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Amazon and Google, you utter *****

Those of you who follow the news will know what I am on about.

I keep hearing, often from people from tax advisory, that it is all the fault of our law, which needs to brought up to date.

I beg to differ. It is the fault of HMRC and politicians who fail to understand how these businesses actually work. They keep saying it is so complicated. Oh yes? Well let me offer you a little analogy.

Suppose you build up a successful little business in, say, plumbing. Your sister lives in Dublin, and is an Internet wizard. You open up your company in Dublin, and "route the sales" as Amazon calls it, through the invoicing service your sister provides. For good measure she designs you a nice little website which is housed on an Irish server. Nevertheless your customers, and the central heating, taps and washing machines you fix, are all based in SE London

Try telling HMRC that you are eligible for Irish and not British corporation tax, because you have "routed the sales" through Dublin, and see where that gets you.

I don't see any substantive difference with what Amazon and Google are doing.

It is very difficult to "boycott" Google, but I have managed to almost 100% boycott Amazon since before Christmas. One thing in particular is, if it is a Marketplace deal, to see whether the vendor is online, and then buy directly from them. I wrote to Amazon telling them what I am doing, and will do so again after today's reports.
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Comments

  • I like Amazon and Google
  • How much tax Have they avoided paying?
  • How much tax Have they avoided paying?

    Read that amazon paid 2.4 million in corporation tax and received 2.5 million in a grant to build a facility in scotland. Probably more to that than meets the eye. Well hopefully.

    Think it worked out amazon paid less than 1% in tax

  • the amount was 0.1% not 1.0%
  • I can't believe they got a grant. We are a joke. Pisses me off when I buy through my business on Amazon and the vat is Luxemburg so I can't claim it back. Will actively avoid both now as much as possible
  • I know we are peed off with what they are doing , but its legal ( if not morally right) and the government can't do anything about it.

    Maybe we should all stop paying tax?
  • Maybe all taxes should be abolished but things that aren't essential should be made more expensive?
  • I know we are peed off with what they are doing , but its legal ( if not morally right) and the government can't do anything about it.

    Maybe we should all stop paying tax?

    If it is "legal", why would HMRC not allow my plumber to 'route sales' through Dublin?

    We should remember that our law is a flexible thing, open to interpretation based on what 'the reasonable man" might conclude. Amazon and Google run rings around our politicians and HMRC because neither of those authorities manage to educate themselves on how the companies do business. It is inexcusable. Of course they can "do something". The politicians can get advice from people who have experience in these areas of business, and they can beef up, rather than cut back on HMRC's senior staff. If HMRC poached a Chief Finance Officer from an international advertising agency and got him to work on Google's case, he'd nail them in weeks. Especially if he was on a bonus of % of increased tax take.

  • I hear you Prague, but these fellas are probably running tax avoidance schemes all over the globe, its how they got so big, we are too apathetic in this country, we moan About things ( myself included) but don't have the will or no how to change things.

    The government thinks by trying to publicly embarrass these companies that they are suddenly going to play ball, they won't.

    It will be a lot of excitement as usual , and then it will die out.

    In 12 months time , 90 per cent of Charlton Lifers who use Amazon now,will still be using them.

    Seeing the crazy ideas politicians of either colour come up with and spend money on , if I was a filthy rich tax avoiding cheat, why would I want to give them any of my money?
  • The government thinks by trying to publicly embarrass these companies that they are suddenly going to play ball, they won't.

    You are probably right about the government - given that Cameron, Clegg and Osborne are all wealthy in their own right from family trusts many people will ignore what they have to say. But there are grassroots organisations such as UK Uncut who publicise tax avoidance by large organisations:

    http://www.ukuncut.org.uk/
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  • Agree - we need a popular movement to hit Google where it hurts and shame them into doing the right thing by increasingly bad publicity.

