Amazon Pays No UK Income Tax, Under Investigation 175
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 (Score:5, Insightful)
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 (Score:5, Insightful)
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.
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Well, if indeed it is legal, then there's nothing illegal with it.
FTFY.
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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
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... despite the fact that in my grandfather's day only the rich paid federal income tax.
Your grandfather must have lived in the roaring twenties then. Through most of the middle of the 20th century that wasn't the case, but, surprisingly, income taxes are more generous to the bottom quintile. The income tax rate [taxpolicycenter.org] in America has gotten more and more progressive over the last few decades with the introduction of the EITC, as the bottom quintile receives more and more money
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... as those below the bottom quintile FTFY
Sigh, once upon a time, this was a geek site..
CC.
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"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."
depends on exactly how far he is going.
"20And he saith unto them, Whose is this image and superscription?
21They say unto him, Caesar's. Then saith he unto them, Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's. " Matthew 22: 20-21
if he uses every legit means (charity/church write-offs ect) then he is in the
Re:Taxes and trade are complicated (Score:5, Interesting)
What if Caesar demands 100%? Or if caesar orders us into a concentration camp, because we're asian? What then Jesus?
BTW most of Jesus' words are not his words. They were written decades after his death by church members who had never met the man. (Just like the story about George Washington chopping-down a cherry tree.) (Or the story about King Arthur.)
Re:Taxes and trade are complicated (Score:4, Insightful)
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:Taxes and trade are complicated (Score:5, Insightful)
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.
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There is a huge difference between donating to charities who do valuable work in your community and giving to the government.
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Especially when you live in a community of rich white people.
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There is a huge difference between donating to charities who do valuable work in your community and giving to the government.
The GP comment's point was that companies are amoral and thus you should expect no moral activities from them, and provided a counterpoint for that argument. I don't see your point - it's not like you are forced to choose - it's within standard mores to support both, within reason.
Paying zero taxes while taking advantages of the benefits of government (public infrastructure, civilized society as consumer base, etc) is immoral. If you don't feel like the benefits are worth the price, move to Somalia or Sie
Re:Taxes and trade are complicated (Score:5, Insightful)
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.
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When someone criticizes corporate citizenship and "free speech" rights, they're reminded that corporations are just "groups of people".
When someone criticizes corporate immorality, they're reminded "corporations are amoral entities". What happened to the people comprising them?
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If corporations are people, then it's not unreasonable to expect them to behave like people and act in a moral way. Personally I think the idea that corporations are people is ridiculous, but the supreme court disagrees.
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Morally speaking, companies have an obligation to their communities.
- that's a load of crap. Companies have an obligation to make money for themselves, that's all, they have no obligation whatsoever to anybody to provide anything, and they only provide something because they want to make money, and that's the best way to have this done.
Anything that companies do is either approved by the market, which buys into it, or it's rejected by the market, and the company fails.
No consumer has an 'obligation' to a company to buy its product, no company has an 'obligation' to any co
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Morally speaking, companies have an obligation to their communities.
- that's a load of crap. Companies have an obligation to make money for themselves, that's all
No, Companies (as a collection of people) have only a legal obligation to make money, but they bear the moral burden of an obligation to the communities in which their people live, and in which their customers abide.
As we forget and ignore this, we slide into a neo-feudalist state where you must swear fealty to your liege corporation.
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The people who work in their freight centres once went to school, maybe enjoyed a happy childhood (although I doubt it) and just *lived* - and everything necessary for them to grow up there was 100% funded by taxes.
- nonsense. Everything that people enjoy was CREATED by somebody, and if government comes in and steals money from some people to give it to others, it doesn't mean government CREATED any of that wealth, it only means government is a legalised robbery mechanism.
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Everything that people enjoy was CREATED by somebody,
Wait... I just went for a nice hike though the mountains, I didn't realize, though, that someone created them. Who should I pay for use?
Oh... this is why I'm not a Randbuckling Freemarketeer, because I'm an atheist. Hm.
(this post is intentionally snarky, and not to be taken at all seriously)
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You are not being very precise in your definition of wealth.
I define too much wealth as having more money than is required to achieve a reasonable life goal.
So what is the going rate for a small moon base and matching warp capable space ship? Having more than that would be my definition of having too much money.
