Slashdot Mirror
Amazon Pays No UK Income Tax, Under Investigation
New submitter artciousc writes with news that Amazon is dodging taxes in the UK. From the article: "Regulatory filings by parent company Amazon.com with the U.S. securities and exchange commission show the tax inquiry into the UK operation, which sells nearly one in four books sold in Britain, focuses on a period when ownership of the British business was transferred to a Luxembourg company."
Clever trick there: "The UK operation avoids tax as the ownership of the main Amazon.co.uk business was transferred to a Luxembourg company in 2006. The UK business is now owned by Amazon EU Sarl and the UK operation is classed only as an 'order fulfilment' business." The HMRC is investigating the legality.
It would be really difficult to structure a tax with the incidence falling solely on setups like the one Amazon has here, especially since the UK is part of the single market. This is most likely an issue that would have to be solved in the European Courts rather than by the UK government. I doubt that a few hundred million pounds in lost tax revenue would persuade the courts to force a major restructuring of trade. I am not expert on European jurisprudence though.
This is a legitimately complex issue of tax avoidance. Most of the time when people howl about corporations paying low effective tax rates it's because they don't realize all of the exemptions for favored industries (green and bio tech, aerospace, etc.) and absorbing losses create that outcome. Here we have a government stretched thin on revenues up against the framework of European economic integration.
I got a catholic block.
It's a good start that Amazon didn't pay income taxes in UK, now it's just the rest of the companies and people that need to stop paying them. It's a step in the right direction.
Of-course politicians are livid, they want to spend other people's money.
You can't handle the truth.
That's a very broad and legally vague concept.
If Amazon succeeds I expect many other international businesses to incorporate in the UK and attempt the same. In fact, they would be fools not to.
They learnt from the best: Topshop, Boots, HSBC (UK)...
Of course, this is a glaring example of the failure of public companies: a lack of ethics. The root of all of our current economic and political problems is that public corporations have one interest: to make money in any way possible. There's no accountability in a public company, so running a public company ethically is out of the question. Of course, private companies can be run unethically as well, but there are a much smaller percentage of cutthroat, skating-on-the-edge-of-legal private companies, because in the case of private companies, there are repercussions to acting unethically or illegally.
I don't respond to AC's.
avoiding taxes. One of these days, someone going to say enough and just not let them do business in the country. I would.
The Kruger Dunning explains most post on
And then some poor schlub who owns a homegrown car repair shop gets one digit wrong, and the IRS is deep in their colon. That's fair!
You want to know how to help your kids? LEAVE THEM THE F*&K ALONE. --George Carlin
no pesos :)
This guy is a master at avoiding taxes
We attempting to contact the CEO at the head office for comment, but discovered that company HQ was located in a small post office box in the Cayman Islands.
What political party do you join when you don't like Bible-thumpers *or* hippies?
No income tax no VAT... these twins are adorable.
http://www.youtube.com/watch?v=SH9GuJROrck
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
we just call that 'working smarter.'
now make haste and begone ye wicked tax collector, tarry any further and we'll 'right-size' the 'human capital!'
muahahahaha,
Amazon, a beacon of american capitalism
P.S: The Kindle Fire is a 7-inch tablet that links seamlessly with Amazon's impressive collection of
digital music, video, magazine, and book services in one easy-to-use package! Prostrate yourself today!
Good people go to bed earlier.
...taxes pay for things from which enable Amazon to have a business at all. Amazon can sell books to us because we're a reasonably literate population. They can get stuff distributed because we have a good road / rail network which is maintained. We have mechanisms in place to dispose of the masses of card packaging that Amazon use. We have employees who are kept reasonably healthy by the NHS (I'll understand if American readers are confused on this point - we have a decent health care system, America doesn't). All of these are the result, essentially, of taxpayer-funded state investment. So, by not paying taxes, Amazon are benefiting directly from such investment without contributing to it which, I would argue, is unfair and parasitical. I saw a great suggestion recently which was that if all of these anti-tax companies really wanted to put their money where their mouths are, they would set up shop in some crummy backward little country that doesn't bother with taxes and consequently has very little in the way of infrastructure, health, literacy etc. That's what small (or no) government gets you. If they decide they'd rather do business somewhere more advanced, they can damn well pay their fair share for the upkeep of the place.
I'm sure they [the UK government] will invent some kind of law making it illegal.
(They're good at that.)
i setup BAD WOLF SHOPPES selling torches, screwdrivers and cabinets (most of which happen to be oh Blue) and other things and payoff the government to allow me to operate without taxes.
i then setup TANGO FULLFILMENT inc in a buncha countries (paying no taxes in these).
