Microsoft made $167m a day in profit, every day, over the past 12 months Microsoft's $46.2bn in revenue for its fourth quarter of 2021, and profits rising 47 per cent to $16.5bn, shows the continued strength in its cloud business, investors were told on Tuesday. Analysts on average anticipated results more along the lines of $44.1bn, though company stock nonetheless slipped in after-hours trading, …
If my company made $167m profit during a day, I would have to pay $35.28m of corporation tax.
How much does Microsoft pay?
Something tells me these juicy profits are turned into costs and then moved away from the lazy (when it comes to big corporations) HMRC.
Now, what is CMA doing about that? Surely these companies have unfair competitive advantage over SMEs that don't have a luxury of top accountants and companies around the world to offload the profits to?
But it depends how you look at it?
HMRC knows SMEs are the ones they can milk, as HMRC are not competing with other tax domiciles. A global corporation will simply move elsewhere. So, by design, an SME will pay more, particularly in a country where the NAO keeps saying that tax payer money is being wasted.
Being digital and all, the global SW corps can also I think simply sell from abroad, and require the buyer to pay in a foreign currency. UK itself is a service economy, do you pay import/export taxes on services?
The government does get VAT on all the services sold, and it is in USA where Microsoft is using all the infrastructure and so on.
If we take Microsoft and the reasonable 15% corporation tax (probably paid in the USA), what exactly is the argument that they should suffer the same as an SME, instead of arguing that the SME should be given access to the same tax regime.
My point is specifically about a SW/cloud global company. There will be downvotes with the "more tax end of" crowd, but I'd be interested in discussion around this point of view.
Yes there will extreme cases of tax avoidance (starbucks), that isn't what I am discussing here.
If I am not big enough to put in a wholesale order, is it wrong that I do not benefit from wholesale prices?
>>scrap corporation tax altogether and replace it with VAT.
This does not make sense - VAT is a tax on the good's price, which makes it effectively a tax on revenue, not profits, when seen from the company.
It would just increase prices and consumers would pay it. I don't see corporation tax savings being passed on as lower prices and even then you would need a harmonised profit margin specified on all products.
A HMRC defined profit scheme would likely deferentially benefit the larger/bigger company, and impedes market competition by creating a barrier to entry.
Say 20% VAT and 10% corporate tax,
For two products costing £2100
£2000 cost + £100 margin = £2100 -> VAT= £420, ctax=£1
£100 cost + £2000 margin = £2100 -> VAT= £420, ctax=£200
The point is to tax profit. A VAT replacement couldn't do it.
> This does not make sense - VAT is a tax on the good's price, which makes it effectively a tax on revenue, not profits, when seen from the company.
Which is the point of the change. It means that companies won't avoid "profitability" to avoid tax ( think international IP transfers ).
> The point is to tax profit. A VAT replacement couldn't do it.
No it isn't. The point is to extract taxation from an economic activity.
Corporation tax doesn't work anymore in the age of multinationals. A VAT like tax ( perhaps a small increase every rate across the board including zero rated ) would mean that small companies pay the same tax as multinationals.
The only people still clinging on to the idea of corporation tax rather than VAT are those that think of tax as something to punish people with rather than an unfortunate necessity.
Yeah your answer doesn't actually show how it solves the problem.
Either VAT remains as is and the tax coffers are emptier with the elimination of corporate tax, or the VAT rate is increased to compensate for the elimination of corporation tax but consumers pay the difference.
I don't see how your VAT only proposal transfers a share of the company's revenue towards the state.
VAT is simply collected additionally on behalf of the state.
As an MNC I would keep the ex VAT price of the product the same , and the VAT/sales tax is the consumer's problem.
More economic activity is funelled away into multinational foreign accounts (corporation tax saved), smaller business do benefit in terms of corporation tax, but their cost base woudd shoot up as the VAT hits cost of living. The money the local SME "saved" in corporation tax is now deducted in local costs.
Meanwhile the MNC is free to use that revenue in investments at other lower VAT locations and have an even more profitable product for the same price that the local SME is now struggling to match.
You haven't solved anything meaningfully, just shifted the tax burden from the corporation to the consumer, and pushed up base costs for local businesses.
> Either VAT remains as is and the tax coffers are emptier with the elimination of corporate tax, or the VAT rate is increased to compensate for the elimination of corporation tax but consumers pay the difference.
As I said, VAT increases across the board.
> VAT is simply collected additionally on behalf of the state.
Which is all corporation tax is, really.