Well were do people think the money comes from? (Score:2)
Do consumers in the UK have the same or worse level or ignorance that ours do? As in, any tax Amazon paid to the UK would simply be an indirect tax on the UK consumers.
the only thing morally wrong is the system which conspires to delude the people into thinking that corporations actually pay any tax, they are merely collectors. All taxes paid come from the people, governments just try to make as much of it indirect as possible to disguise the true cost of government
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Yes, there is somethign wrong with, the legality is a separate issue.
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Well, if indeed it is legal, then there's nothing wrong with it.
The article says that the UK government is investigating, but if Amazon is found to owe these taxes, it would be a matter for the European courts to decide. I have a feeling this is sort of a novel issue. Obviously I'd have to defer to someone that had the relevant case law or EU regulation handy. Either way, this is not something the UK just gets to declare legal or not.
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It is not a novel issue at all. It is a pretty straightforward transfer pricing issue - how much Amazon Luxembourg should pay Amazon UK for fulfilling the orders. Amazon employs 2256 people in the UK, and 134 people in Luxembourg, so you would expect most of the profit to be made in the UK, not Luxembourg, because that's where the people who work to make the profit are actually based.
The other issue, selling e-books from Luxembourg where the sales tax is 3% rather than from the UK where it is 20% is proba
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FYI, the rules on sales tax (VAT etc.) in Europe are quite a touchy subject, in particular whether distance selling customers pay their local rate or the rate where the vendor is based. Right now, it's possible for sales to be charged at the vendor's local rate even if the purchaser is in another country with a higher rate. This is likely to change within the next couple of years, though, to avoid the kind of tax dodge you described.
As someone setting up a business to sell on-line, I'm in two minds about th
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For physical goods, you have to charge VAT etc in the customer's country if your sales to that country exceed the "distance selling threshold" for that country. It is £70,000 in the UK, and typically around €10,000 elsewhere in the EU. http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/vat_in_ec_annexi.pdf [europa.eu]
Amazon will probably exceed that threshold in an less hour for each country, so they do need to pay local VAT.
That, however, does not apply to electron
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I'm curious how this will all work out. In our American union (US), Amazon only has to pay income taxes to its home state (California?) and none of the other states (unless they have a warehouse located there). Does the same principle apply to the European Union? Is Amazon only required to pay income tax to Luxembourg and no other state?
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They file a tax return in the UK because they have warehouses there. However the UK operation is structured so that sales money from customers goes to Luxembourg, and Amazon Luxembourg pays Amazon UK a fee to send the item out to the customer on their behalf. After deducting all the warehouse, staff costs, payments to couriers and so on, there is no profit left to pay tax on.
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What, you conservatives don't like my flat tax? Why Not?
Because my version puts almost all the tax burden on the rich, as opposed to the vile conservative version that puts almost all the tax burden on the poor.
Why
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Oh, at 5%, it lets the government exclude IRA's and your personal home from that tax, without reducing the amount the government gets.
Every version of a flat tax I've seen has said they need to be at 17% to be revenue neutral. This [google.com] analysis talks about 19%. Perry's proposal is 20%. You've managed to come up with a tax rate that is one quarter of what everyone else is proposing and still get the same revenue?
And then to claim that you can exclude things from taxation and not reduce the revenue? How do you apply a 5% to a smaller number and get the same result?
Because my version puts almost all the tax burden on the rich, as opposed to the vile conservative version that puts almost all the tax burden on the poor.
The latter part of your statement is patently wrong. The "poor" pay almost not
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Your criticism hinges on the premise that said assets do not generate a return, which is in direct conflict with reality.
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No, it really isn't. Your TV is an asset, but does it generate a return? No. Your savings are an asset (401k, retirement, whatever you call it) which do generate a return, but is it more than 5%? Probably not. Your car is an asset, but does it generate a return? No. In fact it generates a net loss through consumable requirements (petrol, oil, etc).
The reality is, almost all personal assets generate no or negative return, and the remaining assets would be taxed into negative return. The only class th
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Assets are not the same as income, but about an order of magnitude larger. That is how a smaller percentage tax on assets would be needed.
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net assets or gross?
And the first thing you did was add exclusions, isn't the entire idea of a "flat tax" to not have exclusions and their compications and enabling of avoidance.
