Amazon To Escape UK Digital Services Tax That Will Hit Smaller Traders (theguardian.com) 58
Amazon will not have to pay the UK's new digital services tax on products it sells directly to consumers but small traders who sell products on its site will face increased charges. From a report: The tax, which aims to get tech companies such as Amazon, Google and Facebook to pay more tax in the UK, is forecast to eventually bring in about $645 million annually to the exchequer. Amazon has already stated that the 2% tax on revenues made in the UK will be passed on to sellers but it will not be adding the charge to the cost of advertising on its platform.
According to a report in the Times, Amazon, which paid only $18.5 million in corporation tax on total UK revenues of $17.7 billion last year, will not have to pay the tax on goods it sells directly. The new tax is not being levied on sales, which would also penalise online retailers such as Tesco and John Lewis, but on the service fees that companies such as Amazon and Google charge third parties. With Amazon's third-party sellers facing a 2% rise in the amount they pay, the US retailer is effectively getting a price advantage on competing goods it sells directly to consumers. "This seems to me to be absolutely outrageous," said Lord Leigh of Hurley, the Conservative peer and former party treasurer, in the House of Lords. "It is clear that the UK government is not taxing Amazon properly and is allowing it to avoid tax on its own sales through the marketplace."
According to a report in the Times, Amazon, which paid only $18.5 million in corporation tax on total UK revenues of $17.7 billion last year, will not have to pay the tax on goods it sells directly. The new tax is not being levied on sales, which would also penalise online retailers such as Tesco and John Lewis, but on the service fees that companies such as Amazon and Google charge third parties. With Amazon's third-party sellers facing a 2% rise in the amount they pay, the US retailer is effectively getting a price advantage on competing goods it sells directly to consumers. "This seems to me to be absolutely outrageous," said Lord Leigh of Hurley, the Conservative peer and former party treasurer, in the House of Lords. "It is clear that the UK government is not taxing Amazon properly and is allowing it to avoid tax on its own sales through the marketplace."
control! (Score:2, Insightful)
This is what talking back control looks like!
If you voted in these fuckwits you only have yourself to blame. It's not like you weren't warned they were a bunch of lying incompetents.
Yep, unintended consequences galore (Score:3)
Yep, this is what happens when idiot politicians try to control market forces. They tried to make a law that would tax Amazon and instead they end up with a law that says Amazon can sell directly at lower prices than the small businesses that try to sell *on* Amazon. Trying to bring Amazon down a notch, they just gave Amazon an advantage - by legislative decree.
Re: (Score:2)
If you think this was an unintended consequence, I know someone in the Nigerian royalty with a great finance deal to offer you.
The EU tends to screw up attempts to regulate big business and perhaps unintentionally to hurt huge numbers of small businesses as a result. The Tories in the UK will do the same thing entirely knowingly and deliberately.
Re: (Score:2)
It's not a mistake, it's by design.
Our government is corrupt. Stupid and incompetent, but above all corrupt.
Re: (Score:2)
I'm really surprised to hear you say that. Pleasantly surprised.
I definitely agree with that statement; I think you're right. I just didn't think you realized it.
Just curious, do you think the next administration is going to be a bunch of good guys, unlike all of the previous adminstrations?
Re: (Score:2)
I've been saying this government is exceptionally corrupt pretty much since they got in, you just didn't notice I guess.
Anyway, not all governments are this bad. None of them are perfect but for example the level of corruption was much lower even under May, and certainly under Labour. The Tories have a particular issue with it but the current administration is exceptional.
I won't let perfect be the enemy of good, we can definitely do better.
Re: (Score:2)
Oh, okay, thanks. That's less surprising now that I understand, you were saying THIS government is a bunch of stupid, incompetent, corrupt people. And you so expect that'll change in a few years.
I had understood you as saying the government in a more general sense, politicians generally, are stupid, corrupt, and incompetent. When I thought you were saying that, I agreed but was surprised to hear *you* say it.
Re: (Score:2)
I definitely agree with that statement; I think you're right. I just didn't think you realized it.
Have you been living under a rock recently?