    The cheeky ****s....
  • One of the things that did for the News of the World was a grassroots campaign to persuade advertisers to stop advertising in the rag for fear of bad publicity.
  • Its so simple. Introduce a turnover tax on all UK sales of, say, 1 percent. If they want to do business here, thts the price. Job done.
  • Google and Amazon have improved my life no end over the past 10 years. I really couldn't give a toss how much tax they pay.
  • Not enough apparently though.
  • I am doing a big work project on this issue at the moment for an Asian government, the powers-that-be have had more than enough of being given the run-around by Google, Apple, Amazon etc. and are going to spend a lot of time reigning them in over the next few years.

    These companies are great at what they do but its very unfair that they operate on a different playing field to bricks and mortar retailers who are closing down as a result of the 'OTT' business model used by Amazon and Google.

    The price you pay for cheap goods from Amazon and Google is that the taxation coffers of your own country suffer as a result, the money for essential services has to come from SOMEWHERE so the current behavior of these guys will not be tolerated for much longer.

    The Irish in particular are coming under huge pressure to end their 12% corporation tax for these companies, that's why so many of these firms are based in Dublin.
  • kafka said:

    I can't believe they got a grant. We are a joke. Pisses me off when I buy through my business on Amazon and the vat is Luxemburg so I can't claim it back. Will actively avoid both now as much as possible

    You can claim it back. Let me know if you want to know more - no fee!
    ;-)
  • edited May 2013
    You're forgetting Starbucks too; although they may have fixed their tax situation somewhat after UK Uncut got involved.

    @Prague touches on a good point about HMRC essentially being too lazy to educate themselves about the operations and executions of these companies. However, if HMRC did have a policy of educating their staff on these topics then I expect we'd probably see something akin to the MHRA (Medicines and Healthcare Regulatory Agency) and Pharmaceutical Companies.

    It's really not out of the ordinary for people to work their way up the ranks of a regulatory body before being offered a senior position in a regulated environment; where their knowledge and existing network can be used to think of 'creative' ways of playing a system. (Yes, rules exist that try to minimise this - but they aren't always that effective.)

    I think @IdleHans has the best idea really; a simple black-and-white concrete rule that can't be wiggled or wormed out of. A rule so astoundingly clear and simple that there is no lee-way for arguing over the legalities of paying x amount or routing sales through x region.

    Who is going to get bitten in the ass though? Us. As it is we pay more than the US on a lot of things; even with shipping and exchange rates factored in. If Amazon, Google et al are now going to actually have to... shock horror... pay their tax - then are they going to let that eat in to their profit margins? Are they fuck. They'll just add a little wedge on to their sales to account for that and continue shafting us.

    They either sell to us (at inflated rates compared with other markets already) and contribute sweet fack all to our economy; or they sell to us at prices that are even more inflated but reluctantly contribute the minimum they can to our economy.

    (Disclaimer: Despite this, I love Amazon and have an Amazon Prime account & I'm a heavy Google Apps user that really likes their brand and outlook as a company)
  • edited May 2013

    I know we are peed off with what they are doing , but its legal ( if not morally right) and the government can't do anything about it.

    Maybe we should all stop paying tax?

    If HMRC poached a Chief Finance Officer from an international advertising agency and got him to work on Google's case, he'd nail them in weeks. Especially if he was on a bonus of % of increased tax take.

    You really think so? In my experience people in advertising know fuck all about tax.

    As I think you are proving.
  • I know we are peed off with what they are doing , but its legal ( if not morally right) and the government can't do anything about it.

    Maybe we should all stop paying tax?

    I do try to avoid using Amazon, Starbucks, etc but I suppose I'm being hypocritical. Because I do strive to avoid paying tax myself! You know, max up the ISA accounts to avoid tax on savings; buy duty free; buy low tax wine and beer from Calais; stuff from the Canary Islands; cheap clothing from Florida (with only 7% sales tax and no 20% VAT), etc, etc.
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  • Good luck to anyone avoiding paying tax!
    If I could get away with paying no tax, then I, like most people wouldn't pay it.
    Just because its two massive companies everyone pisses and moans about it.
  • Slightly aside (but an example of their dominance), for every 1,000 arrivals to CL we get via Yahoo, we get 50,000 via Google.
  • Who on earth is the 1 person in 50 using Yahoo?
  • Like IdleHans says, an online selling tax could be implented for any company registered overseas who are not paying UK charges.
    It wouldn't be too difficult to put into place or manage.

