Tax.... what is everyone’s problem with it?

[VincentHanna]

The argument that Amazon pay tax because they pay VAT is silly as well.

WE pay VAT and Amazon collect it for HMRC and then pay it on.

Amazon paying £4.5 million in corporation tax is pathetic.

 

[Janesy B]

For some reason, people who are earning fairly decent salaries have been brainwashed hating people who need a bit of extra help from society.

These people don't even realise that they are a couple of missed paychecks (or a partner losing a job) away from being in the same situation as the lower earners.

 

[Pudney]

The argument that Amazon pay tax because they pay VAT is silly as well.

WE pay VAT and Amazon collect it for HMRC and then pay it on.

Amazon paying £4.5 million in corporation tax is pathetic.

This isn't really true. Acknowledging you're talking about 2017 figures, then in 2017:

• Amazon UK Services reported £4.6 million CT,
• Amazon Video reported £14.7 million CT,
• Amazon Data Services reported £1.8 million CT, and
• Amazon EU SARL pays something, no idea what.

They're the big ones it's not too hard to find.

 

[Dirk Diggler]

If you had a choice in the womb:

To be born in The UK and pay 40% tax on your earnings ..or.. be born in Bangladesh and pay 0% on your earnings.

Which would you choose?

 

[VincentHanna]

This isn't really true. Acknowledging you're talking about 2017 figures, then in 2017:

• Amazon UK Services reported £4.6 million CT,
• Amazon Video reported £14.7 million CT,
• Amazon Data Services reported £1.8 million CT, and
• Amazon EU SARL pays something, no idea what.

They're the big ones it's not too hard to find.

Ok, but it's still a pathetic amount: https://www.theguardian.com/technol...t-in-corporation-tax-despite-tripling-payment

Amazon revealed in US filings that its total sales to the UK rose from £9.5bn to more than £11bn in 2017.

But the tax paid on all these UK sales is not publicly available information.

Why? Because sales made to customers in the UK are booked through the UK branch of a Luxembourg-based company, Amazon EU Sarl.

Retail sales were previously booked directly through the parent company, in order to take advantage of lower tax breaks in Luxembourg.

In 2015, the UK government introduced a “diverted profits tax” to try to stop companies taking advantage of arrangements like these.

Just before the new tax came into force, Amazon opened the UK branch, meaning UK sales and profits were declared to HMRC.

But the fact that sales are booked through the UK branch of an overseas company, rather than through a UK-based subsidiary means Amazon doesn’t have to publish accounts detailing the tax it pays in respect of its total activities in the UK

11 billion pounds worth of sales in the UK alone and they are paying £20 million quid corporation tax? It's not right.

 

[Liquidfox]

I’m pretty sure anyone hitting 6 figure salaries will be paying more than 3% and not opting out, so I hardly find that figure generous

You'd be surprised, a couple of people I know that earn 6-figures don't have a pension. Tieing their money up for years isn't the best place for it, they're investing what would be their pension pot into property instead.

 

[Martynt74]

Ok, but it's still a pathetic amount: https://www.theguardian.com/technol...t-in-corporation-tax-despite-tripling-payment

2.3 Billion pounds in sales, and they are paying £20 million quid?

Maybe a bad example but compare it to Tesco. They have a Net Profit of around 2% and looking around a lot of retailers are around that figure.

2% of £2.3bn is a net profit £46m

At 18% Corporation Tax, that's actually only £8m so you could argue that they're overpaying taxes (if your figures are correct)

• Retailers tend to have profit margins that are lower than in other sectors, which can run between 0.5% and 3.5%.
• Web-only retailers generally have the lowest profit margins, while building supply and distribution retailers have the best margins⁠—reaching as high as 5%.

 

[Kemik]

11 billion pounds worth of sales in the UK alone and they are paying £20 million quid corporation tax? It's not right.

Sales does not equal profit. Tax is on profit.

I wish I had a pound for every time I have to say that, even when I read news articles that report tax as a reference to turnover.

 

[VincentHanna]

Sales does not equal profit. Tax is on profit.

I wish I had a pound for every time I have to say that, even when I read news articles that report tax as a reference to turnover.

I'm well aware of that, I run a ltd company and pay corporation tax.

Do you seriously think that Amazons profit margins are so tiny?

Calculations:
2000000 (20 million) is 0.02 % of 11000000000 (11 billion)

 

[Pipe & Slippers]

Sales does not equal profit. Tax is on profit.

I wish I had a pound for every time I have to say that, even when I read news articles that report tax as a reference to turnover.

Agreed, but then the real question is what profits are arising in the UK. It's well known multinationals move profits around to the lowest tax jurisdiction ie not the UK

 

[FoxEye]

If you had a choice in the womb:

To be born in The UK and pay 40% tax on your earnings ..or.. be born in Bangladesh and pay 0% on your earnings.