Of course I think an actually "flat" tax is silly. You want the rate to increase with income level and it doesn't matter what the "rich" think about it because we already have a progressive income tax system so the status quo wins.
Just remove *all* deductions and rebates. Yes all. Need to buy a uniform for your work, that's betwee
Re:Taxes and trade are complicated (Score:5, Informative)
This has nothing to do with things like offets for favored industries. Large companies now move the various parts of their business to whatever location gives the best net tax situation. Multinationals construct structures like the Double Irish and Dutch Sandwich [wikipedia.org] to place sub-companies for minimal tax. Techniques like Transfer pricing [wikipedia.org] are aggressively used to move the profit to the right place to tax it minimally. Games are played with repatriation [forbes.com] too.
If none of the options are good, they lobby for the specific incentives they need. US companies operate in Delaware because the state legislature there passes whatever the companies ask for in return for the business. Been that way since the 80's. The Cayman Islands and the Bailiwick of Jersey are popular offshore locations because they bend laws to whatever companies ask them to. Even a low rate on a lot of money is still a lot of money relative to a small country or state.
Yes, this is all legal, but it's only legal because the companies have gotten the laws they lobbied and or bullied for. The result is that we're in a race to the bottom on taxation, where business flows to whoever is running the lowest margin government--which unsurprisingly is usually with the most favorable legislative kickbacks too.
Treasure Islands: Tax Havens and the Men Who Stole The World [amazon.com] takes 350 pages to outline just how that happened over the last hundred years, it's a great read for those interested what I'd call "financial tech". The minute you allow companies to influence lawmakers by things like lobbyists and campaign contributions, the inevitable result is making what those companies want legal. The corporate side is unsurprising given that corporations are by definition immoral. The fact that voters are ignorant to how they are being conned is really the problem here. The lawmakers who are complicit and benefitting in all of these schemes shouldn't just be voted out, they should be prosecuted as traitors for hire.
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It seems to me it would also be perfectly legal for the UK to legislate away Amazon's supposed legal right to run a "distribution business" that is more profitable than it claims to be.
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"Too big to tax".
Google and eBay are doing the same (Score:2)
It would be really difficult to structure a tax with the incidence falling solely on setups like the one Amazon has here.
It's not just Amazon - Google and eBay are doing exactly the same thing. [telegraph.co.uk]
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You can be 100% sure these Luxembourg taxes are of a lower percentile than they would be in the UK.
But they are EU taxes none the less.
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That's called VAT. VAT is 20% of the price in the UK. Not everything is classed as VATable , dead tree books are not for example.
The UK has 'Low Value Consignment Relief'. Anything that is imported that is priced less than £15 is VAT exempt. This is slowly being abolished in the UK. It was £18 and stores like Amazon got around not charging VAT by making products such as DVDs priced at £17.99. As soon as LVCR was reduced to £15, Amazon reduced their prices to £14.99. Amazon at
Order fulfilment business? (Score:4, Insightful)
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.
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If you aren't fufilling orders, then you really aren't doing any business
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Probably a specific classification of business. Rather than a seller, manufacturer etc. "order fulfillment" is a distributor, that is contracted on behalf of someone else (amazon.com?) to bundle up orders and ship them to people. They are proclaiming themselves middlemen I think. MS is in this issue in germany, that they have some european distributor who handles warehousing and shipping of Xbox products around europe.
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They simply lied and miss-classified their business operation. Amazon will be fined, CEO and CFO might get jailed, they funneled billions £ out of UK, cheated on Her Majesty Revenue Cohorts (a Scotland Yard backed operation), it's no joke not paying to the UK taxman.
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You're not the only one confused by this quirk of UK tax-law... At a fundamental level, EVERY business is really just an "order fulfillment" business. If you can just apply that label and not pay taxes, what stops every company from organizing a Luxembourg shell-company to "own" the business, then self-applying the same label and never paying another nickel in corporate income tax?
Even though the cynic in me knows better, I desperately hope the answer isn't "nothing whatsoever."
Follow this train (Score:2)
i setup BAD WOLF SHOPPES selling torches, screwdrivers and cabinets (most of which happen to be oh Blue) and other things and payoff the government to allow me to operate without taxes.
i then setup TANGO FULLFILMENT inc in a buncha countries (paying no taxes in these).
