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Amazon Uk Paid £2.4M Tax In 2012 Despite £4Bn Sales

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http://www.bbc.co.uk/news/business-22549434

Amazon.co.uk is thought to have classified itself as a service provider to its Luxembourg business, Amazon EU Sarl, in order to reduce its tax bill. Its UK business employed 4,200 people at the end of 2012, compared with 380 in Luxembourg.

The £2.4m tax bill was just below the £2.5m aid it received from the Scottish government last year to expand its warehouse operations in Dunfermline and Gourock.

Labour MP Nick Smith said: "HMRC should be going through this company's tax arrangements with a fine-tooth comb."

John Hemming, a Liberal Democrat MP, said the figures showed the failure of existing rules to tackle the problem of companies squirreling their profits in tax havens.

"The government clearly needs to do a detailed study on how to handle the tax implications of e-commerce," he said.

http://www.guardian.co.uk/technology/2013/may/15/amazon-tax-bill-new-questions

Company filings showed Amazon's main UK company paid just £3.2m in corporation tax on sales of £320m last year. However, the Seattle-based group has told investors its 2012 UK sales were £4.2bn.

The Guardian investigation has found Amazon pushing definitions close to breaking point; and tax authorities unable, or unwilling, to prevent the imposition of aggressive tax avoidance structures.

Information collected by the Guardian details extensive UK activities that suggest HM Revenue and Customs could take a much tougher line on taxing Amazon's multibillion-pound British operations.

Among the key indicators of whether a business is taxable in the UK is the location of those negotiating deals. A UK publishing executive confirmed that his contract was negotiated on behalf of Amazon EU Sarl, the Luxembourg company, by staff from the British head office in Slough.

"The contract may be with Luxembourg but it is the people from Slough who thrash out the crucial details of the contract such as the discount we agree to give them. There are also people in Slough who are charged with overseeing that the contract is properly executed," the executive said.

Meanwhile, job adverts posted this month on the careers page of Amazon.co.uk invite application for scores of roles in the UK. Among them is a vacancy for a senior financial analyst. "Based at our UK Head Office in Slough, Amazon seeks a Senior Financial Analyst to support Amazon UK's Merchant Services business," the advert said.

Google giving surreal replies again in Parliament...

MPs challenge Google over UK tax reporting

www.bbc.co.uk/news/business-22551401

Edited by Saving For a Space Ship

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You think that is bad!? There is a road in Swansea called Ffordd Amazon - which is the link from the M4 to the Amazon depot.

I don't know how much grant money Amazon got to build the depot in Swansea but they got the road built for them for 3 million quid - 1.5 from the British tax-payer via way of the Welsh Assembly, 1.5 million from the EU Objective 1 money... which was supposedly to be used to help one of the most impoverished parts of the European Union.

I suspect the Amazon bosses were wetting themselves with laughter.

http://wales.gov.uk/newsroom/businessandeconomy/2012/121128amazon/?lang=en

I wonder how much, if anything, Amazon got for the building of the depot?

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http://www.bbc.co.uk/news/business-22549434

http://www.guardian.co.uk/technology/2013/may/15/amazon-tax-bill-new-questions

Google giving surreal replies again in Parliament...

MPs challenge Google over UK tax reporting

www.bbc.co.uk/news/business-22551401

From the evidence google has engaged not in tax avoidance but tax evasion. The answers given to the committee clearly indicate that it has a taxable presence in the UK.

It does not matter where the final bit of paper is signed, but rather where the process of 'sales' take place. So as in the case of google if you have staff negotiating with customers, overseeing contracts, employee commissions based on sales concluded, etc, then that meets the requirement of the "sales" taking place in the UK, and that means it has a UK taxable presence.

However google has told HMRC that none of that occurs in the UK, that it's sales activities are Ireland based. Moreover it's accountants have also signed off on that.

This is clearly tax evasion, not tax avoidance. I would expect any reasonable tax court to conclude this also. The guidelines are pretty clear on this.

Given that it should then be very straight forward for HMRC to audit google, prosecute on the basis of willful tax evasion then hammer them with back taxes, fines and penalties.

