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Thread: Amazon, Google and Starbucks.

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    Amazon, Google and Starbucks.

    Amazon, Google and Starbucks were up in front of the Government over tax issues, will you still shop with any of them?

    I think with the state of the economy I will shop at Amazon because some of there products are a lot cheaper, and Black Friday is only around the corner and some fantastic bargains to be had, as for Google I do not buy anything from them but I do use there search facilities, and when it comes to Starbucks I do not like there coffee much prefer Costa.

    http://www.bbc.co.uk/news/uk-20305250

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    Banhammer in peace PeterB kalniel's Avatar
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    Re: Amazon, Google and Starbucks.

    What is Costa's tax situation?

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    Re: Amazon, Google and Starbucks.

    There was an episode of Newsnight that went into this in some detail, it might still be on iPlayer.

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    Re: Amazon, Google and Starbucks.

    Quote Originally Posted by kalniel View Post
    What is Costa's tax situation?
    Costa is owned by Whitbread who paid 31% tax of its profits.

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    Re: Amazon, Google and Starbucks.

    Well in my opinion this is what happens when you have a system so complicated, one little mistake can make a company get out of anything .

    Although my opinion is that Starbucks should be paying far more due to the fact they are actually setup in england as in they have shops where people go and hand money over. Amazon on the other hand dont really have much than a distribution hub in england, they should be paying less than the other two as they do pump alot of money into england and provide crap loads of jobs when they could simply open a hub elsewhere and ship from there, not that they should pay any they should still pay more but they arent directly linked to the UK like starbucks is, starbucks collects the money in england there for it should be taxed where as Amazon can take it anywhere as they payment is online.

    And google, hard to really pay much tax for them when the fact is they dont sell much in england .
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    Re: Amazon, Google and Starbucks.

    Actually one of the worst offenders is Intel, although there is some logic to it.

    Basically Intel sell a processor (from the USA or Ireland) to Intel UK for say £95 and then Intel UK sell it for £100. this means they are only technically making a profit of £5 and thus only have to pay tax on £5 instead of £100.

    Now in may ways this is a con and a way to pay less tax, but on the other hand if all the expensive design work and fabbing is done overseas why should the UK get tax based on that work? It's not like Intel UK really does anything except marketing.

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    Comfortably Numb directhex's Avatar
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    Re: Amazon, Google and Starbucks.

    Quote Originally Posted by kalniel View Post
    What is Costa's tax situation?
    Direct from their 2011 financial reports:

    Turnover: £377,284,000
    Profit on ordinary activities before taxation: £49,468,000
    Corporation tax: £15,077,000

    So about 30.5%, or double in one year what Starbucks has paid in 14 years, with equal turnover, costs, and staffing levels.

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    Re: Amazon, Google and Starbucks.

    I think it's a similar thing to Intel. That Starbucks USA charge Starbucks UK for the use of their image and branding and thus because they pay large amounts for this 'privilege' they make little to no 'profit'.

    Of course unlike Intel, Starbucks aren't ploughing billions into research and development and fabs, etc. back in the USA.

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    Re: Amazon, Google and Starbucks.

    Quote Originally Posted by Geoff I View Post
    Amazon, Google and Starbucks were up in front of the Government over tax issues, will you still shop with any of them?
    Yes, I will. If they have the product I want (and Starbucks don't), at a price I'm willing to pay, then damn right I'll shop with them.

    After all, they aren't doing anything (legally minimising tax bills) that I won't do, and indeed, actively do do, given half a chance. Why do I max out my ISA allowance? Because if I put it in there, I pay less tax, and therefore get a better return, than if I put the same in a normal savings account.

    The principle is exactly the same - legally lowering my tax bills.

    And if the government don't like it, change the flaming laws. After all, you, government, are responsible for the tax law, and in large part, your predecessor government wrote it.

    Also, before we get too precious about a small list of foreign companies "dodging" tax, we need to make absolutely sure that British companies aren't doing exactly the same abroad. That is, using transfer pricing to move profits out of one jurisdiction into another. One industry I'd like to look at in that regard, to find out exactly who does what, is big pharma.

    And indeed, for some companies on the "dodging" list, I'd also query the basis for the "dodging" charge. If, say, Intel spend a vast amount on R&D designing and developing, say, a processor, in the US, then it is only fair and reasonable that the US has a transfer pricing scheme that transfers a proportion of that R&D cost to other jurisdictions where the products are sold. Then, of course, you start to get in to very judgemental areas of just how much of that cost is, or should be, reflected in transfer pricing.

    Also, it's worth remembering that the owners of companies, and in very large part that means the likes of pension funds (using our money), expect the companies they own to maximise profit. It's not only not a dirty word, it's a legal duty on the board to represent the interests of the owners, not to maximise their tax liability to support profligate governments.

    So, do you want your pension contributions to go up, or your pension when you get it to go down, so that governments can get to grab even more of our money than the greedy gits already do, because that is where it'll go - straight down the toilet pan, like a large percentage of what they already grab.

    Will I continue to shop there? Flaming right I will, if it's in my interests to do so, and to hell with corporate tax rates. If governments aren't getting a "fair" rate of return in tax revenues, it's proof positive of rank incompetence of successive governments that wrote the tax law, and to try to now foist moral responsibility onto those with a legal duty to do what they do (i.e. company boards) is hypocrisy and two-facedness of the first order.

    Don't sit there whinging and wringing your hands, government, get off your fat butts and do your damn jobs for once.


    /rant over .... for now.

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    Comfortably Numb directhex's Avatar
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    Re: Amazon, Google and Starbucks.

    Where you shop has a direct tangible effect, courtesy of things like this.