BWS is a retail/wholesale outfit
TF is a fullfilment company (anything sold by BWS is delivered by TF)
And Amazon EU Sarl is probably just a PO Box... (Score:4, Informative)
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I'm confused, because when it comes to piracy/file sharing/etc., the prevailing opinion on /. is that where your servers are located should get you out of following the law someplace else. But when it's Amazon and taxes, this logic doesn't seem to apply.
Can someone explain this in terms of Libraries of Congress?
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A Library of Congress is a unit of measure, and each LOC is an exact copy of the previous one.
A Slashdot poster, on the other hand, is actually an individual. Kinda like the individual items that the LOC contains. Each one has different opinions, and each discussion is a result of self-selected individuals who feel strongly enough about a discussion to make some sort of contribution. So Slashdot is essentially a Library of Congress for the purposes of this explanation, the collection of individuals.
Just
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Damn it, I knew I should have asked for cars.
The failure of public companies (Score:2)
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or its a failing of the taxation regulation in countries. If the UK said you have to have a presence in the UK in order to do business here, and pay tax on all UK transactions regardless of where your HQ is based, you'll find these companies will return their HQs to London. (which, technically is where they are anyway, they only have a postal box in Luxembourg so they can claim they're based there).
Its no amoral as in News International Amoral, but there is a systematic un-ethical approach to fiddling the r
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"they only have a postal box in Luxembourg so they can claim they're based there)."
Yes, albeit it's a big box, so that 134 people can fit into it.
The Brits have tax laws that suck, that's the reason.
AMazon is yet again (Score:2)
avoiding taxes. One of these days, someone going to say enough and just not let them do business in the country. I would.
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Politicians write exemptions into the tax code for you to use them. That's the whole idea. I'm in canada, the government gives (/gave) me student tax credits for housing that can be carried forward. The fact that I can apply that to earnings long after I'm a student, and therefore pay no tax for potentially several years is exactly how they contructed the system to work.
The EU tradeblock is messy. But then the whole existence of and independent Luxembourg is based on the ability to act as a go between
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The biggest profiteers of the single market 's option to choose the place for your headquarters is probably Microsoft in/and Ireland.
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Switzerland because it's been doing this long before the EU came into being. Everyone knew why money was stashed there, everyone knew their tax policies, but if you agree to let people who 'live' in switzerland and work in your country you know full well what they're doing. If you let people travel to switzerland from your country you know, and have in effect agreed to it by allowing the border agreement.
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Ah, but you'll find that these companies exist in the tax-dodge countries with no more than a post-office box. No-one in their right mind would consider a PO box to be a company HQ.
the real problem is that tax laws are complicated, so these kinds of loopholes are always going to be discovered when they were not intentional.
The current UK government has a new trick: when you change your accounting practices to avoid a tax you have to tell the tax man, and if he decides that the loophole you've just discovere
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Wait, but who's the "they"? The tax department?
You mean to say that common tax collectors (or middle management) have the authority to change tax law? And how does that then affect other companies which may have made investments based on certain provisions of the tax laws?
Finally, it's quite unfair for one p
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they is the Chancellor of the Exchequer. And no, it's not particularly unfair, as you could say these things were not intended to be misused in such a way, and that tax laws are modified all the time - typically once a year during the budget.
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Ah, but you'll find that these companies exist in the tax-dodge countries with no more than a post-office box. No-one in their right mind would consider a PO box to be a company HQ.
um... Delaware anyone (http://en.wikipedia.org/wiki/Delaware_General_Corporation_Law)? Switzerland? Luxembourg? Legally there very much is a precedent that a companies corporate HQ can be a PO box, and you agree to that when you have border agreements.
The UK is realizing that signing up for this when the agreements can include some of the smaller countries wasn't necessarily the greatest plan, although London benefits tremendously from being a 'financial hub' which is essentially the same sort of thing.
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I'm sorry, they renamed it the "education amount" (separate from the textbook amount). on the Tuition education and textbook amounts, the number of months in colum b or C on your t2202A's. At a federal level it is 400 dollars per month for a full time student.
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addendum to my previous statement.
