Amazon Pays No UK Income Tax, Under Investigation

New submitter artciousc writes with news that Amazon is dodging taxes in the UK. From the article: "Regulatory filings by parent company Amazon.com with the U.S. securities and exchange commission show the tax inquiry into the UK operation, which sells nearly one in four books sold in Britain, focuses on a period when ownership of the British business was transferred to a Luxembourg company." Clever trick there: "The UK operation avoids tax as the ownership of the main Amazon.co.uk business was transferred to a Luxembourg company in 2006. The UK business is now owned by Amazon EU Sarl and the UK operation is classed only as an 'order fulfilment' business." The HMRC is investigating the legality.

Taxes and trade are complicated

[explosivejared]

It would be really difficult to structure a tax with the incidence falling solely on setups like the one Amazon has here, especially since the UK is part of the single market. This is most likely an issue that would have to be solved in the European Courts rather than by the UK government. I doubt that a few hundred million pounds in lost tax revenue would persuade the courts to force a major restructuring of trade. I am not expert on European jurisprudence though.

This is a legitimately complex issue of tax avoidance. Most of the time when people howl about corporations paying low effective tax rates it's because they don't realize all of the exemptions for favored industries (green and bio tech, aerospace, etc.) and absorbing losses create that outcome. Here we have a government stretched thin on revenues up against the framework of European economic integration.

Re:Taxes and trade are complicated

[cayenne8]

Well, if indeed it is legal, then there's nothing wrong with it.

I see nothing wrong with playing within the rules to try to benefit yourself as much as possible.

I do it on my personal and business taxes. Nothing even close to underhanded or sneaky, but I have no qualms about trying to use every legal means to reduce my tax burden any way I can.

If they would cut all the deductions, loopholes, etc...and just do simple, flat type taxes...everyone would pay less over all...it would make some that don't pay taxes (people and companies) pay at least a little. And I don't have a problem with that either...everyone should have some skin in the game, even if it is just $1US or 1 Euro if over there.

Order fulfilment business?

[Picass0]

That's a very broad and legally vague concept.

If Amazon succeeds I expect many other international businesses to incorporate in the UK and attempt the same. In fact, they would be fools not to.

Re:Taxes and trade are complicated

[wonkey_monkey]

Well, if indeed it is legal, then there's nothing illegal with it.

FTFY.

Re:Taxes and trade are complicated

[mcgrew]

Well, if indeed it is legal, then there's nothing wrong with it.

What's more wrong, adultery or smoking marijuana? I say adultery is wrong even if it is legal, and there's nothing whatever wrong with smoking the illegal herb.

Legal != right, illegal != wrong. Right and wrong have nothing to do with legal and illegal.

I have no qualms about trying to use every legal means to reduce my tax burden any way I can.

Nothing wrong with that, unless you're a Christian.

If they would cut all the deductions, loopholes, etc...and just do simple, flat type taxes

The poll tax is the most regressive of all. Read Asimov's Forward the Foundation for his take on complicated vs simple taxes. Both are bad. I'd agree that getting rid of deductions is a good thing, but since the rich get far more benefit from government than the poor do, they should pay a higher percentage.

it would make some that don't pay taxes (people and companies) pay at least a little.

Since you're probably European this probably doesn't apply to you, but the "conservatives" in the US are saying the same thing, despite the fact that in my grandfather's day only the rich paid federal income tax. It's hypocticy for them but it wouldn't be, in Europe.

Re:Taxes and trade are complicated

[PraiseBob]

Well, if indeed it is legal, then there's nothing wrong with it.

Legally ok may still be morally wrong. Personally I think making over $3 billion, and doging all taxes falls into the morally wrong category.

Legally speaking, companies only have an obligation to their shareholders. Morally speaking, companies have an obligation to their communities.

Re:No income taxes were paid? Good.

[roman_mir]

You certainly are not buying civilisation with taxes, if that were even remotely correct, we would have had 'civilisation' much earlier, and when I say: "civilisation", I am talking about the rapid progress that we have enjoyed since the beginning of the free market capitalist movement and industrialisation.

You could pay all the taxes you wished forever and ever, and you have, since before the pharaohs and on and on, but the only "civilisation" that you got was on par with those pyramids - the tombs for the Kings.

The real civilisation cannot be bought with taxes.

The real civilisation is created in the free market with people making everyday voluntary decisions on what to buy, making everyday voluntary decisions on what to work on, what to produce, how much to save, where to invest, etc.

None of what you believe to be 'civilisation' is actually that.

