Why Amazon's UK Tax Bill Has Dropped 50% (bbc.com)

An anonymous reader quotes a report from BBC: Amazon has seen a 50% fall in the amount of UK corporation tax it paid last year, while recording a 54% increase in turnover for the same period. This snippet of news raised eyebrows this morning when it was revealed. So what's going on? Taxes are paid on profit not turnover. It paid lower taxes because it made lower profits. Last year it made 48 million British Pounds (BP) or ~$62 million U.S. dollars (USD) in profit -- this year it made only 24 million BP or ~$31 million USD so it paid 7 million BP (~$9 million USD) tax compared to 15 million BP (~$19 million USD). What is more interesting is WHY its profits were lower. Part of the reason is the way it pays its staff. Amazon UK Services is the division which runs the fulfillment centers which process, package and post deliveries to UK customers. It employs about 16,000 of the 24,000 people Amazon have in the UK. Each full-time employee gets given at least 1,000 BP (~$1,297 USD) worth of shares every year. They can't cash them in immediately -- they have to hold them for a period of between one and three years.

If Amazon's share price goes up in that time, those shares are worth more. Amazon's share price has indeed gone up over the past couple of years -- a lot. In fact, in the past two years the share price has nearly doubled, so 1,000 BP (~$1,297 USD) in shares granted in August 2015 are now worth nearly 2,000 BP (~$2,595 USD). Staff compensation goes up, compensation is an expense, expenses can be deducted from revenue -- so profits are lower and so are the taxes on those profits.

Comments

Simple explanation for this

[Anonymous Coward]

Now that the UK is getting out of the EU, there's no need to pay the taxes for all the ridiculous programs that the EU has. It seems that hard work still matters in the UK and people aren't going to be rewarded with a universal basic income for doing absolutely nothing. When you don't have to pay for ridiculous and harmful social programs, your tax bill goes down. This is shocking to absolutely nobody with half a clue about how politics and economics work.

Re:Simple explanation for this

[Opportunist]

Wow, that even already works now that the UK is still in the EU?

Re:Simple explanation for this

[stealth_finger]

What the fuck are you talking about? Hard work doesn't matter in the UK, we're getting shafted hard and it's only going get harder once they trigger the inevitable nuclear brexit, the harder working the job the harder the shaft. What are these ridiculous and harmful social programs you resent? Do you mean the NHS? Some taxes are worth paying you know. Well, they are if they go to what they're supposed to instead of corporate welfare and massive billion quid bungs to hold on to power.

Re:Simple explanation for this

[hord]

Are they worth paying if they end up breaking your society apart?

Re: Simple explanation for this

[Anonymous Coward]

You may have noticed we haven't left the EU yet. If you haven't, maybe you're insane. It would explain a lot.

In fact, leaving the EU is going to make it even easier for companies to take the economy for a ride like this, so consider that.

Re:Simple explanation for this

[Anonymous Coward]

Wow, that even already works now that the UK is still in the EU?

It's beginning to work great. The UK pound is down by 20% in the last couple of yearsand will probably fall below the value of the dollar in the near future. Yen parity will take a little longer after Brexit however. Spending, earnings, everything is down and falling. Including effective tax reciepts. No economy, no money. No money, no taxes. Living the dream!

Re:Simple explanation for this

[Anonymous Coward]

How is the NHS breaking society apart?

Re:Simple explanation for this

[JonnyCalcutta]

Because nobody makes a profit = communism = fall of society

Re:Simple explanation for this

[Mr D from 63]

Amazon is not the only company in the UK who gives employees compensation in the form of stock. It is common practice. It allows Amazon to pay an employee but retain the cash. They are actually paying the employee more based on the stock value at time of award, and therefore paying less taxes. The employee might make more or less in the end from that stock. Most employees are very happy to receive a part of their compensation this way.

Re:Simple explanation for this

[knightghost]

The loophole seems to be when the stock is taxed. It should be when it is given, not when it is cashed. That's like handing someone cash but only paying employer tax when the employee gets around to spending it.

Re:Simple explanation for this

[Opportunist]

London bridge is falling down, falling down, falling down...

Re:Simple explanation for this

[stealth_finger]

It's the government breaking society apart society, not the nhs. The more they cut the worse it gets. Oh yeah, and taxes aren't going down.

Re:Simple explanation for this

[schleimkeim]

I know you're joking. But it's baffling that 70 years after the US brainwashed its people against communism, there are still people around who believe this crap.

Re:Simple explanation for this

[stealth_finger]

http://www.onaquietday.org/wp-...

Re:Simple explanation for this

[Kiuas]

When you don't have to pay for ridiculous and harmful social programs, your tax bill goes down.

Total UK tax revenue in 2016: 716 billion £
Total cost of UK's EU membership after discounting the money you go back in different types of programs and payments: 8,6 billion £, meaning roughly 1,2 % of the total tax revenue or 131 pounds per person per year.