The question is, in who's interest will they act? Ours or the MNC's? Will HMRC do the job it is supposed to do, when it comes to corporates?

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So if my company works and sells in UK I can decide to pay tax in Ireland or the Caymen Islands. If they make money in the UK they should pay tax in the UK, and not just generate the invoice in Ireland and expect to pay less tax. If paying tax on earnings in the UK is not profitable then they should shut down the UK operation

Google is not a UK company. It may well have a subsidiary in the UK, as it chooses to have an office here and employ some people. We should be pleased that they do. There is no real need for Google to have any office or staff in the UK. Some of this talk about tax is getting silly now. The UK has companies based in the UK that pay tax here but pay little tax in other countries. Other countries could be up in arms that they are losing tax revenues.

There are many companies that don't make much profit but still employ lots of people. If these companies were shut down it would be a case of cutting of your nose to spite your face.

Edited by BalancedBear

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So if my company works and sells in UK I can decide to pay tax in Ireland or the Caymen Islands. If they make money in the UK they should pay tax in the UK, and not just generate the invoice in Ireland and expect to pay less tax. If paying tax on earnings in the UK is not profitable then they should shut down the UK operation

The point the Google Director was making was that the sale did not take place in the UK. The sale of intellectual property or services is not as straightforward as selling a physical item, for example a cup of coffee. The other issue that you are not accepting is that both the UK and Ireland are in the same trading area: the EU. The Cayman Islands as far as I am aware are not members of the EU. Have a look at Place of supply rules for VAT to see some of the complexity involved.

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The sales activity took place here (invoice raised in Ireland to be paid in Sterling in IIRC a UK bank) are he admitted that the UK personnel has 'sales' in their title were paid commission. The Cayman Islands are also used for tax avoidance by Google and others for 'intellectual right' and 'management fees'.

You forgot to mention the Rolling Stones using Holland to reduce the tax payable on their royalties.

So let's say you've established that in principal it is wrong to choose which jurisdiction to pay tax in, so tell me the rules you are you going to draft to prevent it?

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My company made 150k profit last year and will be paying 30k corporation tax (as well as all the rest)

If amazon paid my companies rate, they'd have paid £800million in corp tax

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http://www.bbc.co.uk/news/business-22549434

http://www.guardian.co.uk/technology/2013/may/15/amazon-tax-bill-new-questions

Google giving surreal replies again in Parliament...

MPs challenge Google over UK tax reporting

www.bbc.co.uk/news/business-22551401

...instead of the emotion driven kangaroo courts involving ego driven MPs as judges ...what a laugh that is... why don't these same MPs get down to working out ways of changing the tax laws which were drawn up pre digital ....the reason is ..they are just not very bright ...and love their 15 minutes of fame...but at the end of many days that have passed ...the Treasury should have had this sewn up pre last budget..and what they need to do now is ...get the finger out.... :rolleyes:

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If they didn't need staff here they would not have staff here they would base them in India or China as it is cheaper ... and it's losing not loosing tax revenues. It is clear they should be paying tax here, they are doing business here.

I have fixed my typos now, including another you did not highlight. I imagine you don't ever make any.

Companies do not pay corporation tax on doing business. They are only obliged to pay tax on profits made. There are taxes to be paid simply for doing business, such as business rates and national insurance contributions for employees. I would imagine that these are duly paid when required. If the UK wants to tax businesses more for simply operating, it would need to introduce a new tax such as a turnover tax. I'm not sure it would it would make the country any better off though.

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and who leads the charge and calls them evil ... none other than Margaret Hodge of ... 'Margaret Hodge's family company pays just 0.01pc tax on £2.1bn of business generated in the UK' .. fame.

Watch her squirm...

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Profits can be fixed as is well known, common methods being 'management fees', 'royalties' etc do the shareholder of Starbucks really believe that the UK operation has lost money for ten years but still think the investment is worth it? Sure in a start-up you can not make any money for years but Starbucks and I guess Google are mature businesses that do make money.

We all know that profits can be manipulated. However manipulating profits through legal means is legitimate as far as tax rules are concerned.

