It's not the companies fault the Government has setup and left 'loop holes' to be taken advantage of LEGALLY. They should blame themselves not the companies as they are entitled to them as it is within the scope of the law. Providing jobs to people and passing on savings to consumers is a red herring, the crux should be the incompetance of the government for providing these loopholes.Originally Posted by Caveman
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The loopholes are usually provided for perfectly good reasons. It's just that companies use some creative interpretation of the wording that they use to expand the original scope of the loophole. In most cases these interpretations could probably be shown to be incorrect in court, but this is expensive and time consuming and thus companies are rarely brought to task for their faulty interpretation of the law.
expensive maybe, but the ramifications of getting back 100's of millions back in tax is worth it surely to challenge them??
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Just because its legal and mainly the governments fault doesn't excuse Amazon for being a **** employer. Being legal doesn't mean its right and the same can be said for illegal things. Just because the government say X is illegal doesn't mean X is wrong.
Also I have a lot of experience of how bad Amazon for example are to work for...their new warehouse in Rugeley is a prime example of a company using every trick in the book to keep costs rock bottom and just use and abuse the workforce as much as they dare get away with. And that's not me saying it, that's EVERY employee I've come across
Old puter - still good enuff till I save some pennies!
But ultimately if Amazon can justify their interpretation of the law and wins, whether it's morally wrong they will get away with it. It is still up to the government to clearly define their policies more accurately. Amazon or rather any company is not going to pay extra tax on top out of the goodness of their heart and their obligation to the British tax payer, get real.
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Well I dare say that the UK government will follow the French case very closely. If it works for the French we may follow their lead.
Thing is that the case could cost 10s of millions, take years, and may not even be successful.
Even if it is successful it might have negative consequences if it forces Amazon to relocate services, shed jobs, or just switch to a different tax dodge.
Ultimately the tax law is not stringent or rather not doing what it originally there to do, help businesses but not to an extent to immorally cheat the tax payer out of tax.
People may argue that if you chase away investors, there won't be jobs or prices will be expensive. Well so is the many 100's of millions of tax being lost to tax avoidance schemes unncessarily. I'm sure alot of companies use these schemes to benefit their company with good intentions as they were designed to, but to accountants to look for loops holes to be exploited is takign advantage of the 'system' which obviously not robust enough.
That 100's of millions of tax can also be used to set up new companies and employ people and provide money to the tax coffers as well.
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There's sometimes a fine line between doing what it intends to do and having the side effect of allowing some people to do what it's not intended to do. The decision should be taken on the basis of whether it is performing most correctly for the majority, or perhaps the group of interest to the electorate. If you clamp down on incorrect use to the extent that it performs less well for the majority as well then overall you're in a worse off position.
The same premise can be illustrated more easily with something like a simple benefits example. If your intention is to help people who can't work due to disability say, then you set some kind of criteria for the help and dish it out accordingly. Now there isn't a discrete line separating cases who need help and cases that don't - they overlap somewhat, so for any given boundary you're either going to miss some people who need help, or give benefits to a group that doesn't. While it's politically sour to do the latter, if by doing so you ensure that more of the people who actually need help get it, then it's probably the morally correct approach to take, even if there is a small wasteage.
Yes, it's not so much that moving to a system where tax is fairer is what people are worried about, after all if you crack down on tax avoidance you can lower the headline rate and still raise the same amount of money. The issue is the huge amount of upheaval during the transitionary period, especially if the change is done individual company by individual company as seems to the case at the moment. I'm sure there are plenty of companies just as bad as Amazon that aren't in the spotlight. Also you want to have international consensus, if some countries change but not others then you have a tricky situation. I mean you should be able to deal with companies like Starbucks who have a physical presence, but the rest will be tricky.
It would be lovely to have a really simple tax code, but it's very hard to keep it simple while retaining exceptions that most people would agree are just, fair and beneficial.
Unfortunately it also destroys all other moral competition that is native to Britain because there is no way they can compete with these companies. With all the people that work for them loosing their jobs!
What we need is a level playing field.
Ultimately there is no one size fits all policy for taxes
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Tax law has become out dated. A company like google can generate billions in revenue from UK customers without ever setting foot in the UK, that is the effect of the internet. If Google are based in Ireland, have no servers here and only presence is a small sales team then legally they do not pay corporation tax here. That is not a tax dodge, it is a fundamental principle of the tax law. For example if the Washington Post or the New York Times (both paragons of the USA newspaper industry) were to convince UK companies to buy $10m of advertising space, no tax would be due in the UK but in the USA. Google effectively sells advertising space on a web site - tax is therefore due either where the company is based or where its servers are based, neither of which is in UK.
Amazon is a bit more complicated because it has a UK presence to deliver orders. But for that the same principles apply to Amazon as to Google, as an internet company it does not take orders in the UK because neither its servers nor its HQ is based in the UK. Amazon UK no doubt charges a service fee to Amazon to fulfill those orders (amount will be governed by transfer pricing law) and will pay tax on to UK govt if Amazon UK makes a profit which is unlikely to be much given the amount of capital expenditure needed on the warehouses. Again this is not some "tax dodge", once Amazon decided to set up business in one country to take orders and only have the equivalent of delivery service in the UK, the implications are determined by the basic principles of UK tax law not some esoteric loophole.
As for Starbucks I am not sure I understand their system but having a coffee buying company in Switzerland (where 75% of world's coffee is traded) does seem commercially logical. Transfer pricing rules require that the Swiss company sells coffee beans to Starbucks UK on the basis of cost + mark up.
Govt simply has not realised how disruptive the internet has become to tax systems
csgohan4 (16-11-2012)
Companies like Google and Intel I understand.
For Starbucks UK to be making a loss that mark-up must be huge. The mark up should not be any more than Starbucks Switzerland's operational costs.
Willzzz: From what I have read the mark up is 20% on the cost of buying the beans. International tax law requires that Starbucks Switzerland sells the beans to Starbucks UK at price determined by transfer pricing rules which is supposed to be broadly the same price as would be sold to a completely independent person. All I know about coffee is drinking it, but I suspect a 20% mark up is probably commercially about right.
The flip side is that because Starbuck Switzerland is buying for all of Starbucks Europe (maybe even world) they probably get a much cheaper price than if each company bought separately.
I really hate all the politicians who have jumped on the "fair tax" bandwagon and bleating on about immoral behavior of taxpayers (as opposed to expenses claims!). If the law does not achieve what they wanted stop blaming the taxpayers, it is the politicians fault, they are responsible for the drafting and passing of the law.
csgohan4 (16-11-2012)
Yeah 20% isn't bad, so I guess that means there is some other dodgy accounting going on to make it look like the UK operation is making a loss.
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