> You haven't solved anything meaningfully, just shifted the tax burden from the corporation to the consumer, and pushed up base costs for local businesses.
I've shifted the tax burden from the consumer, to the consumer.
Companies don't pay tax. People do. Owners, employees and customers.
We can't clobber owners any more than we do because they can just move away and we can't get them at all if they're foreign.
So the thing to do is to add a tax to what they sell instead. Do it over time, over ten years say, and you don't cause noticeable inflation.
Competition takes care of the "companies making bigger profits" "problem".
The main benefit of this being that Amazon will pay the same rate of tax as Anonymous Coward's Book Emporium.
>> I've shifted the tax burden from the consumer, to the consumer.
You are either missing the point or ignoring it - you are fudging revenue and profit. The consumer pays even more, unless your scheme gets *all* companies to proportionally reduce their profit.
What you describe is not solving anything, just as a blackbox number to the exchequer - consumers pay cost+profit+vat+vat markup for lost tax. Today the consumer pays cost+profit+vat
Nothing in your scheme enforces a transition of reduced profits to keep the consumer price the same.
Your scheme needs the whole world to have the exact same VAT tax rate. Or the scheme goes with a ban of all imports.
Nothing in your scheme increases competition either to further reductions.
This is pointlessly reductive logic.
>> The main benefit of this being that Amazon will pay the same rate of tax as Anonymous Coward's Book Emporium.
To what end? Amazon will slap the VAT increase on the price. They are not getting their advantage because ACBE pays more cTax. By your own logic - owners and customer pay, so ACBE has more cash, but has new costs. Meanwhile Amazon escapes the cost overheads by setting up elsewhere.
The only way is to reduce VAT, eliminate (all?) other taxes, on the presumption that the "lost" taxes will come through to compensate. Isn't that a tax haven?
> You are either missing the point or ignoring it - you are fudging revenue and profit. The consumer pays even more, unless your scheme gets *all* companies to proportionally reduce their profit.
There is no rule that says that tax must only be paid on profit rather than revenue.
In fact, the cause of most tax avoidance is that we tax profits, so companies just create paper losses in order to avoid tax.
> Nothing in your scheme enforces a transition of reduced profits to keep the consumer price the same.
Competition. It's the reason why prices aren't currently higher than they are.
> To what end? Amazon will slap the VAT increase on the price. They are not getting their advantage because ACBE pays more cTax. By your own logic - owners and customer pay, so ACBE has more cash, but has new costs. Meanwhile Amazon escapes the cost overheads by setting up elsewhere.
To extract tax revenue from activity by multinationals rather than just from SME's.
The bigger the company, the easier it is for them to avoid tax. Starbucks doesn't pay tax in the UK because it makes a paper loss. It does this by buying its coffee at hugely inflated prices from its Luxembourg subsidiary.
All we care about is how do we fund the state without taxing the poorest too much and without driving away business.
The idea that we have to try and fail to tax Amazon's profits or Starbucks' profits is just pointless.
> The only way is to reduce VAT, eliminate (all?) other taxes, on the presumption that the "lost" taxes will come through to compensate. Isn't that a tax haven?
No, increase VAT to compensate for the lost revenue.
It would be considered a tax haven. America benefits hugely from the current asymmetrical arrangement and they wouldn't be happy.
Also this won't happen because it looks like giving tax breaks to companies and making the individual pay. It isn't that. Not really.
But regardless of what will happen, this is what we should do.
Eaxctly - and because you're increasing goods final price in a flat way, you're also putting poorer consumers at great disadvantage - as they would pay a far higher marginal rate.
Moreover companies won't lower prices, will just point their finger at the government - "it's the government taxing you - tell them about the increased prices" - while laughing all the way to the bank with money they don't have to pay taxes on.
Whoever advocates an higher VAT or has no clue about it works, or usually have ways to avoid it.
> Eaxctly - and because you're increasing goods final price in a flat way, you're also putting poorer consumers at great disadvantage - as they would pay a far higher marginal rate.
Now we're out of the EU we can do what we like with VAT. We can make all food zero rated for example. There's no reason this has to be regressive.
> Moreover companies won't lower prices
Companies already charge as much as the market will bear.
> Whoever advocates an higher VAT or has no clue about it works, or usually have ways to avoid it.
Whoever thinks we should keep banging our heads against the wall with corporation tax either is a shareholder in a multinational or thinks that we must try to make the rich suffer, regardless of whether it benefits anybody.
Because poor people buy food only? Moreover this way you'll also advantage more rich people - unless you set different rates on different food - a real nightmare.