    A simplified explanation: A large secondary school (1600 pupils) costs £8m a year to run. Costa is paying for two large secondary schools that Starbucks aren't.

    That's the difference between the companies. The only one. They have practically identical turnover, staffing levels, running costs, pay rates, and so on. And the goods are pretty much equivalent. One of them supports the country that provided them with the environment allowing them to thrive, one of them does not.

    Skipping Starbucks is easy, since the alternatives are so obvious and directly equivalent. Google and Amazon, it's rather harder, since the alternatives are not directly equivalent.

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    Seething Cauldron of Hatred TheAnimus's Avatar
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    Re: Amazon, Google and Starbucks.

    Quote Originally Posted by directhex View Post
    One of them supports the country that provided them with the environment allowing them to thrive, one of them does not.
    Starbucks charge VAT right? NI on wages? Commercial Rates on the buildings?

    How would you stop starbucks doing something like they are?

    Also can I put another one in this list?

    The GMG, when they sold Auto Trader....
    throw new ArgumentException (String, String, Exception)

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    Re: Amazon, Google and Starbucks.

    There's one key question here - have these companies paid all the tax that they are legally required to without using any unlawful measures to reduce that tax burden?

    If they have, then fair enough, and well played to them. As Saracen says, the government's job here is to tighten up tax law and ensure that any legal ways of reducing the tax burden that companies use are fair. If they're not fair find a way to legislate around them. As TA points out, there are all sorts of ways that Starbucks *do* put into the UK tax economy, unavoidably, regardless of the amount of corporation tax they pay, not least by employing UK citizens who then pay tax and NI and also spend money on VAT-carrying goods.

    And let's be honest, given the competence any of them have shown managing the UK economy, do you really want to give the politicians more money to waste?

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    Re: Amazon, Google and Starbucks.

    Quote Originally Posted by Saracen View Post
    And if the government don't like it, change the flaming laws. After all, you, government, are responsible for the tax law, and in large part, your predecessor government wrote it.
    There are laws, but you can't write laws to cope with all the different cases. You have to start using terms like 'reasonable' and 'fair' and these are of course subjective. I'm sure the UK could use the current laws against Starbucks, etc. but it would be very costly in legal terms.

    Quote Originally Posted by Saracen View Post
    And indeed, for some companies on the "dodging" list, I'd also query the basis for the "dodging" charge. If, say, Intel spend a vast amount on R&D designing and developing, say, a processor, in the US, then it is only fair and reasonable that the US has a transfer pricing scheme that transfers a proportion of that R&D cost to other jurisdictions where the products are sold. Then, of course, you start to get in to very judgemental areas of just how much of that cost is, or should be, reflected in transfer pricing.
    Indeed, this seems perfectly reasonable in Intel's case, I'm not quite sure how Starbucks and others justify it though. You would need a test that showed that fully independent companies would be happy to pay the same prices as the subsidiary companies do.

    But yes, agree with you in general.

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    Re: Amazon, Google and Starbucks.

    Quote Originally Posted by Willzzz View Post
    There are laws, but you can't write laws to cope with all the different cases. You have to start using terms like 'reasonable' and 'fair' and these are of course subjective. I'm sure the UK could use the current laws against Starbucks, etc. but it would be very costly in legal terms.....
    The tax code has increased VASTLY in recent years. Most of it under Gordon Brown, but even since the coalition took up power, it's become more complicated, not less so.

    It's not words like fair or reasonable that need to change, though, it's the definition and/or interpretation of "tax presence" as relates to corporation tax, perhaps bringing it more into line with the interpretation for PAYE. Google might still be able to dodge round that, but Amazon, Intel and most certainly Starbucks could not. Arguably, Intel could react by pulling all operations, staff and employment out of the UK, but again, Starbucks cannot, and it wouldn't be easy for Amazon.

    Quote Originally Posted by Willzzz View Post
    ....

    Indeed, this seems perfectly reasonable in Intel's case, I'm not quite sure how Starbucks and others justify it though. You would need a test that showed that fully independent companies would be happy to pay the same prices as the subsidiary companies do.

    But yes, agree with you in general.
    A relatively simple solution to the problem induced by transfer pricing is a minimal level of turnover tax, rather than profit-based Corp tax, again with reference to UK "turnover" being defined by sales in the UK, that being where the customer is, not a notional Luxembourg-based web-platform as per eBay.

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    Re: Amazon, Google and Starbucks.

    I stopped going to Starbuck because I decided I didn't like Bean-to-Cup coffee. Now that all this has come up, I feel right-on...

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    Comfortably Numb directhex's Avatar
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    Re: Amazon, Google and Starbucks.

    Quote Originally Posted by scaryjim View Post
    There's one key question here - have these companies paid all the tax that they are legally required to without using any unlawful measures to reduce that tax burden?
    There is at least one piece of borderline-lawbreaking going on in the case of Starbucks.

    There is a huge discrepancy in terms of what Starbucks UK are claiming to HMRC (i.e. how terrible their losses are), and what Starbucks are claiming to the SEC back in the USA (how fabulously profitable their UK operations are, setting a model for expansion in the rest of Europe). A several million pound discrepancy. Either someone is lying somewhere, or there's some *very* creative accounting going on for a profitable business to be relabelled as a loss-making enterprise in order to avoid paying tax. In both cases, even if it's legal, it's not behaviour that should be rewarded by people giving them custom.

    And let's be honest, given the competence any of them have shown managing the UK economy, do you really want to give the politicians more money to waste?
    The country we have built is one with a public good funded by the public purse. The alternative is a Libertarian utopia with no government nonsense stealing money via taxes and wasting it on stuff - AKA Somalia.

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