I can't see a conservative government going after big businesses in this way. Despite benefit fraud accounting for 1.2 billion loss in revenue per year compared to tax avoidance at 30 billion.
(side note - benefit overpayments due to administrative error total 2.2bn)
Think we're being fooled.
As for google and amazon, the people running those companies only have a responsibility to their shareholders, not local governments. It might be wrong but it's the way business works. I would like to see their CEOs at the AGM telling people that they chose to pay out a fortune in tax because it was the right thing to do - They wouldn't have a job in the morning!
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.
But then they'd have to charge Republic of Ireland VAT at 23% which would likely make them uncompetitive.
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.
No, it is exactly the issue. The tax applies to turnover on all sales made to individuals/companies/organisations in the UK. They know they made sales of 2.4bn in the UK, but paid naff all CT. So we simply say, thanks very much, we'll have 1% or whatever of the 2.4bn.
If it does push up online prices, that's a benefit to properly established UK business resident in the UK and paying tax as intended, simply levelling the playing field a bit.
It's a little while since I dealt with foreign companies, but I believe a similar system operates in France already.
For me it is very simple, are they breaking the law ? If yes, proscecute them. If no, change the law. I thought that the interview of the guy from Google yesterday was pathetic. Where did it lead us ?
Well some people prefer cheaper prices, some don't care much about what Amazon, Google and Starbucks are doing, and some do care about it. I'm in the last camp and so have stopped buying from Amazon and going to Starbucks. Google's harder to avoid, but I don't click on their adverts which is where I assume their income comes from.
As Prague says, with Amazon, if your prospective purchase is via their MarketPlace, then you can try to buy direct. If you buy books, there are lots of on-line alternatives, but these don't include Abebooks or Book Depository - they are both owned by Amazon. I've bought from, among others:
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.
No, it is exactly the issue. The tax applies to turnover on all sales made to individuals/companies/organisations in the UK. They know they made sales of 2.4bn in the UK, but paid naff all CT. So we simply say, thanks very much, we'll have 1% or whatever of the 2.4bn.
If it does push up online prices, that's a benefit to properly established UK business resident in the UK and paying tax as intended, simply levelling the playing field a bit.
It's a little while since I dealt with foreign companies, but I believe a similar system operates in France already.
I thought the whole issue was that they didn't make sales of 2.4bn in the UK, they made sales of 2.4bn in Ireland, to customers in the UK (in their eyes). Sorry if I'm missing something obvious here, but I don't think a turnover tax would pick this up. The turnover is in Ireland.
EDIT: I've just re-read your post and see that you're saying sales TO customers in the UK. This would effectively be like an 'import tax' - and I can only see it disadvantaging customers as they company will pass it on. I don't think Google adding 1% tax to their advertising services would make them vastly less competitive (although I agree there must be a line somewhere otherwise they would be charging higher prices already).
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.
But then they'd have to charge Republic of Ireland VAT at 23% which would likely make them uncompetitive.
Presumably most of their revenue comes from other companies (advertising etc.) who don't pay VAT on EU 'imports', provided they are VAT registered themselves.
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.
No, it is exactly the issue. The tax applies to turnover on all sales made to individuals/companies/organisations in the UK. They know they made sales of 2.4bn in the UK, but paid naff all CT. So we simply say, thanks very much, we'll have 1% or whatever of the 2.4bn.
If it does push up online prices, that's a benefit to properly established UK business resident in the UK and paying tax as intended, simply levelling the playing field a bit.
It's a little while since I dealt with foreign companies, but I believe a similar system operates in France already.
I thought the whole issue was that they didn't make sales of 2.4bn in the UK, they made sales of 2.4bn in Ireland, to customers in the UK (in their eyes). Sorry if I'm missing something obvious here, but I don't think a turnover tax would pick this up. The turnover is in Ireland.