That's why rich people like taxes like VAT that make less affluent people pay a higher marginal rate than more affluent ones.
Shareholder any kind of tax on company profits. VAT is OK for them because it is not pay by companies but by consumers.
Rich people should not suffer nor pay less taxes than others just because they're rich enough to take advantage of tax-eluding schemas.
But thinking poorer people should pay more to avoid asking to pay corporate taxes es far worse than thinking rich people should pay more.
> Because poor people buy food only? Moreover this way you'll also advantage more rich people - unless you set different rates on different food - a real nightmare.
Food was an example.
And the corporation tax system doesn't do what you're asking the VAT system to do. Companies that provide luxury products don't provide a higher rate of corporation tax now.
> That's why rich people like taxes like VAT that make less affluent people pay a higher marginal rate than more affluent ones.
No it doesn't.
> Rich people should not suffer nor pay less taxes than others just because they're rich enough to take advantage of tax-eluding schemas.
Ok, so your solution is what? Magic?
Lets magic some money out of those foreign shareholders pockets.
> But thinking poorer people should pay more to avoid asking to pay corporate taxes es far worse than thinking rich people should pay more.
The VAT system needs tweaking so that only luxury goods pay a higher rate, but it isn't fundamentally broken. Cakes and biscuits is a nonsense.
If you want to take taxes from foreign domiciled multinationals, you need to switch from taxing profit to taking turnover.
The easiest way to do a turnover tax is to use the existing VAT system.
Well you're still not making sense.
I think your idea is on the presumption that the prices are the highest they can be.
Then the corollary is that the prices should never rise. But they do.
>> Competition. It's the reason why prices aren't currently higher than they are.
The price is the highest for the *current* costs. If they *all* have the same cost increases, they will all increase their prices. Your scheme is just inflation and a new input cost.
Why would they maintain their market and sales to make less profit?
Most MNCs sell goods that people buy for the brand anyway. You're just bumping up labour costs and You're matching taax revenue as a number, but taxing the whole economy, while the foreign taxes remain the same. You;re not solving anything, it might make a small difference to certain price inelastic sectors in the near term, which most MNC don't bother with as the margins are thin. Your scheme makes the margins thinner for those inelastic sectors, which eventually means they will also pass it on as costs, just perhaps slower as the wider economy catches up with increased wages (inflation).
The rest won;t bother - starbucks is "aspirational" for eg.
If this were sensible at least one country would have done it.
Nothing in your design structurally ensures that the lost tax revenue is proportionally converted by enforcing lower profits. Previous VAT increases did notthing to profit percetages. You're just saying it should work, but really you're saying let's cross fingers and hope.
Previous VAT increases did not work the way you claim.
https://www.theguardian.com/business/2011/feb/15/cost-of-living-vat-rise
https://www.tutor2u.net/economics/blog/economics-qa-will-the-rise-in-vat-harm-the-uks-economic-performance
I'd like to see an article where a professional economist treats this idea of yours, with pros and cons.
"“We are innovating across the technology stack to help organizations drive new levels of tech intensity across their business”
Who talks like that anyways? If a salesman talks that way to me, I know I am getting screwed."
To be fair, by the standard set by tech executives this is a relatively meaningful sentence (even though it's of course complete gibberish by the standards of normal human beings).
I did that 15 years ago, frankly as an experiment. The last time I had looked at a Mac before then it was one running OS 9, and that felt so much like a toy I wasn't really impressed so until then I ran a mix of Windows and Linux.
The idea was to spend a month getting used to the different UI, do my experiments, gather the Mac user's point of view and then reformat it for running Windows or Linux.
Instead, the then OSX impressed me so much by being so much more usable (even Microsoft's Office package at the time just worked better) that I started calculating true TCO (also known as not fudging costs by ignoring the cost of my time), and that equation pointed firmly towards Apple, even then. So, instead, Windows went out of the, er, window, later followed by Microsoft Office when LibreOffice was usable enough (I think I did that when OpenOffice forked, and I found LibreOffice improving at a faster pace - as an aside, the current 7.1.5 release is excellent).
That picture (and true TCO) hasn't changed at all, if anything it has improved. The 2006 OSX had far less business integration provisions than modern Macs, there is more software to manage them in volume and they have thankfully eaten some crow on the security front so they don't try to sell the platform as somehow magically unable to get infected, but it is still considerably harder than on Windows (who, by the way, has again a Domain Controller security issue out re. NTLM authentication).