BWS is a retail/wholesale outfit
TF is a fullfilment company (anything sold by BWS is delivered by TF)
Any person using FTFY or editing my postings agrees to a US$50.00 charge
Quite frankly, it is a pain for companies to structure their businesses as Amazon.co.uk has. Smaller companies have it even more rough as they don't have a team of lawyers and accountants to keep it all strait. Even so, the reason why companies (as well as individuals) do things like this is simply to avoid excessive amounts of taxes. If the tax rates weren't as high as they are, there would be much less incentive to jump through arcane hoops just to save a bit of money. (Conversely, if higher taxes can be avoided simply by not spending so much.)
It is important to realize that taxes on business income are hidden taxes to the consumer. Businesses always look at the bottom line and the bottom line for a business is different than that of a taxing authority. The taxing authorities look at profit being after the cost of your goods and services, rent, overhead, etc. In reality, your profit is all the above AND your after tax income. Businesses look at how much they need to make at the end of the day, figure in the cost of their taxes, raw materials, labor and overheads then make sales projections and then price accordingly. The price to the consumer reflects the taxes on the business as the money to pay those taxes do not come from out of nowhere.
Business "income" is a ripe target for politicians as businesses are unable to vote to defend themselves and are often afraid to speak out as the same politicians that tax them can also regulate them out of existence. Meanwhile, it gives the politicians a source of income for which they are unaccountable and with which they can buy votes for their next term in office. Unfortunately, the consumer is unaware of how much of their final price is composed of government imposed taxes and fees. If they did, they would likely be very very upset.
If you don't _have_ to pay for something, why would you? Same with taxes - they know darned well they _should_ pay taxes, but with a little corporate slight of hand, they don't have to.
Is it just my observation, or are there way too many stupid people in the world?
The US has the same issues as the UK, which has the same issues as Europe. In the US, there was a report last year about how many companies moved their HQ to a PO box overseas, I believe mostly to Ireland. This was reportedly done to avoid paying US taxes. Of course even though this was shown to be true, the media later stated that it was anti-business hype and not a real problem. As of course the US goes further and further in to debt, public services are cut more and more, and the top 1% earners increase their wealth by incredible amounts each year.
Now we see similar stories from the UK, and right in the article it's seemingly excusing the businesses and vilify the protestors. (Sound like OWS?)
HSBC has joined the least desirable club in the business world. The bank yesterday became the latest target of a sudden surge in public fury over tax avoidance, as a guerrilla group of demonstrators under the elusive banner UK Uncut planned to occupy branches in London and Liverpool.
Baker says he is worried that the kind of street protests led by UK Uncut could "morph" into a more serious anti-business movement, though he admits some firms give the corporate world a bad name by over-exploiting loopholes.
So if you complain, you have to be anti-business.. you can't be right.
So the UK is as messed up as the US.. I'm not sure that makes me feel any better. Used to be, we were kind of the check and balance for each others corruption. The more of this kind of stuff I read about, the more I have to think that many of those conspiracy theories may be true.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
Everyone arranges their affairs so as to minimize tax liabililty as long as doing so does not cost more than it is worth. The financial affairs of large organizations such as Amazon are complex and tax law is not a cut and dried objective subject and billions of pounds are at stake. Thus the tax returns of big corporations are always "under investigation". There is no news here.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
HMRC: 'Evening, Executive!
Executive: (stiffly) Good evening.
HMRC: Is, uh,...Is your corporation a goer, eh? Know whatahmean, know whatahmean, nudge nudge, know whatahmean, say no more?
Executive: I, uh, I beg your pardon?
HMRC: Your, uh, your corporation, does it go, eh, does it go, eh?
Executive: (flustered) Well, it sometimes "goes", yes.
HMRC: Aaaaaaaah bet it does, I bet it does, say no more, say no more, knowwhatahmean, nudge nudge?
Executive: (confused) I'm afraid I don't quite follow you.
HMRC: Follow me. Follow me. That's good, that's good! A nod's as good as a wink to a blind bat!
Executive: Are you, uh,...are you selling something?
HMRC: SELLING! Very good, very good! Ay? Ay? Ay? (pause) Oooh! Ya wicked Ay! Wicked Ay! Oooh hooh! Say No MORE!
Executive: Well, I, uh....
HMRC: Is, your uh, is your company a sport, ay?
Executive: Um, it's profitable, yes!
HMRC: I bet it is, I bet it is!
Executive: As a matter of fact it's very profitable.
HMRC: 'Oo isn't? Likes profits, eh? Knew it would. Likes profits, eh? It's been around a bit, been around?