This *used* to be a rent amount, they changed it because students couldn't always get rent receipts, this way you get the benefit even if you don't live at home. In an of itself this change is an example of a known tax dodge, because now landlords don't have to declare rental income for students to claim it on their taxes, and the government knew full well that was why they were changing it. It's there for you to take advantage of.... It also has the benefit that you don'
Tricksy lil' hobbitses, ain't they? (Score:2)
And then some poor schlub who owns a homegrown car repair shop gets one digit wrong, and the IRS is deep in their colon. That's fair!
Attempts to contact the head office were made (Score:2)
We attempting to contact the CEO at the head office for comment, but discovered that company HQ was located in a small post office box in the Cayman Islands.
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We attempting to contact the CEO at the head office for comment, but discovered that company HQ was located in a small post office box in the Cayman Islands.
...a post-box that is currently filled with unread magazines, unpaid utility bills, and angry letters from disappointed shareholders, which might explain why notes to the CEO are also going unanswered...
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The reason why Amazon should pay taxes is simple.. (Score:4, Insightful)
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Corporations don't pay tax unless most of their customers are foreigners. What you're demanding is that Amazon raise prices, collect more money from their British customers, and give it to the British government.
Why do you think the world would be a better place if ordinary Britons had to pay even more tax than they currently do?
Well, perhaps then their competitors - like brick and mortar bookstores and even other online retailers might actually *stay in business*, thus creating jobs, healthier economy, more money going back into the economy (instead of being siphoned away to a tax haven).
Amazon's prices are artificially low - they don't need to raise them, they need to be brought into line with where they would be if they were playing fairly.
Re:The reason why Amazon should pay taxes is simpl (Score:4, Insightful)
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.
Corporations wonder why people download movies... (Score:3)
If you don't _have_ to pay for something, why would you? Same with taxes - they know darned well they _should_ pay taxes, but with a little corporate slight of hand, they don't have to.
Globalization? (Score:3)
The US has the same issues as the UK, which has the same issues as Europe. In the US, there was a report last year about how many companies moved their HQ to a PO box overseas, I believe mostly to Ireland. This was reportedly done to avoid paying US taxes. Of course even though this was shown to be true, the media later stated that it was anti-business hype and not a real problem. As of course the US goes further and further in to debt, public services are cut more and more, and the top 1% earners increase their wealth by incredible amounts each year.
Now we see similar stories from the UK, and right in the article it's seemingly excusing the businesses and vilify the protestors. (Sound like OWS?)
HSBC has joined the least desirable club in the business world. The bank yesterday became the latest target of a sudden surge in public fury over tax avoidance, as a guerrilla group of demonstrators under the elusive banner UK Uncut planned to occupy branches in London and Liverpool.
Baker says he is worried that the kind of street protests led by UK Uncut could "morph" into a more serious anti-business movement, though he admits some firms give the corporate world a bad name by over-exploiting loopholes.
So if you complain, you have to be anti-business.. you can't be right.
So the UK is as messed up as the US.. I'm not sure that makes me feel any better. Used to be, we were kind of the check and balance for each others corruption. The more of this kind of stuff I read about, the more I have to think that many of those conspiracy theories may be true.
So What? (Score:2)
Know what I mean? (Score:3)
HMRC: 'Evening, Executive!
Executive: (stiffly) Good evening.
HMRC: Is, uh,...Is your corporation a goer, eh? Know whatahmean, know whatahmean, nudge nudge, know whatahmean, say no more?
Executive: I, uh, I beg your pardon?
HMRC: Your, uh, your corporation, does it go, eh, does it go, eh?
Executive: (flustered) Well, it sometimes "goes", yes.
HMRC: Aaaaaaaah bet it does, I bet it does, say no more, say no more, knowwhatahmean, nudge nudge?
Executive: (confused) I'm afraid I don't quite follow you.
HMRC: Follow me. Follow me. That's good, that's good! A nod's as good as a wink to a blind bat!
Executive: Are you, uh,...are you selling something?
HMRC: SELLING! Very good, very good! Ay? Ay? Ay? (pause) Oooh! Ya wicked Ay! Wicked Ay! Oooh hooh! Say No MORE!
Executive: Well, I, uh....
HMRC: Is, your uh, is your company a sport, ay?
Executive: Um, it's profitable, yes!