This is shocking to absolutely nobody with half a clue about how politics and economics work.

If you think your taxes are going to go down after this 1,2 % 'saving' boots you out of the biggest trade union in the world, you've probably gotten your political and economic education from the university of one prominent Solarium Sultan from across the Atlantic. Hint: you're going to end up paying more than that 131 pounds a year just in form of increasing inflation, unemployment and increased cost of importing/exporting goods. Not to mention that the fact that your government's expenditure goes down 1,2 % does not mean they will cut taxes by that amount, or any amount.

Honestly, this reminds me of Kronan the Swedish navy vessel that at the time of its sinking was the Navy's flagship and was sent out to crush some Danes. However, because at that time the Swedish navy chose officers based on family lineage instead of any kind of actual competence, this happened:

Around noon, some distance northeast of Hulterstad, the Swedish fleet made what the military historian Ingvar Sjöblom has described as "a widely debated maneuver". Because of misunderstandings and poorly coordinated signaling, the Swedish fleet attempted to turn and engage the allied fleet before they had sailed past the northern end of Öland, which had been agreed on before the battle. Sharp turns in rough weather were known to be perilous, especially for ships that had stability weaknesses. Kronan turned to port (left), but with too much sail, and heeled so far over that she began to flood through the open gunports

While I do not see Britts as an enemy of any kind and had wished for them to stay in the EU, as a metal fan (not the air conditioning kind) watching the UK government execute this 'widely debated maneuver' of Brexit while no-one at the helm seems to know what the plan is even in the short term, I do get reminded of the lyrics to a metal song about Kronan by the Swedish band Falconer called 'Man of the Hour':

Danes in confusion
Surprisingly greet
The self termination
Of the Swedish fleet.
Without firing a round
On the stronger foe
They're victory bound
As "The Crown" went below.

Re: Simple explanation for this

[Anonymous Coward]

So you want employees to pay income tax on the stock when recieved rather than when they sell it?

Re:Simple explanation for this

[jellomizer]

Amazon has learned how to utilize the UK Tax system.

The problem with progressive taxing, is that the rich have resources to to move their money around so they appear poor to the taxing institution. The poor don't have such resources so they look like they are doing well enough be taxed at a bracket they actually hurts them.

Re:Simple explanation for this

[Pembers]

Usually the stock would be taxed when the employee receives it, because the company is giving the employee something that's worth money, but there's an exemption that Amazon are (presumably) making use of here. If the shares are worth less than £X and it's been more than Y years since the employee last benefited from this exemption, no tax is due when the employee receives the shares. (I'm too lazy to look up the values of X and Y, but they're not huge.) The aim is to encourage the spread of share ownership and give companies another way to motivate employees.

Re:Simple explanation for this

[Mr D from 63]

There is no loophole. There are established tax rules on how you account for these items, they are being accounted for properly in accordance with the rules and their intent.

Re:Simple explanation for this

[Anonymous Brave Guy]

The UK pound is down by 20% in the last couple of years

Sterling was probably overvalued and due for a correction even before the Brexit vote, though. While the referendum result triggered a sharp drop and further falls over the following weeks, the pound has since recovered some of those losses and it now sits roughly in line with the longer term trend against the US dollar. Some economists had been arguing that it should be closer to its current level anyway, so we shouldn't necessarily expect it to continue falling or take any more sharp dives on account of Brexit (unless they screw up the negotiations, of course...).

Re:Simple explanation for this

[Anonymous Brave Guy]

Taxing the stock when it is given means an employee gets a tax bill but doesn't necessarily have any real money to pay it with. That sort of arrangement often creates perverse incentives, and isn't normally how taxes on capital gains work.

Re:Simple explanation for this

[Anonymous Coward]

this is true in general, but Amazon is special,
they really keep their prices as low as possible and earnings as low as possible because they would rather earn 0% profit or even loose money some years, but increase market share by 10%+ than earn few billions but increase market share only 1%

every country taxes profits, not revenue, if you or company earn 0% (or loose money) there is nothing to tax (in some countries they even give you money back/negative tax)
so company that tries to take as much your money as possible, and has huge profit SHOULD pay huge tax, but one that sells you stuff "at cost" or even "below cost" does not pay any taxes (or in some countries gets "negative tax" back from government

off course most companies try to extract as much money from you, but some would rather you buy everything from them during your whole life, even if it means they don't earn profit, because they value market share more than profit

Re:Simple explanation for this

[Anonymous Coward]

Brexit is what happens when you give the lower class of uneducated people the right to vote.

Re:Simple explanation for this

[Anonymous Coward]

Fidel Castro said "Communism doesn't work". Boris Yeltsin "Our system is not working for the people. It's a good thing they did brain wash us or we'd be in some pit today. But I suspect that is your wish.