But hey, we're not allowed to mention that the one single thread through all security breaches and ransomware attack is a product from Redmond now, do we? All that advertising money they spend has put up quite a wall against that.
I found it's quite possible to run a decent size business with MacOS, Linux and LibreOffice. It means we saved ourselves a spectacular amount of money, it's easier to keep secure (although I must mention that's also assisted by proper architecture segmentation), and being able to be brutally rude to FAST (remember those?) came as a bonus :). It also helps we have board members who have a clue, which is admittedly a bit rare for a small company.
It's not that hard to establish and maintain a secure operational platform, but you need to get your fundamentals right. It's not going to happen if you build on quicksand.
I like it! I have PCs and laptops from 1998 which still work perfectly. And believe it or not, I still use a couple of them regularly to make strange syntehsised noises, because their VESA soundcards with DSP chippery, produce epic reverb in particular.
Microsoft is dead to me. Will buy a Mac, also I might turn of my desktops into a Hackintosh - I did that with a laptop as an experiment and it mostly worked, bar wifi and slow graphics. Gigabyte board, Intel CPU & ATI graphics should be broadly compatible. Do wish Apple would release a version of their OS untied to their hardware.
So....Redmond expects every man jack and his dog to be able to afford hardware upgrades to run its O.S... BIOS level TPM2 and Secure Boot IS NOT AVAILABLE on many legacy systems, many of which are DONATED to poorer families and countries to keep up education and learning.
Redmond are holding EVERYONE to ransom expecting upgrades to be able to just RUN this bloatware.
Many of the *nix derivatives already do what is required and cost NOTHING to install and run programs mimicking Windoze offerings.
Millions worldwide will be losing out after WIn10 support stops in a few years time.
FORCING customers or owners to fork out for hardware which will run this joke of an O.S will see many defecting to free alternatives.
In collusion with hardware manufacturers worldwide Microshaft are engaging in a war against the consumer and raising associated companies profits and increasing their own with this agenda
I've been with them since DOS2... in ALL variations up to Win10, but now will use Ubuntu or another *nix O.S instead so no more of MY hard earned will line their pockets
I worked for a consultancy where the IT division was always advising customers to use Windows, because they made a fortune in selling developer time and forever fixing things.
They even spent some months developing a new company website and then sell that framework to others. They were not happy with me pointing out that I would have spent half that dev time with Joomla (then Mamba) or Drupal and throw a massive launch party and still come in under what they spent :)
I worked for one of the top 5 SI's (and MS Gold partner), they weren't happy when I advised they should deploy a Juniper/Packeteer based solution rather than a Windows ISA server-based solution on a customer-site. That my approach was cheaper, significantly shorter lead time and more secure didn't cut it, it would not generate any revenue for the Microsoft practice and so was dismissed...
Absolutely.
I'm now looking at a government depatrtment where a Microsoft-loving moron has taken over. The Microsoft love fest is not fuelled by any degree of technical expertise, I can tell you that, and I dread the upcoming attempt to embed Microsoft products in systems that have to support a whole nation because it just cannot handle that scale - heck, integrating a team solution alsmost seems to much to ask.
But hey, politics speak louder than expertise, and Microsoft has had more than 30 years to perfect that game. As far as I can tell, it's the about only thing they perfected in that time. Software, not so much.
Right now I am struggling to get my daughter's old Win 7 laptop (which she uses for university) to activate her copy of Office again - I've tried enabling the TLS 1.2 stuff as per their article, without result - which took some searching to find since, of course, there was no error message, just a silent failure. And yes, Win 7 is no longer supported, but the computer likely won't manage an upgrade to Win10 since it struggles enough as it is. More memory would probably help, but I just don't have the money to keep my kids updated with modern hardware.
But Microsoft's certainly not earning any brownie points with me when it refuses to acknowledge my perfectly valid licence, and won't let my daughter save or edit documents in a few days' time.
So if I can't get this sorted we may have to try migrating her over to OpenOffice / LibreOffice instead, at least until we can afford to buy her a new machine. At which point it's going to be very tempting to burn her a live DVD of one of the alternatives and see how her system performs with it.
Games are the real problem with moving, of course.
A much lower cost and performnce enhanching upgrade would be an SSD. Even SATA ones perform SO much better than HDD's that it really will breathe life into your daughter's machine.
As of a few months ago as well, the free upgrade to Windows 10 was still working.
Just a thought - if you were to take an image first, as well, you can always roll back but I would definitely look at an SSD as a low cost option.
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