EDIT: I've just re-read your post and see that you're saying sales TO customers in the UK. This would effectively be like an 'import tax' - and I can only see it disadvantaging customers as they company will pass it on. I don't think Google adding 1% tax to their advertising services would make them vastly less competitive (although I agree there must be a line somewhere otherwise they would be charging higher prices already).
So they charge a little more. Is this really likely to seriously damage any individual's pocket? Might help us all if the tax on all those purchases was made available to the Treasury.
I'd wager most are of us make occasional purchases from Amazon and if the product we're buying is more expensive than somewhere else you'll buy somewhere else. That is, the law of supply and demand will offer a degree of control on pricing, and I don't see a problem with Amazon being less competitive if it brings the rest of the market back into play.
Right now our economy suffers because Amazon's competitiveness comes from tax avoidance: we don't get the tax on Amazon purchases, and the wider market can't compete on price so we don't buy as much at those tax paying companies.
If you buy direct via Amazon MarketPlace you don't get the protection that Amazon offers.
I understand why people moan about big companies because it scales up to big numbers but it has to be said that I don't know anyone that pays more tax than they need to. Rightly or wrongly all the time the rules exist to allow it you can't expect them to opt to pay more tax, they have shareholders etc. that they answer to. Some of whom will be little old ladies that use their investment income to pay for their heating in the winter.
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.....
I'm sorry but that is a really objectionable comment. You can't expect large companies with shareholders to pay more tax than the rules allow for because it would not work out great if no one paid any tax.
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 happily concede that I am no tax expert, since tHat was never remotely my own role in ad agencies, although as i am now a small business owner tax resident outside my domiciled country, I am obliged to educate myself. However the CFO of an (international) ad agency would be a great guy to have on the inside of HMRC, because firstly the big agency networks are all up to similar larks themselves;WPP for example has its HQ, laughably, in Dublin. There are about ten people there. The second reason is that ad agencies understand better than anyone outside Google itself, how Google does business. Sorrell ( WPP) said bluntly at a large meeting I attended that Google pretends to be in the search business where in fact it is essentially a media sales business. An agency CFO knows a lot about Google.
I don't believe HMRC is too lazy. I understand that this bloody government cut the funding to HMRC, so they have to reduce their elite staff when we need more of them. But I doubt whether anyway they would hire such an outsider. They just don't know what they don't know.
I think Idle Hans idea how to attach this issue is excellent.
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 happily concede that I am no tax expert, since tHat was never remotely my own role in ad agencies, although as i am now a small business owner tax resident outside my domiciled country, I am obliged to educate myself. However the CFO of an (international) ad agency would be a great guy to have on the inside of HMRC, because firstly the big agency networks are all up to similar larks themselves;WPP for example has its HQ, laughably, in Dublin. There are about ten people there. The second reason is that ad agencies understand better than anyone outside Google itself, how Google does business. Sorrell ( WPP) said bluntly at a large meeting I attended that Google pretends to be in the search business where in fact it is essentially a media sales business. An agency CFO knows a lot about Google.
I don't believe HMRC is too lazy. I understand that this bloody government cut the funding to HMRC, so they have to reduce their elite staff when we need more of them. But I doubt whether anyway they would hire such an outsider. They just don't know what they don't know.
I think Idle Hans idea how to attach this issue is excellent.
"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. "
That is emphatically not what I've been advised. I am told that you have to satisfy HMRC that the services are for real, and if you can't persuade them, they will do you. As in my plumber example. The problem is they are aggressive with the little guys but then Amazon with their legions of Big 4 advisers come in and tie HMRC and MPs up in knots with tales of the alleged complexity of their business. It isn't complex at all in reality. If I buy from Amazon UK for delivery to Eltham, has anything happened, did anybody do anything in the Luxembourg offices of Amazon to enable that to happen? My arse, it did.
For all those taking the view that no company would/should pay more than they can legally "avoid"...well, I can see your point, but then perhaps they could equally take a decision not to expect access to an educated workforce, a transport infrastructure, or if we are being silly, a fire engine turning up when their warehouse is on fire or a host of other benefits they get from our taxes.