Just curious, do you think the next administration is going to be a bunch of good guys, unlike all of the previous adminstrations?
Oh save me. You think the world is divided into goodies and baddies and assume everyone else thinks the same.
Re: (Score:2)
I don't know if you saw Ami's reply to that before you butted into our conversation, but apparently the answer is yes. Ami does think the Labour candidates won't be stupid, incompetent, and corrupt.
In my experience, it's rare to get a politician who isn't at least incompetent, and a majority are corrupt to some degree. Personally, I don't expect that to change next year, or the year after.
Re: (Score:2)
PS, I actually think the exact opposite of what you said I think. That's what Ami thinks; that's where disagree, where we see the world differently.
> Oh save me. You think the world is divided into goodies and baddies and assume everyone else thinks the same.
*I* think politics mostly can be divided into baddies and baddies; all of the parties suck. Ami just said she thinks there is a bad party, in contrast to the good guys (or much better guys) party. That's a fundamental part of how we see the world
Re: (Score:2)
Did anyone honestly think that taking back control was about anything other than a few tax havens? I mean all the biggest Brexit campaigners all have their millions stashed away in places they were most worried about the EU getting them. Unfortunately people are dumb enough to fall for the brown person is coming for your money and it's the EU's fault excuse.
Re: (Score:3)
Please let's not get into a dumbed down Brexit debate. The world has had enough of those already. Spoilers: The EU is not full of nasty dark people who are going to come and steal all yer jerbs, and the amount we were paying for membership was small compared to the amounts made or lost depending on that membership or whatever might now replace it. The EU is also not some infallible beacon of democracy, wisdom and compassion whose policies never hurt anyone. It turns out that in one of the most complicated s
Re: (Score:1)
Hey, it ain't Amazon's fault.... (Score:4, Insightful)
This is the fault of the lawmakers that wrote the faulty tax laws.
Amazon, like any one or any company plays by the law and will and should try to pay nothing more than what legally owed.
If the lawmakers and general public don't like the result, change and write and pass BETTER tax laws.
Re: (Score:2)
Maybe Amazon did write the laws. A few donations to the Tory Party, hire someone who went to Eton with the relevant minister...
Re: (Score:2)
It's the fault of Amazon as much as the others. Doing evil for money doesn't excuse doing evil.
Re: (Score:2)
What evil exactly are they doing?
They offer products and services like many other businesses...you are free to engage with them or not.
Re: (Score:2)
What evil exactly are they doing?
Not paying their fair share of taxes.
They offer products and services like many other businesses...you are free to engage with them or not.
My refusing to do business with them (as I do) doesn't mean they pay comparable taxes to local companies. Do you really not understand this.
I welcome you to tell me how it's entirely legal for them to not pay their way, as if legality was the arbiter of ethics. So save your breath.
Re: (Score:2)
It appears they are paying exactly what the law requires them to pay.
How is that evil?
From all appearances, Amazon is working within the tax laws on the books.
If they are doing so, and not breaking the law (which I think would have been in the article)...then again, m they are not doing anything wrong.
As an individual, do YOU
Re: (Score:2)
How is that evil?
Let me repeat my previous post:
I welcome you to tell me how it's entirely legal for them to not pay their way, as if legality was the arbiter of ethics. So save your breath.
ah there we go!
From all appearances, Amazon is working within the tax laws on the books.
Yes because we all know that legality and ethics are exactly the same thing!
As an individual, do YOU willing not take every deduction you can and volunteer to pay more than what you legally owe?
A deduction is something the governmen
Re: (Score:2)
What Amazon does is a textbook example of failed corporate social responsibility. It would be fair to give back to society by paying what is morally due, instead of (ab)using loopholes and sticking to the same societal obligations as everyone else. In Europe taxes funds health-care, social benefits and services and pensions. Those are benefits European states, including the UK, provide to Amazon's employees via our tax money. We're basically subsidizing Amazon. The amount they give back in charity is only a
Re: (Score:2)
Err, when did "morality" or social responsibility become something that was applicable to a commercial business adventure?
Companies are there to make money, plain and simple.
They have no more obligation that that.