HMRC: I bet it is, I bet it is!
Executive: As a matter of fact it's very profitable.
HMRC: 'Oo isn't? Likes profits, eh? Knew it would. Likes profits, eh? It's been around a bit, been around?
Executive: We have offshore accounts, yes. We moved the books to Luxembourg. (pause)
HMRC: SAY NO MORE!!
HMRC: Luxembourg, saynomore, saynomore, saynomore, Executive!
Executive: I wasn't going to!
HMRC: Oh! Well, never mind. Dib dib? Is your uh, is your corporation interested in....taxes, ay? "Taxes, ay", he asked him knowlingly?
Executive: Taxes?
HMRC: Snap snap, grin grin, wink wink, nudge nudge, say no more?
Executive: Corporate taxes, eh?
HMRC: They could be, they could be corporate. Domestic, you know, DOMESTIC corporate taxes?
Executive: No, no I'm afraid we don't pay any domestic taxes.
HMRC: Oh. (leeringly) Still, mooooooh, ay? Mwoohohohohoo, ay? Hohohohohoho, ay?
Executive: Look... are you insinuating something?
HMRC: Oh, no, no, no...yes.
Executive: Well?
HMRC: Well, you're a man of the world, Executive.
Executive: Yes...
HMRC: I mean, you've been around a bit, you know, like, you've, uh.... You've "done it"....
Executive: What do you mean?
HMRC: Well, I mean like,....you've SKIPPED on you taxes....
Executive: Yes....
HMRC: What's it like?
This is the root of our economy woes (Score:2)
This is one of the biggest reasons for our economic situation.
Amazon pays no UK tax, General Electric pays no US federal tax [go.com], and on and on.
By propping up existing companies. governments have been investing in stagnation for the last 20 years. It's reached the point where it's very difficult to start a new company.
Jobs aren't created by existing companies, jobs are created by starting new companies and by small companies growing large.
Yes, GE and Amazon have been job creators, but that was then. Once compan
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Yes, GE and Amazon have been job creators, but that was then. Once companies have enough employees to get their job done, hiring essentially stops. Workforce numbers among established companies is, to a large extent, static.
I can't speak to GE but I work for Amazon and we're hiring like crazy. We have something like 2000 open engineering positions in the US alone, and we pretty much open a new position for every one we fill.
I won't speak to the tax issue, but saying Amazon is no longer a jobs creator is just entirely untrue.
Reverse Engineering the Tax Analysis (Score:5, Informative)
OK. Reverse engineering a bit and filling in gaps in the media reporting, here is my educated analysis. If you, as a UK consumer, buy a book from amazon.co.uk, you are actually hitting servers in Luxembourg and buying the book from a Luxembourg company. Letâ(TM)s call it Amazon Lux. Current EU VAT rules mean that if you are downloading a e-book, Amazon Lux only charges the Luxembourg VAT rates on the sale and hands that VAT over to the Luxembourg government. (This rule is expected to change in two years.) If you are buying a dead tree version, then Amazon Lux has to charge UK VAT rates on the sale and hands that VAT over to the UK government.
There is a separate Amazon subsidiary in the UK, which operates a warehouse and shipping operation. Letâ(TM)s call it Amazon UK. Amazon Lux pays Amazon UK to operate the warehouse and perform the shipping. Typically this is done on a cost-plus basis, so Amazon UK is probably recovering its costs and getting a profit margin of 5-10%. Amazon UK will be paying UK income taxes on this small profit margin.
The tax treaty between the UK and Luxembourg states that if the only thing a Luxembourg company has in the UK is an agent that distributes stuff or stores stuff in a warehouse, then the UK government wonâ(TM)t treat that Luxembourg company as âoedoing business in the UKâ. Amazon Lux can take this position because they claim that the actual âoesaleâ event happened at the servers in Luxembourg when you made the final click on Amazon Luxâ(TM)s website. If this position is valid, then any profit on the sale above and beyond the cost-plus margin at Amazon UK is only taxable in Luxembourg. (And remember that the cost-plus margin is taxed at Amazon UK, not Amazon Lux â" the legal entity that actually entered into the transaction with the consumer.)