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.....
I'm sorry but that is a really objectionable comment. You can't expect large companies with shareholders to pay more tax than the rules allow for because it would not work out great if no one paid any tax.
Don't try and verbal me. Where did I sat large companies should pay more tax than the rules allow? Where?
I responded to a cretinous comment of 'If I could get away with paying no tax then I like most people wouldn't pay it' by pointing out that if everyone avoided tax altogether then the whole country would be fucked.
Quite frankly people who praise the wonders of tax avoidance absolutely sicken me - want to see what happens to a country when nobody pays their tax? Try decrepit India with its 1950s infrastructure or bankrupt Greece.
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.....
I'm sorry but that is a really objectionable comment. You can't expect large companies with shareholders to pay more tax than the rules allow for because it would not work out great if no one paid any tax.
Don't try and verbal me. Where did I sat large companies should pay more tax than the rules allow? Where?
I responded to a cretinous comment of 'If I could get away with paying no tax then I like most people wouldn't pay it' by pointing out that if everyone avoided tax altogether then the whole country would be fucked.
Quite frankly people who praise the wonders of tax avoidance absolutely sicken me - want to see what happens to a country when nobody pays their tax? Try decrepit India with its 1950s infrastructure or bankrupt Greece.
Nobody volunteers to pay more tax than they have to. When I was working freelance I worked through my own limited company and employed an accountant to minimise my tax liability. This is all within the law and thousands of people do it. However, what these global companies are doing goes way beyond that.
The ability to trade across European borders is an integral part of the European free market. I had the pleasure of building one of the first multicurrency cross border systems in support of global points of sale applications in the early 90's.
The Irish Development Association virtually rebuilt the entire Eire economy on the back of bringing American companies to Dublin as their foothold in selling across Europe.
This method of trading, sales, product fulfilment and accounting has been around for 20 years. There are a number of issues surrounding the practice in terms of prevailing financial rules, consumer protection and product standards and of course corporation tax. The consolidation of administrative functions in one country saved these corporations a fortune. Advantageous tax regimes were core to deciding the preferred country of "trading" domicile.
May I suggest to those who express solidarity with such tax avoidance as if it is some blow against government who the hell do they think has to pay more tax because these corporations do not pay.
I find the concept of tax avoidance as if it were a game ridiculous and the idea a corporation feels able to place itself above the individual societies in which it trades and from which it profits beyond arrogant. Without doubt it is an abuse of those individual societies and effectively sticking two fingers up to every other business and individual tax payer who pay their dues.
The solution is comparatively straight forward. The country of trading and therefore prevailing consumer protection, prevailing legal product protections, and therefore consequent applicable tax regime simply needs to be defined by the country of origin of the order, be that order placed in writing, over the telephone or via the internet. Each transaction is easily tracked by way of network access. Any attempt to mask such network access identity would then be tantamount to tax fraud.
It is perfectly possible for each transaction to carry an applicable country code. International credit card transactions have done so for decades. It is fundamental to the credit card bank interchange fees.
The message to any global corporation should be simple you want to sell in and make money in my national market you pay a fair price for the privilege.
If you go into a shop down your local high street and buy something then both you and the retailer will generally be taxed in the UK. Simple.
But what if you buy, say, a Book from Amazon. If they have it stored in a warehouse in Luxembourg, or Jersey, then where should that supply be taxed - in the UK which is where you belong or in the country where they have their warehouse? Or maybe where they have their head office?
Then say that rather than buying a physical book you just download one for your kindle - where does that get taxed? - where you belong in the UK, where the supplier has their main office or somewhere else? Where the server is located? Nobody has physically done anything for you - the whole thing is automated.
If you're a global company supplying stuff to people all around the world then there are lots of factors that will determine where, for example, you warehouse goods. Tax is just one of those factors.
But if you don't sell goods and instead sell electronically supplied services then where would you choose to locate if you could pick anywhere in the world? Why go to one country when the one next door will tax you less?