    The consumer may end up paying slightly more for their orders, but it would save the government from raising everbody's taxes to account for the shortfall.
    1 man's loss is everbody's gain!

    It may even make it a little bit more of a level playing field for the bricks and mortar shops and keep the UK high streets going - those that do pay tax.
    After all, if they all dissapear it'll be us UK wage earners who'd get taxed more.

    Rant over. Any transfer news ? ;)
  • edited May 2013
    Greenie said:

    Good luck to anyone avoiding paying tax!
    If I could get away with paying no tax, then I, like most people wouldn't pay it.
    Just because its two massive companies everyone pisses and moans about it.

    Yes, because if nobody paid any tax then that would work out great.....
  • redcarter said:

    Who on earth is the 1 person in 50 using Yahoo?

    Probably someone who has downloaded some crap piece of software and had their default search engine set to Yahoo without them knowing.

    There are even some people who use ask.co.uk (remember Ask Jeeves?)
  • Its all those bastard Tories fault
    Under LIEbour Google/Amazon and Starbucks paid billions in tax to HMRC as did the banks ---because those top people in the 13 years of Liebour were all good old working class miners who would never embrace deregulation, they would never infact be saying days before the wheels fell of the economy that MORE delregulation was required (Ed Total Balls).
  • IdleHans said:

    Its so simple. Introduce a turnover tax on all UK sales of, say, 1 percent. If they want to do business here, thts the price. Job done.

    That's not the issue - the issue is what constitutes a 'UK sale'. Google would avoid a turnover tax in exactly the same way, but saying that the sale was taking place in Dublin.
  • It's not difficult to avoid tax as a large company.

    I set up 2 companies, one in the UK that sells widgets and one in the Camen Islands that owns the rights to the company logo/branding.

    The UK company makes 10million profit this year, so the Camen Islands company simply bills it for 9.5million licensing fees for using the logo. Result is on 500k taxable profit in the UK.

    There's no way to stop that happening. You can't stop company A from billing company B for services rendered, even the companies are constructed in such a way that the service is largely fictitious.

    Of course only companies can do this, self employed and individuals can't because we usually want to spend our income at some stage, so we have to bring that income into the country as earnings at some stage. A large company can do it because they will either sit on the cash and then bring it in as income at a latter date, or more likely either invest it elsewhere or pay it out to share holders as dividends. Those shareholders then pay tax on that income.

    It gets more complicated in the Jimmy Carr scenario. There are lots of ways you could try and spend your income without spending it, but they are usually subject to taxation. For example you could stash your earnings in an offshore, then have that offshore company buy a house and you live in it rent free. Tax man will usually try and say that's a taxable benefit and hit you for what would be a reasonable rent for the property as if it was income. Gets complicated and there are way around it, but you need better accountants. The company structure above is simple enough that anybody could set it up in a few hours.
  • It's not difficult to avoid tax as a large company.

    I set up 2 companies, one in the UK that sells widgets and one in the Camen Islands that owns the rights to the company logo/branding.

    The UK company makes 10million profit this year, so the Camen Islands company simply bills it for 9.5million licensing fees for using the logo. Result is on 500k taxable profit in the UK.

    There's no way to stop that happening. You can't stop company A from billing company B for services rendered, even the companies are constructed in such a way that the service is largely fictitious.

    As the law stands now, no. Is there any reason why they couldn't change the tax rules so corporation tax is assessed on any profits made before payments are made out to
    a) any company that is owned by the company's parent company
    b) any company that is registered in a tax haven?

    It wouldn't stop the Google trick of pretending that they are doing business in another country when they are actually doing it here, but if it worked then it'd stop the Stabucks shenanigans.
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