The complicating historical question is whether Amazon could move its historical business operation out of the UK to Luxembourg without paying an exit tax. EU law allows free movement of business and capital, but the issue of whether you can bail out of a country to a lower taxed country without any tax consequences is a bit of a muddle right now.
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Just want to point out that dead tree books are in fact VAT exempt [hmrc.gov.uk]. There is also Low Value Consignment Relief that makes any product under £15 VAT exempt, it is soon to be abolished and it was £18 last year. Did you notice that Amazon sold DVDs at £17.99, now they are £14.99 or lower.
Don't get it. (Score:5, Insightful)
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.
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Yeah attack the people the defend Amazon. Call them names (libertarians, useful idiots, defenders of Amazon). Would you care can to explain why you disagree with "If it's all legal, it is ok". (I am assuming this is happening in a first world country, with pretty well defined laws)
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I view it in simple terms: exploiting a loophole to evade taxes.
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It's someone using an exploit for gain. Isn't that the distinction between black hat and white hat? Amazon being black hat in this case.
Bad Title (Score:2)
Amazon wouldn't pay Income Tax in any case; Income Tax is the tax paid by individuals on their yearly earnings from salaries, dividends, savings interest, etc.
TFA is about Amazon evading Corporation Tax, which is an entirely different thing.
Taxing the wrong thing. (Score:3)
There's no point attempting to tax corporations, particularly big international ones, on their profit - profits just get shifted around on the books to places like Luxembourg.
The only thing you can do reliably is tax turnover (obviously at a lower rate) which is much harder to make disappear. We already *do* tax proxies for turnover in the UK (such as the employer's "national insurance contribution" which is just a tax on labour costs) so it wouldn't actually be a radical change and would enable actual tax rates to go down for the majority of smaller companies when the big boys were paying their fair share.
The big whine usually goes up at this point: but what if poor Corporation X makes a loss? Well, none of the other costs of doing business for Corporation X go away at that point, so why should tax? And if Corporation X is making a loss big time, it's not going to be in business long whether it's paying tax or not.
And your average citizen gets taxed on their earnings, not the margin between their earnings and spending (you can't offset mortgage payments or pretty much anything else of significant value), so why should it be different for corporations?
But they still charge VAT - misleading summery? (Score:2)
Trying to figure this out. It looks like maybe the title and the summery is badly written - it sounds like they do pay taxes - they are just trying to avoid paying a certain tax. Not too familer with how Taxes work in the UK - I just know that, living in the US, I get a huge discount when ordering from the UK because they take OFF the VAT. When I first read the article, it sounded like Amazon needed to refund hundreds of millions, if not billions, of VAT to customers, or give it to the government, but it so
"Income" Tax? (Score:2)
People (employees) pay income tax, not companies/corporations.
Taxes on profits are nearly always "Corporation Tax" which is not an income tax. Income taxes (22% for most of most peoples income above a certain threshold) are paid by the individual, but it is usually taxed "at source" so the company pays it to HMRC before the employee receives the payment making it appears as if the company pays it...
If they are not paying "Income Tax" on the wages paid to their employees, they are in MAJOR trouble as are the
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I like paying taxes, with them I buy civilisation. However I am increasingly disgusted and angered by the wanton waste and inefficiency of government and public sector expenditure, especially at a time when new and higher taxes and rates are being levied against me. I have the right to demand value for money. I'm not sure how I can claim that right in the absence of political representation that's not invested to the back teeth in the public sector, so here we are I guess.
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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
Re:No income taxes were paid? Good. (Score:5, Insightful)
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?
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Yes.
Everything entirely voluntary.
Anything non-voluntary is coercion. Coercion is always immoral.
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building multiple roads to allow a free competitive market to operate (and may the best road win) is an obvious nonsense.
- and yet it is done that way even now. There are plenty of ways getting from point A to point B, some ways are more expensive (have to pay a toll) and yet people prefer them, because those roads are mostly better and maybe more convenient, maybe there are fewer cops there, maybe there is less road maintenance going on at any point in time.
The same applies to water, gas, sewers, buildings, and everything else that has a fixed location,
- yeah, shows what you know.
There are many competing services, even for water, gas, sewers, buildings and everything else. It doesn't have to be 2 buildings in one ex
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Or if there were just simple flat rates of tax for income and/or wealth there would be no advantage to create these shells.