Which would you choose?

Don't worry, Boris is going to make sure the difference in another five years is negligible.

 

[Kemik]

I'm well aware of that, I run a ltd company and pay corporation tax.

Do you seriously think that Amazons profit margins are 0.1%?*

Calculations:
11 Billion pounds of sales in 2017
Corporation Tax of £20 million (which is 19% of your total profits)
Total profits of approx 100 million?

I have no idea how much tax they pay, and neither do you. All of their day-to-day consumer spend will go via the UK branch of Amazon EU Sarl, based in Luxembourg. The other entities will be service entities for their UK based staff performing things like customer service, development, etc.

International tax law does not say all profits relating to the sale of a product must sit in the country of the sale. Here's some made up figures... if you ran a business that made £100m profit on your sales in the US, but all of your R&D, staff, etc was based in the UK and cost £20m, you think HMRC would be happy for you to leave all of that £100m in the US? International tax law dictates that the exceptional profits/losses sit where your significant people functions are. The rest of your admin functions get a small cost plus return. Obviously that massively oversimplifies Amazon's business but you get the idea.

You should be aware that tax law has changed significantly in the past five years and will continue to do so for the next decade.

 

[martin363]

Well we seem to be having immense difficulty in this country getting major corps to pay any tax at all.

E.g. Amazon, who kept telling everybody they don't make any profit at all from their UK operations (lols).

The Tories keep advocating pushing corp taxes down if anything.

It is easier when a company has significant manufacturing reliance on a country, they can't afford to disrupt their global operations for upsetting the source of the goods

 

[Seearbe]

Sorry to spoil the "we want Amazon to pay more tax" party but no company pays tax. It's customers pay the tax which is captured and forwarded to HMRC by the company.

If Amazon were required to pay more tax, the only thing that would happen is that we individuals would pay more for the goods we buy.

 

[Seearbe]

International tax law does not say all profits relating to the sale of a product must sit in the country of the sale. Here's some made up figures... if you ran a business that made £100m profit on your sales in the US, but all of your R&D, staff, etc was based in the UK and cost £20m, you think HMRC would be happy for you to leave all of that £100m in the US? International tax law dictates that the exceptional profits/losses sit where your significant people functions are. The rest of your admin functions get a small cost plus return. Obviously that massively oversimplifies Amazon's business but you get the idea.

The iPhone example is always good for explaining this one.

An iPhone costs £1,000 in the UK (mugs for paying that, but that's another story). The components for an iphone probably cost £50. So does that mean the UK tax is on £950?

China says cool but it's Chinese labour that went into making the phone so, as well as the cost of the components we bought, add the Chinese labour and it actually cost £55 to make the phone. And we provided a "value add" service here. There are plenty of other places where you could go and get that phone made and most of those companies will make a 15% profit, so yeah, we think the Chinese share of the revenues is £65 and we'll get the tax on £10.

Then Ireland come along and say we import the phones into the EU and provide all the ongoing support for the iPhone which is part and parcel of the product. If that wasn't priced into the phone, the customer would have to pay £150 to an external party for the support, so we think we should get the tax on the £150. Oh, and our import and brokerage service, warehousing costs etc is worth another £50. So we'll have tax on £200.

And then America comes along and says, hey, the iphone is just a bundle of standard components bundled into a generic design. What people are really buying is the Apple brand, and that's American. And moreover, the brand is clearly the most valuable part of the phone. So we think the US share of profits is £500.

So the UK is left with £235. But hang on, of the £1,000 phone, £165 of that was VAT, so the profits are only £70. But also in the UK are the costs of selling the phone - shipping, store costs, advertising etc. So we're now down to £30.

 

[Martynt74]

Sorry to spoil the "we want Amazon to pay more tax" party but no company pays tax. It's customers pay the tax which is captured and forwarded to HMRC by the company.

If Amazon were required to pay more tax, the only thing that would happen is that we individuals would pay more for the goods we buy.

You're thinking of VAT, corporation tax is completely paid for by the company.

(Unless you're using the stupid argument whereby the customer pays for all wages/costs indirectly)

 

[Seearbe]

You're thinking of VAT, corporation tax is completely paid for by the company.

(Unless you're using the stupid argument whereby the customer pays for all wages/costs indirectly)

Yep, I'm going with the stupid argument I'm afraid. Because that's exactly what happens sadly.

 

[FoxEye]

The iPhone example is always good for explaining this one.

An iPhone costs £1,000 in the UK (mugs for paying that, but that's another story). The components for an iphone probably cost £50. So does that mean the UK tax is on £950?