Having said all that, some companies are clearly taking the piss - but nowhere near as many as some might have you believe. But I'm afraid it's not as simple as saying that just because someone has UK sales - or sales into the UK - of X then they MUST have tax of Y on their profits generated from those sales.
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.....
I'm sorry but that is a really objectionable comment. You can't expect large companies with shareholders to pay more tax than the rules allow for because it would not work out great if no one paid any tax.
Don't try and verbal me. Where did I sat large companies should pay more tax than the rules allow? Where?
I responded to a cretinous comment of 'If I could get away with paying no tax then I like most people wouldn't pay it' by pointing out that if everyone avoided tax altogether then the whole country would be fucked.
Quite frankly people who praise the wonders of tax avoidance absolutely sicken me - want to see what happens to a country when nobody pays their tax? Try decrepit India with its 1950s infrastructure or bankrupt Greece.
I suspect you are probably in the minority with your comment ormy.
Your situation as a successful worker in Oz may well be different to the vast majority on here.
Getting through the month with your head above water is a tall order for a lot of people at the moment.
If I was offered a way to retain more and hand over less tax a month, I'd take it. I suspect the majority would.
Sorry if that makes me a cretin, but I more than pay my way to provide for those that don't, and I have a wife and kids to provide for.
If you can't understand that view, search out on Channel 4s equivalent of iPlayer a programme aired this week called Skint.
"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. "
That is emphatically not what I've been advised. I am told that you have to satisfy HMRC that the services are for real, and if you can't persuade them, they will do you. As in my plumber example. The problem is they are aggressive with the little guys but then Amazon with their legions of Big 4 advisers come in and tie HMRC and MPs up in knots with tales of the alleged complexity of their business. It isn't complex at all in reality. If I buy from Amazon UK for delivery to Eltham, has anything happened, did anybody do anything in the Luxembourg offices of Amazon to enable that to happen? My arse, it did.
Prime example. In your little example there then why do you think the sale should be taxed in Eltham, just because that's where you live? What if the person that sold you the goods/services has no presence in the UK, absolutely none whatsoever. Why should they have to pay tax on profits generated from sales to here when all of their staff, warehousing, etc is all located in another country? Don't you think that people like you in that other country will be demanding they pay tax there, after all they are benefiting from that countries infrastructure and educated workforce.
As I said, not as simple as you might think.
But, again, it's clear that some people look to take advantage of the varying tax rules from one country to the next in order to get the best result for them and their shareholders.
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.....
I'm sorry but that is a really objectionable comment. You can't expect large companies with shareholders to pay more tax than the rules allow for because it would not work out great if no one paid any tax.
Don't try and verbal me. Where did I sat large companies should pay more tax than the rules allow? Where?
I responded to a cretinous comment of 'If I could get away with paying no tax then I like most people wouldn't pay it' by pointing out that if everyone avoided tax altogether then the whole country would be fucked.
Quite frankly people who praise the wonders of tax avoidance absolutely sicken me - want to see what happens to a country when nobody pays their tax? Try decrepit India with its 1950s infrastructure or bankrupt Greece.
I suspect you are probably in the minority with your comment ormy.
Your situation as a successful worker in Oz may well be different to the vast majority on here.
Getting through the month with your head above water is a tall order for a lot of people at the moment.
If I was offered a way to retain more and hand over less tax a month, I'd take it. I suspect the majority would.
Sorry if that makes me a cretin, but I more than pay my way to provide for those that don't, and I have a wife and kids to provide for.
If you can't understand that view, search out on Channel 4s equivalent of iPlayer a programme aired this week called Skint.
It is a quite obviously cretinous view to think, as the OP did, that if he could get away without paying tax he would because there would be horrendous long term consequences, if people can't understand that then there is no helping them.
If everybody did that you end up EXACTLY where the Greeks did, with everyone claiming their due from the state and nowhere near enough revenue to pay for it, you can only spend as much as you take in, that is obvious.