Executive: We have offshore accounts, yes. We moved the books to Luxembourg. (pause)
HMRC: SAY NO MORE!!
HMRC: Luxembourg, saynomore, saynomore, saynomore, Executive!
Executive: I wasn't going to!
HMRC: Oh! Well, never mind. Dib dib? Is your uh, is your corporation interested in....taxes, ay? "Taxes, ay", he asked him knowlingly?
Executive: Taxes?
HMRC: Snap snap, grin grin, wink wink, nudge nudge, say no more?
Executive: Corporate taxes, eh?
HMRC: They could be, they could be corporate. Domestic, you know, DOMESTIC corporate taxes?
Executive: No, no I'm afraid we don't pay any domestic taxes.
HMRC: Oh. (leeringly) Still, mooooooh, ay? Mwoohohohohoo, ay? Hohohohohoho, ay?
Executive: Look... are you insinuating something?
HMRC: Oh, no, no, no...yes.
Executive: Well?
HMRC: Well, you're a man of the world, Executive.
Executive: Yes...
HMRC: I mean, you've been around a bit, you know, like, you've, uh.... You've "done it"....
Executive: What do you mean?
HMRC: Well, I mean like,....you've SKIPPED on you taxes....
Executive: Yes....
HMRC: What's it like?
Is it just my observation, or are there way too many stupid people in the world?
This is one of the biggest reasons for our economic situation.
Amazon pays no UK tax, General Electric pays no US federal tax, and on and on.
By propping up existing companies. governments have been investing in stagnation for the last 20 years. It's reached the point where it's very difficult to start a new company.
Jobs aren't created by existing companies, jobs are created by starting new companies and by small companies growing large.
Yes, GE and Amazon have been job creators, but that was then. Once companies have enough employees to get their job done, hiring essentially stops. Workforce numbers among established companies is, to a large extent, static.
Jobs are created by starting new companies - but how can anyone compete? It's impossible to make a product that competes with a GE product. Even if the new product is better, GE has a lower margin because it pays no taxes.
IP laws (patent issues), intrusive useless regulations, intrusive tax accounting, ambiguous laws with discretionary enforcement set the barrier to entry for starting a business today very high.
A vibrant, healthy economy has lots of churn. Businesses need to adapt or die, and propping up businesses just because they are "established" runs counter to that goal.
It's no wonder that the economy hasn't recovered in 3 years - we don't allow it to change.
OK. Reverse engineering a bit and filling in gaps in the media reporting, here is my educated analysis. If you, as a UK consumer, buy a book from amazon.co.uk, you are actually hitting servers in Luxembourg and buying the book from a Luxembourg company. Letâ(TM)s call it Amazon Lux. Current EU VAT rules mean that if you are downloading a e-book, Amazon Lux only charges the Luxembourg VAT rates on the sale and hands that VAT over to the Luxembourg government. (This rule is expected to change in two years.) If you are buying a dead tree version, then Amazon Lux has to charge UK VAT rates on the sale and hands that VAT over to the UK government.
There is a separate Amazon subsidiary in the UK, which operates a warehouse and shipping operation. Letâ(TM)s call it Amazon UK. Amazon Lux pays Amazon UK to operate the warehouse and perform the shipping. Typically this is done on a cost-plus basis, so Amazon UK is probably recovering its costs and getting a profit margin of 5-10%. Amazon UK will be paying UK income taxes on this small profit margin.
The tax treaty between the UK and Luxembourg states that if the only thing a Luxembourg company has in the UK is an agent that distributes stuff or stores stuff in a warehouse, then the UK government wonâ(TM)t treat that Luxembourg company as âoedoing business in the UKâ. Amazon Lux can take this position because they claim that the actual âoesaleâ event happened at the servers in Luxembourg when you made the final click on Amazon Luxâ(TM)s website. If this position is valid, then any profit on the sale above and beyond the cost-plus margin at Amazon UK is only taxable in Luxembourg. (And remember that the cost-plus margin is taxed at Amazon UK, not Amazon Lux â" the legal entity that actually entered into the transaction with the consumer.)
The complicating historical question is whether Amazon could move its historical business operation out of the UK to Luxembourg without paying an exit tax. EU law allows free movement of business and capital, but the issue of whether you can bail out of a country to a lower taxed country without any tax consequences is a bit of a muddle right now.
If you think deeply enough, you will have no single direction for your outrage.
Corporations don't pay tax unless most of their customers are foreigners. What you're demanding is that Amazon raise prices, collect more money from their British customers, and give it to the British government.
Why do you think the world would be a better place if ordinary Britons had to pay even more tax than they currently do?
