts dumping there, the Mexicans would be pissed off. They would be perfectly right to be pissed off at BOTH the US government for allowing the behaviour, AND the people working at ShitCo itself for knowingly polluting their water supply.
Just because the government allows something does not mean it's right, nor that the people doing it are somehow blameless because they were within the law, regardless of whose law or where.
the UK can close the loopholes, but how do you persuade another country to change its laws? Especially one that is making money from it [looks across to UK's next door neighbour]
We're not the only ones facing this problem, Australia hauled up a big company about this in the last year as well - I believe it may have been Google - and found they hadn't broken any law.
Countries either unify to stamp this out, or it all unravels. Well done to the European Parliament for making sure everybody sings from the same hymn sheet. Sterling effort!
And, indeed, is it right to do so? We're seeing this appalling move at the moment on the part of large inefficient nations like the UK and US whose taxes have got stupidly high to bully small sovereign democratic jurisdictions like the Caymans into raising their taxes because our treasuries happen to find them inconvenient. I personally would love one of the "tax havens" to show a political broadcast here, showing us schools, hospitals, policing, etc, explaining that they pay for it all by having a low tax rate that brings in international investment, and making it clear to the "moral" tax campaigners that part of what they're campaigning for is the impoverishment of foreigners.
I fail to see why they can't just drop corporation tax down to nothing.
Now before I get criticised for being on the side of the fat cat business people just ask yourself what a company actually does with money earned.
It saves the money, in which case it can be taxed on returns.
It moves the money, in which case it can be taxed on amount.
It can pay the money out in dividends, which can be taxed.
It can pay the money out in increased salaries, which can be taxed.
It can invest in the business, which may or may not be taxed depending on the basis the money is invested in the business.
The point being that profit is a concept rather than a reality and can be manipulated to suit the prevailing mood at the time, making tax more of a voluntary obligation rather than a legal one.
Why not just change the point of taxation to something more easily definable and hence less likely to suffer from avoidance (avoidance because what the companies are doing is not illegal although it may very well be immoral).
Money in the bank isn't a concept.
turnover isn't a concept.
money paid in dividends or salaries is not a concept.
moving money between countries is not a concept.
VAT is the tax with the highest compliance in the EU because it is collected at a point where evasion and avoidance is, to all intents, impossible by design.
Perhaps the country might be in a better state if more taxes were that simple.
They could very easily apply a different tax model to multinational companies who pull this kind of shite.
Double the VAT component on their goods and make it non refundable too.
"Are you taking the piss buddy?" says Apple.
"Well you started it mate." says HMRC.
They would have sorted these things out by now.
We in the UK are in a strong position, we have a massive market and a massive pool of creative people able to start their own companies.
Thus refusing entry to our market for those who do not pay tax here, Google, Apple,Amazon Starbucks etc would have the knock on affect of creating jobs as we fill in the gaps left by these people.
They have no right to be here, they make use of our infrastructure and the huge amount of money they make could easily be made by internal companies. Yeah some of them have good products, but really, 5 years down the line who will care who made your phone, ground your coffee or found your online raz pics
There's actually already a rule in the UK that any corporate structure deemed to exist only to reduce tax doesn't exist as far as the tax man is concerned. It's quite a neat rule, I think, however, to be able to use it we'd have to hire some civil servants (i.e., Tax Inspectors). How long would any other business that decides to sack the sales team last? Only in government...
Is it not the ever growing complexity of the tax system that is allowing these corporations to legally find & exploit loopholes?
The solution will not be found by yet more layers of regulation, international agreements, wholescale rationalisation of the tax system (desirable but no political will & massivelymayexpensive/disruptive & bound to befudged by vested interests).
As we are losing tax revenue by trying to retrive what is an increasingly difficult to apply corporate tax, would not be more effective & fair to replace it with a point of sale tax ? After all we the consumers only see the final price & if the likes of Apple do pass it on to us, the laws of supply & demand may come into play with a more even playing field for the local competition & at least it stays in the economy rather than pilfered out of the country.
There is a really simple solution which no-one seems to have spotted...
Instead of charging Corporation tax on the 'profit' at 20%, why not reduce this to 10% (or eliminate it completely) and charge a Country-based 'Sales' tax of say 5% on the value of ALL sales made within the Country. Companies may be able to avoid the 'tax-on-profit' by using an Offshore subsidiary but there would be no way to avoid a tax on total 'Sales' in Country. At least the likes of Apple would have to pay something!!! Oh, and if 5% is too high, lower it...even 1% is better than nothing!!!
As you can see, I agree with you on a sales / transaction tax & the reduction/ elimination of Corporation tax . The benifit being that it should not effect those who have been paying their taxes, if done properly, Corp tax reduction should be balanced by sales/ transaction tax increase.
My only concern is that this is too good &there is bound tobe some Brussels regulation that will either knock the simplicity out of it or prohibit it altogether!
This isn't even dodging. Let alone tax avoidance.
Yoiu pay corporation tax on the profit left over after you've substracted all the costs of doing business.
Paying your staff is indeed a cost of doing business. This is an allowable expense.
So, what have Apple done? They've paid some of their management in shares in the company. Clearly this is part of their pay, clearly this is a business expense and clearly it's allowable against corporation tax.
And that's it. Nowt dodgy about it all.
There's all sorts of fun stuff about Apple's taxes, this is true, but this particular move isn't even slightly odd in the least.
And don't forget, the recipients of those shares will be payiing a hefty chunk of tax on them. 28% I think for CGT now? Which is actually more than the corporation tax rate.
The little guys pay tax and the big boys pay accountants. If it's perfectly legal to organize a large corporation such as Apple, Google or Starbucks so the regional corporate offices are in the lowest tax rate zone, they have to do it. If they don't, shareholders could bring suit against the board for not doing their duty in maximizing share value. I do realize that the only shareholders that usually matter are the top office execs.
It's been stated correctly here previously that corporations don't pay tax, people pay tax. The UK is an excellent place to do business. There is a well educated and qualified workforce, infrastructure of high quality, good housing, a good climate and easy access to all of Europe via many forms of transportation. If HM's government courted large corporations with very low or zero corporate tax, many would move their European base of operations in very short order. This would lead to all sorts of new jobs directly and even more indirect jobs (think of cafes, office supply, IT services, etc). Corporate jobs typically pay better than factory which means more paid in rates. As long as companies, especially large ones, can locate somewhere with a more favorable tax rate, they will.
Look for a copy of "Make it in America" by Dow Chemical CEO (retired?) Andrew Liveris. It's an excellent read about workings of a large corporation. Mr Liveris has a great view of big business as Dow is a supplier of basic materials to many other big businesses.
For the USA and UK, the concern is maintaining a business environment that provides an adequate supply of medium to high paying jobs for the present and the future. It isn't always the cost of labor that motivates corporations to move operations offshore. It can often be the tax and regulation environment alone or in combination with labor costs.
Biting the hand that feeds IT © 1998–2020