Sure, it is nice, when companies or even individ
That is not an accident (Score:1)
Barstewards (Score:1)
Amazon is a slimeball of a company who does not care about the health and safety of its employees.
Amazon should not escape the sales tax on items 'fulliled by Amazon'
What about all that Alexa (sh1t)? They make it so should be paying the tax.
Written to demonize Amazon, but this seems legit (Score:5, Insightful)
Basically, the UK government wants more tax revenue.
So they look at the big tech companies and say... how can we get them to pay more tax?
Now, at some level our democracies are still functioning as laws have to be somewhat neutral. You can't just create an Amazon specific tax.
So the government says... can we tax Amazon sales? Maybe, but then we'd also end up taxing our own firms like Tesco. So let's not do that.
How else can we tax Amazon?
Maybe tax on 3rd party marketplace sales? That sounds good enough for me.
And away they go. Basically taxing Amazon's sales directly wasn't worth it to the UK government as it would hit other UK retailers that they didn't want to target. Everything worked out.
How this impacts 3rd party sellers... all to be seen. Maybe it's just the 2% push they need to get off amazon and setup their own shop. Who knows. Or maybe they just eat the tax.
Re: (Score:2)
You can't just create an Amazon specific tax.
Sure you can, but you mustn't call it that. As we've seen elsewhere in Europe, you have to make laws that could affect companies like Amazon and then get a regulator or court to award a huge penalty for violating them after an investigation or legal action aimed at that specific company.
Re: (Score:2)
How else can we tax Amazon?
How does Amazon get away with paying so little on UK revenue? The usual trick seems to be to put all of your IP (patents, branding) in a tax haven, then charge your subsidiares in other countries huge fees for using that IP, the reducing the net (taxable) revenue of those subsidiaries. Instead of coming up with all these silly taxes like the Digital Servies Tax, make sure that companies can no longer deduct bullshit charges between international subsidiaries of the same company. I'm no tax lawyer or legi
Re: (Score:2)
Instead of coming up with all these silly taxes like the Digital Servies Tax, make sure that companies can no longer deduct bullshit charges between international subsidiaries of the same company. I'm no tax lawyer or legislator, and I'm not sure how to phrase laws to that effect
And now you understand the problem. The trouble with the simplistic approach you are proposing is that multinational businesses routinely transfer huge sums of money across borders for entirely legitimate reasons, as well as for arguably less legitimate ones constructed for tax avoidance purposes. If prohibiting the tax avoidance without causing huge collateral damage were easy and there was some obvious way to write those tax laws, almost every country would have those laws on its books already.
Re: (Score:2)
Re: (Score:2)
It's extremely easy to tax Amazon. Just make a law that they have to pay corporation tax on profit made on UK sales. Doesn't matter if they then pay huge crippling fees to the parent company that wipe out all their profits, that's their problem.
The EU is trying to do it for the whole bloc. Brexit was supposed to mean that the UK could do that sort of thing more quickly and easily but for some reason they have abandoned the idea. Possibly related to that "become a tax haven" plan they floated a while back.
Re: (Score:2)
It's extremely easy to tax Amazon. Just make a law that they have to pay corporation tax on profit made on UK sales. Doesn't matter if they then pay huge crippling fees to the parent company that wipe out all their profits, that's their problem.
Companies pay expenses first, then corporate tax rate on profits left over (if any) - your suggestion does nothing to change this.
If an international company is making too high a profit in one nation, that branch can borrow money from another - lower taxed - branch and start paying interest on that loan to itself. The highly taxed branch has increased expenditure and lower profits - so less tax, and the lower taxed branch has higher income and profits - so more (but not as much) tax. The branches just nee
Re: (Score:2)
Right, so it needs to be changed so that tax is calculated by looking at the overall profitability of the parent company and the proportion of that income that originates from each country. Sorry I should have explained that better.
So if they make 100bn globally and 10% of their income is from France, France will tax them based on 10bn profit even if the local French subsidiary made a paper loss because of crippling fees or loan arrangements to the parent company.
It's a little more complicated because there
OK so no useful context (Score:3)
What were the expenses for the same period? You are only taxed on
Revenue - Expenses = Profit (which is the amount being taxed)
Governments world wide would love to tax total revenue!