The parts of Amazon in the UK is an 'order fulfilment' business. You can even buy things that are sold by other sellers and "fulfilled by Amazon". If a UK vendor uses Amazon to sell their products and makes a profit then they will pay their UK taxes. As a legitimate company, Amazon UK makes sure that everything going into the UK has had all the tariffs, VAT, etc...payed.
If Amazon makes a profit, it will be taxed at least once. With modern technology, there can really be a few people running the profitable parts of the whole show. If google was not trying to do a million news cool things just for the heck of it, how many people would it take to make a search engine 100?
At least in the US, along the highway there are periodic weigh stations where commercial shipping trucks must stop to be weighed and taxed to fund the road system etc...
About 50 people so far have given some variation of, "Well, if it's all legal then it must be ok." It's not troubling to anyone that they worked within the law to create a fiction, which is that they don't really operate or exist in the UK? It's wrong because it isn't true. Like in the USA we had Reagan redefine ketchup as a vegetable or something. I say this almost ever time this topic comes up, but it really seems to me that libertarians are nothing more than the useful idiots of big business. Sure, they like to think they support business in general, but it's always big business they rise to defend. As if Amazon needs defenders.
Of course it's paying no income tax in the UK. Companies don't pay income tax in the UK. Individuals, unincorporated businesses, partnerships and LLPs pay income tax in the UK. Limited companies pay corporation tax on their profits.
Corporations don't pay tax unless most of their customers are foreigners. What you're demanding is that Amazon raise prices, collect more money from their British customers, and give it to the British government.
Why do you think the world would be a better place if ordinary Britons had to pay even more tax than they currently do?
Well, perhaps then their competitors - like brick and mortar bookstores and even other online retailers might actually *stay in business*, thus creating jobs, healthier economy, more money going back into the economy (instead of being siphoned away to a tax haven).
Amazon's prices are artificially low - they don't need to raise them, they need to be brought into line with where they would be if they were playing fairly.
Maybe you haven't been paying attention lately. The US government just finished printing/borrowing $7.2 Trillion to hand out to banks. They had a $900 Billion stimilus that only went to keep union employees in their jobs, and only for unions that automatically collect dues and give a percentage to the DNC. They spent $50 Billion on loans to solar companies that never had a chance to work out, but were owned by campaign bundlers.
On the flip side, an oil company wanted to build a pipeline, with no government handouts or subsidies, but were denied because they are owned by people who are not bundlers of donations for the DNC.
Now why would ANYONE want to contribute to this? The governments are literally stealing money from the middle class for their own use. It isn't going to infrastructure, or better services, it is going to the pockets of politicians and their friends.
So, if Amazon is paying 20% UK VAT on most purchases (besides e-books), then isn't the UK making about 5 times as much an Amazon's revenue as Amazon is making (if we assume 4% profit)? Doesn't the VAT being paid dwarf any corporate income tax loss? Also, why doesn't any "news" outlet reporting on this story mention Amazon's total UK tax burden?
Do consumers in the UK have the same or worse level or ignorance that ours do? As in, any tax Amazon paid to the UK would simply be an indirect tax on the UK consumers.
the only thing morally wrong is the system which conspires to delude the people into thinking that corporations actually pay any tax, they are merely collectors. All taxes paid come from the people, governments just try to make as much of it indirect as possible to disguise the true cost of government
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Of course.. the obvious counter argument is that business enables governments to tax anything. Because without business, nobody has a job. Nobody has income. And thus nobody has tax revenues, because all the people are busy trying to live subsistence farming lives. Without businesses maintaining rolls of employees to tax, no literate populations, no NHS, no garbage collection, no good roads (although I laugh at calling the UK's rail network "good"). So maybe the government should cut all businesses a break and not tax them. Stop giving businesses reasons to send revenue out of the country, and maybe they won't do it anymore.
Technically, they can't truly shut this down. For the tax man to decide that Amazon UK should be paying a hefty tax bill, they'll need pretty strong arguments. According to their balance sheet, they probably make nothing. They pay all their income to Amazon Lux. If it were an independent business, this wouldn't make much business sense, since a business's primary purpose is to make a profit. But a business isn't defined to be confined within national borders either. The business is in Lux, even though all its money making activities are in the UK. GoDaddy sell domains to the UK. Should the HMRC get a cut? The fact that domains don't need to be shipped from a local arm is irrelevant. They only get VAT, which seems to be the case with Amazon UK too. Amazon could be total dicks and pay Lux VAT instead (if they have any) and behave like a totally foreign company with a warehouse in the UK that does the "order fulfilment".
