Now we know why they are pushing Prime so hard.
The economy of Luxembourg is about to shrink by a few billion pounds, with Amazon bowing to UK pressure and announcing it'll book UK sales through its British branch. The Wall Street Journal reports the change began on May 1. The Guardian says Amazon is moving in response to the UK government's diverted profits tax, which …
Prime is no use to me. Prime is about £80. I have unlimited upload space on flickr for £13 a year, I mostly buy music via Amazon Market Place as it tends to be cheaper with the postage than Amazon charges, and I have no use for film streaming. Personally, if I find a way of dealing directly with the regular suppliers rather than through Amazon I would do.
You pay for prime up front for a service that you may or may not use, that puts cash in their bank account. By ruthless advertising and pushing they will be sitting on a big wad of cash. Money they could use to pay the taxman. It's good to have money in the bank when the taxman cometh...
I quite like Prime, so I kept it on. My old PS3 has free Amazon software to play the Prime TV shows - at least I got to watch the latest Ripper Street and Vikings series 3. Not to mention many other shows like Black Sails, plus some films.
But I have to take care to only watch the 'free' Prime stuff, as other things can get quite expensive.
The cheap delivery discounts are really only secondary to me.
I'm glad to see they are finally paying some TAX, the cunts.
Yet again we see a government bullying a company into paying them more cash. They're fast turning into highway robbers.
These issues are for the courts to decide and for good reason.
Regardless of what you think of the business practices of Amazon, Google et al, I really would not like to see an expansion of government intervening directly in the legal, financial affairs of individuals and companies. They should stick to policy and leave execution to the independent legal apparatus.
The point is that Amazon, etc. were organising their tax affairs legally and HMRC & the courts (who enforce law) had nothing had nothing against them.
The government make law and decided (rightly or wrongly, depending on your viewpoint) that Amazon etc. were not paying enough tax and changed the legislation to enable more tax to be extracted legally. The mechanism of a tax on exported profits seems odd (similar to non-dom "charges"?), but the only other way would be a full revamp of global taxation and the cooperation of every tax haven.
I'm sure Amazon will just put their prices up to cover the taxes, but I would still use them because they provide a good service.
Starbucks have enough real competition that they can't do that. But as I don't like the taste of their coffee, fewer Starbucks branches make no noticeable difference to me. Though you could say that they're providing employment and paying rent & business rates, so there is some loss to the economy.
"Yet again we see a government bullying a company into paying them more cash. They're fast turning into highway robbers."
On the other hand, Amazon have been using a legal loophole to sell to UK buyers from a UK "presence", fulfilling the orders from UK warehouses and claiming that the sales for tax purposes happened in Luxembourg where taxes and VAT rates are lower, ie using their size, power and reach to undercut smaller local companies in what many see as an unfair way. Now the law has been changed and Amazon, as well as others, have to work within the new framework.
The law is catching up with the new dynamics of on line buying so I don't see that as bullying. I see that as bringing the law up to date. If Amazon want to retain their Luxembourg tax and VAT status then maybe they could sell in Euros and send the shipments from their Luxembourg warehouse. I have no doubt Amazons legal team are already looking for new/more loopholes.
"The law is fast realising that in the new world economy, country boundaries for trade make a lot less sense now than at any time in the past."
That may partially be the effect of current laws on international trade but without a world government, boundaries will always be there and companies have to work with that whether they like it or not. A company may attempt to maximise profit but they don't have a right to a profit, especially not by ignoring the law.
"country boundaries for trade make a lot less sense now than at any time in the past."
I should also add...
If companies think national boundaries are a hindrance to trade, why is it so difficult/expensive to use a mobile phone on the same companys network across the EU (where available) or access steaming services across the EU or subscribe to a TV sat service from another EU country?
National boundaries are an integral part of companies strategy to re-sell the same services across what is supposed to be a "common market" so I would say that both from the point of view of companies AND government, national boundaries are an integral and vital part of how trade still operates today.
A Legal Loophole is an unexpected and untended consequence of a particular phrasing of legislation. The law in this case, so far as understand it, is quite clear and explicit and is being used exactly as written.
As to non-doms I fail to understand why we tolerate this daft piece of legislation. It is not a if we derive any benefits from being a tax haven. Quite the contrary, if a non-dom were to invest in this country then he would pay UK tax on the revenue. One thing a non-dom must never do is to actually invest in a UK business. Nor must he repatriate any foreign earned income, or he will pay tax. All a non-dom may do is to buy property, which is why it is quite impossible to buy any more than a rabbit hutch in London.
> In other words, it's the government's job to intervene.
In general terms, yes I agree. However, as we saw with committees hauling in the executives of Amazon et al to publicly harangue them over their actual legal accounting arrangements, followed by laws tailored specifically for these small number of large multi-national companies, they are rather vindictively attempting to extract money from them.
I repeat, governments should make laws that suit the majority of people in the majority of situations. This law is a specific vindictive attempt to extract additional money from companies that they believe are not paying enough tax. The reality is that whatever these companies are avoiding in tax contributions make hardly a whit of difference to the overall budget of the UK government, large as the amount sounds. It is political grandstanding, pandering to a media shit storm of entirely their own manufacture. The worst kind of petty bickering that seems to dominate what passes for politics these days.
Government has 'intervened' in legal, financial affairs since at least 1799 - Duties of Income Act (Thank you Mr. Pitt The Younger)
So it's not new. Surely it's part of the Governments duty to make sure all elements of society pay their fair share - including multinational corporations. And if they get 'clever', it's Governments job to slap them down.
But then again I always was a bit naïve ...
Going after Apple, Google, Microsoft, even Facebook I can understand. But Amazon? They aren't hiding their income overseas, they're hardly making any. Its the last dot com bubble stock that's yet to burst, as investors continue to believe that someday they'll start making billions.
VAT rules have already changed, meaning that Luxembourg no longer offers that advantage (old rules, physical goods pay VAT of point of delivery, digital goods rate of point of sending. Now both rate of point of delivery, so lower Lux VAT rate no benefit any more).
I wuold be very surprised indeed if Amazon ended up paying more than the £4 million or so its been paying to the UK in corporation tax though.
Because while the sales will now be booked as a branch (and I've checked, this does mean profits on such sales will be UK taxed) it's still true that the brand, the software, he platfrom, are developed elsewhere and reside elsewhere. So, there will be royalty payments (and there must be, transfer pricing arrangements, the law, insist that such things must be paid for to where they reside) and it's actual;ly illegal for the UK to try to tax such royalty payments if they are going to another EU country.
So, Amazon sells in the UK, records the profits in the UK and then sends 5-10% of sales off to wherever to pay for brand and platform. And their net margins ain't 10% of sales: but 5-10% as a royalty/contribution to development costs would be viewed by HMRC as entirely righteous. Lower end certainly (Starbucks gets 4-5% allowed just for the brand).
Things would be very different indeed for Google, Facebook, Apple, perhaps, but Amazon in a low margin business? Ain't gonna be much tax cash....