About the main subject, the small business did not buy the required number government officials(bureaucrats, politicians and family members) to be exempted from the tax like Amazon.
Re: (Score:2)
While this is a fair point, just from publicly available figures you can see that most aspects of Amazon's business make a very nice margin by traditional retail standards. My UK businesses pay 19% Corporation Tax on profits, so unless Amazon is earning less than £76M or so in profit from its £13.7B or so in sales (that is, around a 0.5% profit margin or less) then they are apparently paying a lower rate than my little businesses.
Re: (Score:2)
Revenue taxes have existed. In Denmark, the revenue tax was removed in 1967 and replaced with a value added tax. You are implying that there is some kind of barrier stopping governments from creating revenue taxes. This is not the case.
I am not sure governments have feelings.
Re: (Score:2)
But they would love to do it
Re:OK so no useful context (Score:4, Informative)
I think the Guardian article has succeeded in it's attempt to muddy the waters.
The UK (and some other jurisdictions) have introduced a new tax on revenue. They did this because a lot of multinationals are using strategies to export profits to other countries by creating fake costs.
This new tax applies only to large companies and only to "digital services". Amazon are now paying this tax. The small businesses are not required to pay the tax. Amazon has chosen to pass some of this new cost on to the small businesses.
The Guardian campaigned for this tax. Now it's being charged they're making it sound like Amazon like the opposite has happened.
Re: (Score:2)
I think you hit the head on the nail.
"fake costs".
Amazon UK paying a fee to use the name Amazon to Amazon Tax Haven, is clearly just a fake, but legal, setup.
Should make international setups illegal, with few and very clear exceptions and time limited exceptions that require full applications and full disclosure of all setups
Transparency is often a good path to keeping things legal
Re: (Score:2)
The Guardian campaigned for this tax.
No that's manifestly not true. The Guardian campaigned for a tax, not this particular shitshow of a tax.
If you ask for a sandwich without specifying the filling and someone gives you a shit sandwhich, you won't be happy with the excuse "BuT yOu DiDnT sAy WhAt FiLlInG".
Re: (Score:2)
Amazon are now paying this tax. The small businesses are not required to pay the tax. Amazon has chosen to pass some of this new cost on to the small businesses.
At last, some sanity. Thank you.
From the small business perspective, the company supplying services that they use has had a small increase in its own costs, and so the charge it makes to them has increased too.
They can still pursue their business through other services without needing to pay this tax.
Re: (Score:2)
Governments world wide would love to tax total revenue!
They already do in most areas - it's generally known as a "sales tax" in that case. And is generally directly passed on to the consumer as a result.
Re: (Score:2)
Ok then, how much of Amazon's UK expenses went into Jeff Bezos' personal fortune? It seems he becomes wealthier by over $2000 per second (see https://www.businessinsider.co... [businessinsider.com] ). It would be reasonable to charge him UK income tax on that. Yes, I do understand that's something else that billionaires abroad who own multinationals don't have to worry about.
By contrast, I have a small bequest left to me in another country which I have to cash in some day. I understand that when I do, I will also have to show
Re: (Score:2)
But no government that could get him would let if go. The profit for them would just be to great.
I am sick of these tax arguments (Score:2)
Re: (Score:2)
Outside of sales tax (VAT taxes in most of europe) that aren't counted in these totals I imagine... Tax IS NOT paid on Revenue.
Sorry, but I think you've missed the point here. The point of the digital services taxes being introduced by various European countries recently is exactly that they are based on revenues, and they are thus immune to most of the funny money games that big multinationals use to offshore their profits before calculating their liability for Corporation Tax or the equivalent. Also, unlike VAT and its counterparts, the digital services taxes typically can't be offset against spending elsewhere to reduce the liab
TFA is Disingenuous (Score:3, Insightful)
IMO the headline for TFA is misleading and there is a large amount of spin in this article. Amazon aren't avoiding the new tax in any way, shape or form. The tax does not apply to goods sold online and was never intended to. It only applies to advertising and services provided by large websites. So Amazon's UK advertising revenue etc is taxed but their direct sales are not. This is what was intended by the tax.