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They pay taxes in other jurisdictions. The gripe is we're not getting our fair share. The answer then is to make our tax rates the same as the jurisdiction they currently pay tax in.

The gripe is is that the economic activity that generates the taxable revenue occurs in the UK, but via various means is shifted abroad so it is then treated as occurring elsewhere.

As for lowering our tax rates to that of tax havens that's an idiotic proposal.

The reason tax havens work is that they tax economic activity that occurs elsewhere, to the extent that the revenue is large enough to offset very low rates of tax.

To illustrate this process as an example lets assume your tax haven government would typically need a tax take of 20% of it's GDP to function and provide necessary services.

However that tax haven is actually taxing 500%+ of its GDP because its taxing economic activity that is occurring in the UK, germany, US, etc as well as that that occurs in the tax haven

But because it is not providing the necessary government functions and services to support that 500%+ of economic activity but only 100% of it, it only then needs a 4% (or less) tax take of that 500%+ of it's GDP to support it's internal 100% of GDP economy.

This is why tax havens are all small entities or small parts of larger entities.

It is also why if the UK tried to lower our tax rates to tax haven rates the government would not have enough income to function and our economic system would collapse. No if's no but's. Just collapse.

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You forgot to mention the Rolling Stones using Holland to reduce the tax payable on their royalties.

So let's say you've established that in principal it is wrong to choose which jurisdiction to pay tax in, so tell me the rules you are you going to draft to prevent it?

There does not need to be any change in the rules with reference to google and their recent activities. They have broken the law and undertaken tax evasion.

All that is needed is HMRC to impose back taxes, penalties, and fines. if they refuse take them to court for tax evasion.

Given the evidence that's been presented (sales commissions to UK workers, sales targets for those workers, invoices sent from the UK, etc, etc) it's an easy win case.

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There does not need to be any change in the rules with reference to google and their recent activities. They have broken the law and undertaken tax evasion.

All that is needed is HMRC to impose back taxes, penalties, and fines. if they refuse take them to court for tax evasion.

Given the evidence that's been presented (sales commissions to UK workers, sales targets for those workers, invoices sent from the UK, etc, etc) it's an easy win case.

..are you an ambulance chaser...?... :rolleyes:

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There does not need to be any change in the rules with reference to google and their recent activities. They have broken the law and undertaken tax evasion.

All that is needed is HMRC to impose back taxes, penalties, and fines. if they refuse take them to court for tax evasion.

Given the evidence that's been presented (sales commissions to UK workers, sales targets for those workers, invoices sent from the UK, etc, etc) it's an easy win case.

Could the UK afford to risk driving Google away. If government action resulted in Google being switched off in the UK for a week in retaliation it would be political suicide as most likely the populace would blame the government rather than Google.

The only solution is probably simpler tax and a world government and unfortunately that's game, set and match to the present global central banking cartel. I wouldn't be surprised if it didn't start as a global internet tax administered by a seemingly (to the populace in general, in any case) benign supranational body like the UN, with overall accounting done on a global basis in something like special drawing rights. This is assuming such a move didn't immediately provoke a stampede into Bitcoins.

This particular genie could be very hard to stuff back into a bottle. All governments are really going to have a spectacularly hard time hiding from the people just how expensive they are and what poor value for money they represent.

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From the evidence google has engaged not in tax avoidance but tax evasion. The answers given to the committee clearly indicate that it has a taxable presence in the UK.

Interesting - sounds like you are now a tax expert and prepare to make accusation that Google has done something criminal.

It does not matter where the final bit of paper is signed, but rather where the process of 'sales' take place. So as in the case of google if you have staff negotiating with customers, overseeing contracts, employee commissions based on sales concluded, etc, then that meets the requirement of the "sales" taking place in the UK, and that means it has a UK taxable presence.

Really? That is not what the Irish-UK tax treaty says. In the treaty, tax is payable if the sales is concluded in the UK, or that in the sales process gets so closed to completion that the sales are concluded in the UK. One cannot determine this unless one has full set of facts in details.

I am wondering if when we buy product/services by calling a call center in India, the relevant UK company will be paying Indian Taxes :D

However google has told HMRC that none of that occurs in the UK, that it's sales activities are Ireland based. Moreover it's accountants have also signed off on that.

