News - France seeks over $250 million in back taxes from Amazon

[Champman99]

I think some blame has to be attached to the governments of the corporate tax havens. Theres something a little bit parasitic about having a ridiculously low corporation tax with the intention of syphoning off a companies operations in much larger countries (I'm looking at you Luxembourg).

I dont mind so much if you have a low rate to actually attract businesses in, and those businesses generally operate and employ lots of staff in that country. For instance if you look at Google, they genuinely employ a lot of people in Ireland, so you can legitimately claim that the sales in the UK are genuinely generated in Ireland / The US. This is I think what people are fundamentally arguing about, where is the sale generated, Google claim that the development and software that lead to the sale are legitimately developed in America, and hard to argue with that. But can Amazon really legitimately claim that the British sale is "generated" in Luxembourg?

I dont see any way round this though unless there is a massively worldwide agreement on corporation tax, an then if you were a small country that massively benefits from being a tax haven why would you agree to this. I almost think you have to do away with corporation tax completely and hope that in doing so companies start employing people where they generate sales, and therefore you get the tax from Income Tax / NI. Its very difficult.

[mark22]

I think some blame has to be attached to the governments of the corporate tax havens. Theres something a little bit parasitic about having a ridiculously low corporation tax with the intention of syphoning off a companies operations in much larger countries (I'm looking at you Luxembourg).

I dont mind so much if you have a low rate to actually attract businesses in, and those businesses generally operate and employ lots of staff in that country. For instance if you look at Google, they genuinely employ a lot of people in Ireland, so you can legitimately claim that the sales in the UK are genuinely generated in Ireland / The US. This is I think what people are fundamentally arguing about, where is the sale generated, Google claim that the development and software that lead to the sale are legitimately developed in America, and hard to argue with that. But can Amazon really legitimately claim that the British sale is "generated" in Luxembourg?

I dont see any way round this though unless there is a massively worldwide agreement on corporation tax, an then if you were a small country that massively benefits from being a tax haven why would you agree to this. I almost think you have to do away with corporation tax completely and hope that in doing so companies start employing people where they generate sales, and therefore you get the tax from Income Tax / NI. Its very difficult.

Or... stop people relying on benefits, realise who makes money, voila grow up. You almost have it with do away with, follow it through.

[cjs150]

The problem with tax havens is that defining them is very difficult.

Countries raise tax in order to provide govt with money to implement their policies. We do not have the right to dictate the spending plans of foreign countries.

So if one country has a low tax rate but keeps govt budget in balance and the other country has a much higher rate of tax but, in good times, is running a govt deficit of c.5% of GDP (ie the UK in 2007) which country is the tax haven?

[Champman99]

Well I think the idea of the tax haven is that it is taking a small amount of tax, but essentially the company that is paying the small amount of tax has no real operations in that country. So the government is raising money to spend on public services yes, but it is essentially siphoning off the operations of companies that another country has for whatever reason chosen to tax highly.

The point is that the UK has decided that companies should pay 28% or whatever it is on UK profits, and by shifting these profits to Luxembourg, the Luxembourg government and people are facilitating the company doing business in the UK while avoiding this tax, and making some money out of it in the mean time.