China says cool but it's Chinese labour that went into making the phone so, as well as the cost of the components we bought, add the Chinese labour and it actually cost £55 to make the phone. And we provided a "value add" service here. There are plenty of other places where you could go and get that phone made and most of those companies will make a 15% profit, so yeah, we think the Chinese share of the revenues is £65 and we'll get the tax on £10.

Then Ireland come along and say we import the phones into the EU and provide all the ongoing support for the iPhone which is part and parcel of the product. If that wasn't priced into the phone, the customer would have to pay £150 to an external party for the support, so we think we should get the tax on the £150. Oh, and our import and brokerage service, warehousing costs etc is worth another £50. So we'll have tax on £200.

And then America comes along and says, hey, the iphone is just a bundle of standard components bundled into a generic design. What people are really buying is the Apple brand, and that's American. And moreover, the brand is clearly the most valuable part of the phone. So we think the US share of profits is £500.

So the UK is left with £235. But hang on, of the £1,000 phone, £165 of that was VAT, so the profits are only £70. But also in the UK are the costs of selling the phone - shipping, store costs, advertising etc. So we're now down to £30.

So you're saying the UK is powerless to take a greater share of tax revenue than the US, on products sold in the UK. And presumably that applies to Amazon too. Even for products that never entered the US.

And that's fine? You think that's fine?

**** it. Why not just set corp tax to zero and be done with it. All that time and effort chasing them and they aren't compelled to pay more than a derisory token amount anyhow.

I just find it sad how everybody cheers when companies and individuals pay little or no tax. Like it's a) clever and b) something to applauded.

These are companies making billions (combined) in profits from the UK market. Why shouldn't they give something back?

 

[dowie]

I don't have a problem with tax, I think in general though marginal rates shouldn't exceed 50% all in (income tax + NI). Just in principle the lion's share of what you earn ought to be yours IMHO and I don't think that providing disincentives for higher earners is a good idea.

Currently there is a rather unfair setup that hits some of the most productive workers right at the sweet spot where their overtime or bonus payments might lay. It hides away from any headlines etc.. but there is essentially a 60% marginal rate once you get to 100k and the personal allowance disappears and I think that is very unfair.

There is some silliness dong the rounds on Facebook where people are pointing out that say a 5% tax increase on high earners is "only" 5p for an extra £1 earned etc... well duh. The thing is they'd forward that same empty argument if it were say an increase from 45% to 50% or from 50% to 55% and so on... "but it's only 5p" it's only [cost of a Netflix subscription] per month for X amount earned etc..etc..

I think the Lib Dems are generally a bit more sensible when they often put forth proposals for say an extra 1p across the board - in fact that is generally a bit fairer. Its all well and good people demanding that other people are taxed when they won't be impacted.

We could probably do with increasing the range at which council tax can be charged, that should be based on property values not some land value tax nonsense that perhaps made more sense a couple of hundred years ago.

I'd like to see further clamp downs on trusts (ideally leading to them being abolished when used essentially for perpetually passing down dynastic wealth).

International companies selling goods/services here probably should be taxed more and certainly exploiting some arrangement where they have an office registered in Luxembourg is quite blatantly a **** take - how to tackle it though becomes potentially rather complicated.

 

[Seearbe]

So you're saying the UK is powerless to take a greater share of tax revenue than the US, on products sold in the UK. And presumably that applies to Amazon too. Even for products that never entered the US.

Well firstly this is what we signed up to, back in the days of yore when these agreements were all signed. Worked well in the days of coal and steel but not any more, which is why the OECD are taking another look at this. Also, remember it works the other way too. We get a lot of tax on every Dyson vacuum sold (until they move HQ to Singapore - thanks for campaigning leave and then abandoning ship Mr Dyson).

And that's fine? You think that's fine?

No, but it's the law as it stands. A company has a duty of care to its shareholders first and foremost, in accordance with company law (a UK company, at least). So to not conduct business in a way that is beneficial to shareholders is illegal. But the law does need to change, and it is.

**** it. Why not just set corp tax to zero and be done with it. All that time and effort chasing them and they aren't compelled to pay more than a derisory token amount anyhow.

There is actually an argument for that and there are many countries around the world that have a very nominal tax system. That's because companies contribute a lot more than simply taxes - they make a greater economic contribution, including providing employment. Taxes is just a very simple X = Y view of economics. In theory, every country would take higher employment and GDP over corporation tax take. income tax is by far and away the biggest source of tax revenue in the UK (and probably most countries actually).

I just find it sad how everybody cheers when companies and individuals pay little or no tax. Like it's a) clever and b) something to applauded.

These are companies making billions (combined) in profits from the UK market. Why shouldn't they give something back?

Where are you sourcing this information from? The Guardian doesn't count