This is clearly tax evasion, not tax avoidance. I would expect any reasonable tax court to conclude this also. The guidelines are pretty clear on this.

If you look at the second half of the PAC meeting, the HMRC lady said that the outcome of such dispute will follow the letters of the law, rather than common sense, unfortunately. Then, Margaret was surprised (!) that laws do not always follow common sense.

The PAC meeting also discussed about cross border VAT transactions and many (if not all) of the MPs were totally clueless as to how it works.

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This is all bollacks... If the company is legal , then its game on ....all this muttering by our politicians is just waving a flag to their own utter incompetence or vested interests...this is all diversionary. The issue lies fair and square with Parliament and thats it! ....its for them to sort the legislation out ....not for companies to be blackmailed into "voluntary " contributions

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This particular genie could be very hard to stuff back into a bottle. All governments are really going to have a spectacularly hard time hiding from the people just how expensive they are and what poor value for money they represent.

Exactly - If the government ran google, it would not be a service that generated profits anywhere, but a service that would have to be provided by taxes.

Edited by BalancedBear

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I'm fed up with all the government whining about tax avoidance. If they think its not right (and I agree in some cases it isn't) then it is up to them to change the rules. They set the tax rules, so if they're not happy, change them, rather than moaning at businesses for following them.

Likewise people claiming its evasion rather than avoidance. Surprising how many accountancy experts pop up on here, who are clearly more knowledgable than the raft of accounants employed by multi-nationals to ensure they stay on the right side of the law.

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Amazon under fire in Germany for low tax bill

www.zdnet.com/amazon-under-fire-in-germany-for-low-tax-bill-7000018108/

.....Amazon earned more than €6.8bn in 2012, cornering one-quarter of the online retail market in Germany.

German politicians, however, are not so thrilled about Amazon's success: Amazon paid just €3m in income tax for that year.......

To avoid relatively high German taxation, Amazon is channelling its business through its Amazon Europe Holding Technologies, based in Luxembourg, where the income tax is a lot lower.

(Under the legal arrangement, when a European customer makes a purchase, they are buying from the Luxembourg company, with the order then fulfilled by Amazon's local subsidiary.

As a result, the sale is chalked up to the Luxembourg unit, where it is taxed.)

The holding company reported €118m in profits in 2012 (in Germany, Amazon reported only €10m profit), but because of a tax-exempt partnership, it did not have to pay any income tax, Reuters reports.....

...........German politicians have long called for a change in European tax laws and a shift in the way that international corporations are able to shift profits around.....

..............Amazon has also been under attack by German trade union Ver.Di because of its refusal to join a collective agreement regulating wages and working conditions. There have already been a number of strikes at German Amazon facilities as a result.

The company employs more than 9,000 people in Germany across eight sites.

Although the strikes did not impact Amazon's business operations, the company remains under pressure from workers

Edited by Saving For a Space Ship

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I have fixed my typos now, including another you did not highlight. I imagine you don't ever make any.

Companies do not pay corporation tax on doing business. They are only obliged to pay tax on profits made. There are taxes to be paid simply for doing business, such as business rates and national insurance contributions for employees. I would imagine that these are duly paid when required. If the UK wants to tax businesses more for simply operating, it would need to introduce a new tax such as a turnover tax. I'm not sure it would it would make the country any better off though.

VAT is effectively a turnover tax.

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Things like this really grind my gears. If we all bought local we could stop this craziness!

It's a shame Amazon are so damn handy & efficient.

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Amazon have never taught anyone to read- nor Google for that matter- the money to do that was generated by taxation. But how much profit could either make from an illiterate population?

The bottom line is that they want to drink the water but not pay the costs of maintaining the well.

Ok- the CEO's of these companies can argue that taxation is not a moral issue.

But if their personal income tax rates were suddenly raised to 99.9% they would be jumping up and down crying about how 'unfair' that would be- and I would agree with them. But the question of 'fairness' is a moral question is it not?

So it turns out that taxation is a moral issue after all. :lol:

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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