One of the biggest problems that developing countries, India and Indonesia being prime examples, have is that there is so much tax avoidance that government cannot fund critical infrastructure like roads and airports to help develop the country so people remain mired in poverty.
Regardless, we are not talking about a bloke in the suburbs earning 50k or whatever who avoids 20 quid VAT on his new lawnmower, we are talking about huge, huge companies that earn billions in revenues and pay a pathetic amount in tax compared to their rivals.
The likes of Amazon have - by their ultra low prices - forced many UK retailers to the wall, there is simply no dispute about that and as Rupert Murdoch has said, "The Internet will destroy more jobs than it will create."
However, whilst the UK consumer loves paying 9.99 on Amazon vs 24.99 in a retail store for a book the problem is that the 9.99 goes offshore never to be seen again, whilst the 24.99 goes back into the UK.
Even here in Australia, a strong economy, our future tax revenues for the next four years are down by about $80 BILLLION on original forecasts, in large part because local retailers are getting hammered by the online retailers who are all off shored.
So far the likes of Apple, Google, Netflix, Amazon have hit the consumer retail (books, music, DVDs) sector and the telco sector with their OTT services but, having spoken to all of these guys myself, they have much bigger plans in store.
When you see Google and Amazon start to take on the banks with their own 'digital banking' services - and you will see this - then the government will really shit itself because that is where the real money is.
This is a critical issue and the smart politicians - the Chinese are all over this already - are starting to deal with it because the long term implications are profound.
If you go into a shop down your local high street and buy something then both you and the retailer will generally be taxed in the UK. Simple.
But what if you buy, say, a Book from Amazon. If they have it stored in a warehouse in Luxembourg, or Jersey, then where should that supply be taxed - in the UK which is where you belong or in the country where they have their warehouse? Or maybe where they have their head office?
Then say that rather than buying a physical book you just download one for your kindle - where does that get taxed? - where you belong in the UK, where the supplier has their main office or somewhere else? Where the server is located? Nobody has physically done anything for you - the whole thing is automated.
If you're a global company supplying stuff to people all around the world then there are lots of factors that will determine where, for example, you warehouse goods. Tax is just one of those factors.
But if you don't sell goods and instead sell electronically supplied services then where would you choose to locate if you could pick anywhere in the world? Why go to one country when the one next door will tax you less?
Having said all that, some companies are clearly taking the piss - but nowhere near as many as some might have you believe. But I'm afraid it's not as simple as saying that just because someone has UK sales - or sales into the UK - of X then they MUST have tax of Y on their profits generated from those sales.
Now then, carry on.
Ah, a man who knows what he is talking about! How refreshing.
...What if the person that sold you the goods/services has no presence in the UK, absolutely none whatsoever. Why should they have to pay tax on profits generated from sales to here when all of their staff, warehousing, etc is all located in another country? ...
In the case of Amazon, because they use the UK as a banner to sell their services. It seems pretty clear to me from this that I am dealing with a UK business. If it isn't a UK business, they ought to stop falsely implying that they are.
Try finding amazon.co.lu you'll be waiting a long time because it doesn't exist.
...What if the person that sold you the goods/services has no presence in the UK, absolutely none whatsoever. Why should they have to pay tax on profits generated from sales to here when all of their staff, warehousing, etc is all located in another country? ...
In the case of Amazon, because they use the UK as a banner to sell their services. It seems pretty clear to me from this that I am dealing with a UK business. If it isn't a UK business, they ought to stop falsely implying that they are.
Try finding amazon.co.lu you'll be waiting a long time because it doesn't exist.
Eh? Because they use a British flag and have a .co.uk web address that means they HAVE to pay UK tax? Even if they have all of their offices elsewhere and store and dispatch their goods from that location elsewhere? Don't you think the country where they belong might be wanting a slice of the tax action?
Ok, amazon isn't the greatest example because we all know they're at it.