Re:Taxes and trade are complicated

[mcgrew]

Morally speaking, companies have an obligation to their communities.

Saying an amoral entity should exhibit morals is like saying an atheist should respect God. Ain't gonna happen. Atheists don't believe in God, and have no reason for rspect, and it would be stupid to expect it. Amoral corporations don't believe in right and wrong, only in legal and illegal, and to expect them to have compassion or any sense of social responsibility is equally stupid.

The reason why Amazon should pay taxes is simple..

[danielrendall]

...taxes pay for things from which enable Amazon to have a business at all. Amazon can sell books to us because we're a reasonably literate population. They can get stuff distributed because we have a good road / rail network which is maintained. We have mechanisms in place to dispose of the masses of card packaging that Amazon use. We have employees who are kept reasonably healthy by the NHS (I'll understand if American readers are confused on this point - we have a decent health care system, America doesn't). All of these are the result, essentially, of taxpayer-funded state investment. So, by not paying taxes, Amazon are benefiting directly from such investment without contributing to it which, I would argue, is unfair and parasitical. I saw a great suggestion recently which was that if all of these anti-tax companies really wanted to put their money where their mouths are, they would set up shop in some crummy backward little country that doesn't bother with taxes and consequently has very little in the way of infrastructure, health, literacy etc. That's what small (or no) government gets you. If they decide they'd rather do business somewhere more advanced, they can damn well pay their fair share for the upkeep of the place.

Re:Taxes and trade are complicated

[characterZer0]

There is a huge difference between donating to charities who do valuable work in your community and giving to the government.

Re:No income taxes were paid? Good.

[thoth]

The real civilisation cannot be bought with taxes.

The real civilisation is created in the free market with people making everyday voluntary decisions on what to buy, making everyday voluntary decisions on what to work on, what to produce, how much to save, where to invest, etc.

So where does public infrastructure fit into this scheme, especially the funding of it? How are the following funded: roads, sanitation systems, legal and judicial system, police, etc? Is that funding to be entirely voluntary as well?

Don't get it.

[taxman_10m]

About 50 people so far have given some variation of, "Well, if it's all legal then it must be ok." It's not troubling to anyone that they worked within the law to create a fiction, which is that they don't really operate or exist in the UK? It's wrong because it isn't true. Like in the USA we had Reagan redefine ketchup as a vegetable or something. I say this almost ever time this topic comes up, but it really seems to me that libertarians are nothing more than the useful idiots of big business. Sure, they like to think they support business in general, but it's always big business they rise to defend. As if Amazon needs defenders.

Re:Taxes and trade are complicated

[arkhan_jg]

Amoral corporations don't believe in right and wrong, only in legal and illegal, and to expect them to have compassion or any sense of social responsibility is equally stupid.

And it's this kind of thinking that is destroying capitalist nations like the US and the UK (I'm british, btw). You know, it's within living memory that large corporations switched to focusing solely upon short term shareholder 'value', back in the 70's and 80's. Before that, many big companies recognised they were only part of a giant collection of people, and that shitting in their own front yard was of short-term value only. Where they paid their workers sufficiently so that they could buy the very products they made. Where training, looking after your workers and ensuring a good work-life balance rewarded you with happier and thus better performing and more loyal employees. Where they recognised the social value of investing, via taxes and direct contributions, into the social lifeblood of their communities - schools, roads, hospitals. Where CEO's were stewards of their companies, not just there to strip much as much personal compensation as possible then get the hell out before anyone asked awkward questions.

Of course, not all companies were like that. But now, virtually none of them are. the 'Greed is Good' mantra has won.

In 1953 - "When he was asked during the hearings before the Senate Armed Services Committee if as secretary of defense he could make a decision adverse to the interests of General Motors, Wilson answered affirmatively but added that he could not conceive of such a situation "because for years I thought what was good for the country was good for General Motors and vice versa". Can you imagine a CEO of a current multinational - or one of the big casino banks - saying that with a straight face now?

We should expect more than 'I can get away with it because it's within the letter of the law'. No, we should damn well DEMAND it.

Re:The reason why Amazon should pay taxes is simpl

[Patch86]

The problem is that Amazon (a US company based in Luxembourg) are tax exempt, while local companies that employ local people and contribute to local society are not. Amazon has a price advantage by virtue of a £0 tax bill, and UK-based companies can't compete.

You need to either tax Amazon or stop taxing local companies in order to restore competitive balance. As colossal tax cuts for big business aren't top of the agenda in the middle of a painful economic slump and massive budget deficit, the former option needs to be investigated.