What the UK needs to do is have a good old talk down with Luxembourg and the EU to get these Union-wide tax leaks plugged. But then they'll move to Jersey or something, a bit closer to home, to show the UK their hypocrisy.
It would be really difficult to structure a tax with the incidence falling solely on setups like the one Amazon has here.
It's not just Amazon - Google and eBay are doing exactly the same thing.
In Canada this would be clearly income tax evasion and would land a the company corporate fine and directors in jail. Same should happen in the UK.
The problem is that Amazon (a US company based in Luxembourg) are tax exempt, while local companies that employ local people and contribute to local society are not. Amazon has a price advantage by virtue of a £0 tax bill, and UK-based companies can't compete.
You need to either tax Amazon or stop taxing local companies in order to restore competitive balance. As colossal tax cuts for big business aren't top of the agenda in the middle of a painful economic slump and massive budget deficit, the former option needs to be investigated.
Amazon wouldn't pay Income Tax in any case; Income Tax is the tax paid by individuals on their yearly earnings from salaries, dividends, savings interest, etc.
TFA is about Amazon evading Corporation Tax, which is an entirely different thing.
But then, without people there would be no-one to do the work, or buy the goods, so maybe the government should cut all taxes on the individual.
There's no point attempting to tax corporations, particularly big international ones, on their profit - profits just get shifted around on the books to places like Luxembourg.
The only thing you can do reliably is tax turnover (obviously at a lower rate) which is much harder to make disappear. We already *do* tax proxies for turnover in the UK (such as the employer's "national insurance contribution" which is just a tax on labour costs) so it wouldn't actually be a radical change and would enable actual tax rates to go down for the majority of smaller companies when the big boys were paying their fair share.
The big whine usually goes up at this point: but what if poor Corporation X makes a loss? Well, none of the other costs of doing business for Corporation X go away at that point, so why should tax? And if Corporation X is making a loss big time, it's not going to be in business long whether it's paying tax or not.
And your average citizen gets taxed on their earnings, not the margin between their earnings and spending (you can't offset mortgage payments or pretty much anything else of significant value), so why should it be different for corporations?
Trying to figure this out. It looks like maybe the title and the summery is badly written - it sounds like they do pay taxes - they are just trying to avoid paying a certain tax. Not too familer with how Taxes work in the UK - I just know that, living in the US, I get a huge discount when ordering from the UK because they take OFF the VAT. When I first read the article, it sounded like Amazon needed to refund hundreds of millions, if not billions, of VAT to customers, or give it to the government, but it sounds like the article is talking about some other tax.
I know one of the big issues in the United States is that many states are trying to sue Amazon for not paying sales taxes. Amazon seems to get away from charging sales taxes in the US by simply shipping an item you order from a warehouse in a state other than the one you live in, and its some type of federal law (sorry, been a long time since I took business law in college, so can't tell you exactly where its written) that you are not allowed to tax on interstate commerce. Some states like Texas say that items can still be taxed if the company has a physical presence inside of the state, which caused Amazon to close their Texas warehouse.
People (employees) pay income tax, not companies/corporations.
Taxes on profits are nearly always "Corporation Tax" which is not an income tax. Income taxes (22% for most of most peoples income above a certain threshold) are paid by the individual, but it is usually taxed "at source" so the company pays it to HMRC before the employee receives the payment making it appears as if the company pays it...
If they are not paying "Income Tax" on the wages paid to their employees, they are in MAJOR trouble as are their employees, who will be liable to pay the tax, even though the company avoided it. The article, though, talks about them not paying CORPORATION tax - a whole different matter.
I don't know why Slashdot chose to use the phrase "Income Tax" in the title, which makes this highly confusing...
There are no simple reasons, only simple people lacking imagination.
For every problem, there is an answer that is obvious, simple and wrong.
In your particular case:
- amazon doesn't ship the packages themselves; they pass them to UK companies who use the road/rail network and pay taxes
- packaging disposal is not relevant to their business, don't make it like it is. they would still ship stuff to you if you made a cardboard tower in your yard
- amazon employees living in the UK pay income tax regardless if the employer is a foreign company
- by paying less at amazon, people have more disposable income to use, so they benefit too, or they would not buy from there
Nice strawman about the "small" government there too. As a matter of fact, high taxation levels due to large governments is what is causing all these companies to set up headquarters and funnel their income elsewhere. You don't fix anything by increasing the tax.
There may be many reasons why Amazon entities within UK should pay taxes, but those you listed aren't it. If they are indeed storage warehouses and you start taxing them, you might just end up ruining your importing businesses as well, as there are many intermediaries to buffer goods on your island since everything has to come in bulk by large ships and get stored in warehouses.