But what about a small UK business that sells something to someone in France - are you suggesting they should be paying French tax on the profits generated from the sale of that one item? Say they then sell another item to someone in Germany - is German tax now due? Then they sell to someone in Italy, etc, etc.
As I said, it just isn't as simple as some might think, largely because of the interaction between the rules in different countries. What globalisation has done is to allow some companies to take advantage of anomalies in the tax systems between one country and another. But then why would you warehouse goods in a country that was more expensive than the one next door? Leaving tax to one side and the moral rights and wrongs of paying it, if its cheaper to do something one way over another then businesses will do it, within reason, as a business is all about generating profits.
Knew you would pipe up on this thread and rightly so. Bfr - you shot yourself in the foot with all that guff you've come out with - advertising md's advising on tax policy - ŷou Sure hombre?lots of chuff spouted on here.
Happens on our own doorstep too though.....I was a major re-seller of computer consumables in the late 90's up to around 2007....however, business dropped off fairly steeply due to a couple of companies that set up in Guernsey and Jersey...they bought at roughly the same rate as I did, but didnt pay VAT...automatically they could be at least 17.5% cheaper than me (it was a low margin high turnover market). They saturated the market and basically killed the competiton. I did look at opening an office over in the Channel Islands but its was extremely complicated...the rest is history.
Happens on our own doorstep too though.....I was a major re-seller of computer consumables in the late 90's up to around 2007....however, business dropped off fairly steeply due to a couple of companies that set up in Guernsey and Jersey...they bought at roughly the same rate as I did, but didnt pay VAT...automatically they could be at least 17.5% cheaper than me (it was a low margin high turnover market). They saturated the market and basically killed the competiton. I did look at opening an office over in the Channel Islands but its was extremely complicated...the rest is history.
There is relief from VAT on low value imports - although the Channel Islands is now (recently) excluded from this TEL.
The government could easily change the law on this, if they really wanted to. In the meantime a nonEU business gets an advantage over a UK business in the way you describe. S the UK business has to either compete, by setting up overseas, or lose.
If they are not a UK business, they should stop masquerading as one. They generate far more sales in this country by pretending to be British than they would by being straight-up. Lots of people think twice before buying from overseas businesses because of concerns about customs tariffs, because there's an assumption that delivery times will be longer, and because of worries that refunds and exchanges will be more difficult. If they are trading on the UK's name, they should pay the price from that. In any case where does this stuff come from anyway? I've had loads of stuff from Jersey, Scotland and the North of England. I don't remember ever getting a package from Luxembourg though. It seems to me like it's all a sham.
Comments
(side note - benefit overpayments due to administrative error total 2.2bn)
Think we're being fooled.
As for google and amazon, the people running those companies only have a responsibility to their shareholders, not local governments. It might be wrong but it's the way business works. I would like to see their CEOs at the AGM telling people that they chose to pay out a fortune in tax because it was the right thing to do - They wouldn't have a job in the morning!
If it does push up online prices, that's a benefit to properly established UK business resident in the UK and paying tax as intended, simply levelling the playing field a bit.
It's a little while since I dealt with foreign companies, but I believe a similar system operates in France already.
As Prague says, with Amazon, if your prospective purchase is via their MarketPlace, then you can try to buy direct. If you buy books, there are lots of on-line alternatives, but these don't include Abebooks or Book Depository - they are both owned by Amazon. I've bought from, among others:
www.awesomebooks.com
www.betterworldbooks.co.uk
www.hive.co.uk
www.aphrohead.com
EDIT: I've just re-read your post and see that you're saying sales TO customers in the UK. This would effectively be like an 'import tax' - and I can only see it disadvantaging customers as they company will pass it on. I don't think Google adding 1% tax to their advertising services would make them vastly less competitive (although I agree there must be a line somewhere otherwise they would be charging higher prices already).