The article basically boils down to "Amazon is paying the new tax and passing this new cost onto 3rd parties."
The Guardian has a track record of describing taxes as tax breaks for everyone who doesn't pay them. For example, there was an article that described VAT as a "subsidy for business" because businesses can reclaim VAT. There was another one that described the tax rules for pensions as handouts for rich people. This was a rather distorted way of describing the way that we are all allowed to pay into our pensions before tax. We pay the usual tax when we spend the pension. That way it's taxed only once.
I wish they'd stop doing this. It's not helpful.
Amazon Doesn't Pay (Score:2)
The title of this article is wrong because Amazon doesn't pay taxes. Any taxes levied against Amazon are passed right to the consumer. No matter whether the tax is in a line item or not, ultimately this raises the cost for the consumer. That said, the fact that Amazon could conceivably sell items cheaper (less tax) might mean the law will backfire as consumers choose the cheaper Amazon Fulfilled option.
Re: (Score:2)
Yes exactly this. Taxing any reseller is pretty silly, and for that matter, taxing most businesses doesn't make sense for this very reason. I've long felt that corporate income tax should be abolished, and instead make it so that individuals can't hide personal income inside of corporations. If a company gives you a car, that's a form of personal income. Perhaps if corporate taxation was eliminated, but personal income tax liability strengthened, it would encourage companies to reinvest and innovate, and
Re: (Score:2)
If a company gives you a car, that's a form of personal income.
It's called fringe benefit tax where I live, and the benefit you derive from items in your salary package is added to your assessable income for tax purposes.
Perhaps if corporate taxation was eliminated, but personal income tax liability strengthened, it would encourage companies to reinvest and innovate, and pay employees more equitably and stop dumping money on executives.
It would encourage public companies to use profits to buyback shares and increase the value of shareholder equity - which isn't realised as taxable income until those shares are sold (ie: up to never, especially with some ability to pass shareholdings in estates to recipients without triggering a capital gains event that requires payment of associated
Re: Amazon Doesn't Pay (Score:2)
Profit maximization is so insanely fucked-up. The result of same amount of work at the same quality is worth exactly the same always and everywhere. In units of work hours times skill. (Duh)
That is what yoh earn.
Anything beyond that, is profit.
Aka what you ger without giving the equal worth in return.
Aka theft/robbery/usury.
To casually say you are "good" for maximizing that... is the textbook example of organized crime culture.
Why don't you stop stealing and work for ALL the dollars I give you. Cause you kn
Re: (Score:1)
Yes Amazon will pass the tax onto it's customers. However, companies who sell direct or via small platforms don't have to pay the new tax. So this increases competition by increasing costs for Amazon but not for the small players. It also keeps more tax revenue in the UK where the sales happened. If you live in the UK it's hard to find anything bad about this unless you insist on doing all your shopping on Amazon.
Yes they kinda do! (Score:2)
Yes, they kinda do.
Because that means not unviably lower prices compared to the competition, which means not as much business for them, so not as much money.
And more for their competition, due to them draining not as much of the market.
Re: (Score:2)
The title of this article is wrong because Amazon doesn't pay taxes. Any taxes levied against Amazon are passed right to the consumer.
TIL that "charging what the market will bear" isn't a thing!
If Amazon starts paying its fair hare of taxes, then its profits will drop. If it bumps up prices to compensate, people will shop elsewhere and its profits will drop further.
Not "pay more tax". Pay *their* taxes. (Score:3)
As in: Not use our services and infrastructure without paying for it.
As in: Not stealing from us!
Which is the opposite of what that statement claims.
Nice try though.
"bring in about $645 million annually" (Score:2)
This is a charming example of reporting bias.
The tax won't "bring in" about $645 million annually. It will cost you about $645 million annually. The government isn't finding lost money, it's raising your taxes. On you, not on some amorphous blobs of companies that were possibly keeping millions of dollars under the seat cushions. Amazon isn't a person and doesn't sit on a couch. It's apparently considered another good instrument for the government to use to raise taxes on you, though.
I'm sure that's for you