I'd wager most are of us make occasional purchases from Amazon and if the product we're buying is more expensive than somewhere else you'll buy somewhere else. That is, the law of supply and demand will offer a degree of control on pricing, and I don't see a problem with Amazon being less competitive if it brings the rest of the market back into play.
Right now our economy suffers because Amazon's competitiveness comes from tax avoidance: we don't get the tax on Amazon purchases, and the wider market can't compete on price so we don't buy as much at those tax paying companies.
I understand why people moan about big companies because it scales up to big numbers but it has to be said that I don't know anyone that pays more tax than they need to. Rightly or wrongly all the time the rules exist to allow it you can't expect them to opt to pay more tax, they have shareholders etc. that they answer to. Some of whom will be little old ladies that use their investment income to pay for their heating in the winter.
I don't believe HMRC is too lazy. I understand that this bloody government cut the funding to HMRC, so they have to reduce their elite staff when we need more of them. But I doubt whether anyway they would hire such an outsider. They just don't know what they don't know.
I think Idle Hans idea how to attach this issue is excellent.
"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. "
That is emphatically not what I've been advised. I am told that you have to satisfy HMRC that the services are for real, and if you can't persuade them, they will do you. As in my plumber example. The problem is they are aggressive with the little guys but then Amazon with their legions of Big 4 advisers come in and tie HMRC and MPs up in knots with tales of the alleged complexity of their business. It isn't complex at all in reality. If I buy from Amazon UK for delivery to Eltham, has anything happened, did anybody do anything in the Luxembourg offices of Amazon to enable that to happen? My arse, it did.
I responded to a cretinous comment of 'If I could get away with paying no tax then I like most people wouldn't pay it' by pointing out that if everyone avoided tax altogether then the whole country would be fucked.
Quite frankly people who praise the wonders of tax avoidance absolutely sicken me - want to see what happens to a country when nobody pays their tax? Try decrepit India with its 1950s infrastructure or bankrupt Greece.
The Irish Development Association virtually rebuilt the entire Eire economy on the back of bringing American companies to Dublin as their foothold in selling across Europe.
This method of trading, sales, product fulfilment and accounting has been around for 20 years. There are a number of issues surrounding the practice in terms of prevailing financial rules, consumer protection and product standards and of course corporation tax. The consolidation of administrative functions in one country saved these corporations a fortune. Advantageous tax regimes were core to deciding the preferred country of "trading" domicile.
May I suggest to those who express solidarity with such tax avoidance as if it is some blow against government who the hell do they think has to pay more tax because these corporations do not pay.
I find the concept of tax avoidance as if it were a game ridiculous and the idea a corporation feels able to place itself above the individual societies in which it trades and from which it profits beyond arrogant. Without doubt it is an abuse of those individual societies and effectively sticking two fingers up to every other business and individual tax payer who pay their dues.
The solution is comparatively straight forward. The country of trading and therefore prevailing consumer protection, prevailing legal product protections, and therefore consequent applicable tax regime simply needs to be defined by the country of origin of the order, be that order placed in writing, over the telephone or via the internet. Each transaction is easily tracked by way of network access. Any attempt to mask such network access identity would then be tantamount to tax fraud.
It is perfectly possible for each transaction to carry an applicable country code. International credit card transactions have done so for decades. It is fundamental to the credit card bank interchange fees.
The message to any global corporation should be simple you want to sell in and make money in my national market you pay a fair price for the privilege.
Grapevine49
If you go into a shop down your local high street and buy something then both you and the retailer will generally be taxed in the UK. Simple.
But what if you buy, say, a Book from Amazon. If they have it stored in a warehouse in Luxembourg, or Jersey, then where should that supply be taxed - in the UK which is where you belong or in the country where they have their warehouse? Or maybe where they have their head office?
Then say that rather than buying a physical book you just download one for your kindle - where does that get taxed? - where you belong in the UK, where the supplier has their main office or somewhere else? Where the server is located? Nobody has physically done anything for you - the whole thing is automated.
If you're a global company supplying stuff to people all around the world then there are lots of factors that will determine where, for example, you warehouse goods. Tax is just one of those factors.
But if you don't sell goods and instead sell electronically supplied services then where would you choose to locate if you could pick anywhere in the world? Why go to one country when the one next door will tax you less?
Having said all that, some companies are clearly taking the piss - but nowhere near as many as some might have you believe. But I'm afraid it's not as simple as saying that just because someone has UK sales - or sales into the UK - of X then they MUST have tax of Y on their profits generated from those sales.
Now then, carry on.
Your situation as a successful worker in Oz may well be different to the vast majority on here.
Getting through the month with your head above water is a tall order for a lot of people at the moment.
If I was offered a way to retain more and hand over less tax a month, I'd take it. I suspect the majority would.
Sorry if that makes me a cretin, but I more than pay my way to provide for those that don't, and I have a wife and kids to provide for.
If you can't understand that view, search out on Channel 4s equivalent of iPlayer a programme aired this week called Skint.
As I said, not as simple as you might think.
But, again, it's clear that some people look to take advantage of the varying tax rules from one country to the next in order to get the best result for them and their shareholders.
If everybody did that you end up EXACTLY where the Greeks did, with everyone claiming their due from the state and nowhere near enough revenue to pay for it, you can only spend as much as you take in, that is obvious.
One of the biggest problems that developing countries, India and Indonesia being prime examples, have is that there is so much tax avoidance that government cannot fund critical infrastructure like roads and airports to help develop the country so people remain mired in poverty.
Regardless, we are not talking about a bloke in the suburbs earning 50k or whatever who avoids 20 quid VAT on his new lawnmower, we are talking about huge, huge companies that earn billions in revenues and pay a pathetic amount in tax compared to their rivals.
The likes of Amazon have - by their ultra low prices - forced many UK retailers to the wall, there is simply no dispute about that and as Rupert Murdoch has said, "The Internet will destroy more jobs than it will create."
However, whilst the UK consumer loves paying 9.99 on Amazon vs 24.99 in a retail store for a book the problem is that the 9.99 goes offshore never to be seen again, whilst the 24.99 goes back into the UK.
Even here in Australia, a strong economy, our future tax revenues for the next four years are down by about $80 BILLLION on original forecasts, in large part because local retailers are getting hammered by the online retailers who are all off shored.
So far the likes of Apple, Google, Netflix, Amazon have hit the consumer retail (books, music, DVDs) sector and the telco sector with their OTT services but, having spoken to all of these guys myself, they have much bigger plans in store.
When you see Google and Amazon start to take on the banks with their own 'digital banking' services - and you will see this - then the government will really shit itself because that is where the real money is.
This is a critical issue and the smart politicians - the Chinese are all over this already - are starting to deal with it because the long term implications are profound.
Try finding amazon.co.lu you'll be waiting a long time because it doesn't exist.
Ok, amazon isn't the greatest example because we all know they're at it.
But what about a small UK business that sells something to someone in France - are you suggesting they should be paying French tax on the profits generated from the sale of that one item? Say they then sell another item to someone in Germany - is German tax now due? Then they sell to someone in Italy, etc, etc.
As I said, it just isn't as simple as some might think, largely because of the interaction between the rules in different countries. What globalisation has done is to allow some companies to take advantage of anomalies in the tax systems between one country and another. But then why would you warehouse goods in a country that was more expensive than the one next door? Leaving tax to one side and the moral rights and wrongs of paying it, if its cheaper to do something one way over another then businesses will do it, within reason, as a business is all about generating profits.
The government could easily change the law on this, if they really wanted to. In the meantime a nonEU business gets an advantage over a UK business in the way you describe. S the UK business has to either compete, by setting up overseas, or lose.
On another note, then the Financial Times and the Daily Fail write articles about working conditions, you know that something's up.
http://www.dailymail.co.uk/news/article-2286227/Amazons-human-robots-Is-future-British-workplace.html