Re:Simple explanation for this

[green1]

Communism isn't all or nothing. The most successful countries on the planet have publicly funded healthcare, that doesn't suddenly make them Cuba or the USSR.

Or is your argument that anything that Cuba has must be bad, simply because it's Cuba? In that case I recommend you stop eating food, because communist countries have that too.

Re:Simple explanation for this

[green1]

That's not a problem with progressive taxation, it's a problem with complicated taxation rules.
The rules are designed by the rich to make it easy for the rich to circumvent. If the tax code wasn't thousands of pages long, the odds are the loopholes wouldn't exist.

Re:Simple explanation for this

[Anonymous Coward]

Communism has failed every time its been tried. The more socialist a country gets, the worse it gets. How's Venezuela doing these days, huh?

As for "Most successful", well...
Do the social democracies like Germany or Norway invent amazing new technologies like the Internet or smartphones? No, that was the US,
Do your social democracies like the UK have the best health outcomes? No, that's the US - be chance of survival for infants, cancer, heart disease, HIV...
Do you social democracies like France or Sweden perform huge amounts of medical R&D? No, that's the US, which provides half of the entire world's medical R&D.

Your "most successful" nations have been most successful at leaching off the rest of the world and making great promises about the future. But now your bills are coming due, and its getting harder to pay them... that's the real reason for the huge European immigration push - they need lots of young people to work hard and pay huge tax bills, so the old folks can get their "free" medicine and pensions.

When you communists have broken even more countries and destroyed even more economies, the US won't willing to pick you up again. So, good luck with that - and enjoy being a history lesson on how not to run a country.

Re:Simple explanation for this

[SScorpio]

Better go warn the people of Lake Havasu City, Arizona.

https://en.wikipedia.org/wiki/Lake_Havasu_City,_Arizona

Re:Simple explanation for this

[green1]

Do the social democracies like Germany or Norway invent amazing new technologies like the Internet or smartphones? No, that was the US,

Germany invented the first programmable computer, I'd like to see how your internet and smartphones would have worked without that. Also the smartcard, the first oscilloscope, SMS for cell phones, morphine, x-rays, etc. Norway's inventions include things like Object Oriented Programming.

Do your social democracies like the UK have the best health outcomes? No, that's the US - be chance of survival for infants, cancer, heart disease, HIV...

Despite the US spending nearly three times the amount per capita on health care as the UK (and even ignoring private money the US government spends almost 25% more than the UK on health care), the average life expectancy in the UK is 3 years longer than in the US, all cause mortality in the UK is lower than in the US, and specifically the UK has lower mortality rates for cancer and heart disease, and has half the infant mortality rate of the US. (I didn't immediately see figures for HIV)

Do you social democracies like France or Sweden perform huge amounts of medical R&D? No, that's the US, which provides half of the entire world's medical R&D.

Sweden spends more money per capita on medical research than the US. And in per-capita spending, the US is behind even such countries as Signapore and South Korea.

Re:Simple explanation for this

[Anonymous Coward]

Capitalism is a model, communism is a model, socialism is a model.
These are called 'names' - and a name doesn't specifically decide if something is good or bad.

You can have a bad implementation of socialism, a bad implementation of communism, or a bad implementation of capitalism.

You can also have an implementation of any of the above which doesn't even conform to the model in principal - this is called "deluding yourself". Just because someone said you and is good, doesn't automatically mean "you" = "good". These people are called also called ideologues and they believe their definitions more than they understand their own actions, and often act hypocritically outside their own definitions. They polarize around definitions and become hung up on definitions without context. These people sit at dinner tables preaching how we need immigration reform and then hire a bunch of Mexicans to move their furniture.

So, no. When someone tells me they do X or they follow X as a principal model then I assume they follow a subset of it which happens to benefit them. People can and will mix-and-match their paradigm to obtain the maximum benefit even if it sits outside the boundaries of ethics.

Re:Simple explanation for this

[Anonymous Coward]

This is what we call dog whistle politics. Just call something communist and most American's will lose their bananas over it.

Re:Simple explanation for this

[JonnyCalcutta]

Thanks for helping to make my point

Clarification question

[Gaccm]

The compensation relevant for taxes is the 1000 GBP the stock is worth when Amazon gives it and not its value at the end, right?

Re:Clarification question

[CriticalYetLazy]

My thinking exactly. I'm no accountant (far from) but I doubt you can register inflated shares as "expenses"..

Re:Clarification question

[Shimbo]

The article didn't make a whole load of sense to me. Amazon can give away £1000 of shares and the employess don't pay tax as long as they hold them for 5 years. https://www.gov.uk/tax-employe...

The employee may end up paying capital gains tax on the sale if they end up with a pile of shares and sell them in one tax year. The first £11 000 or so of profit is free, so unlikely to be an issue for most people.

But Amazon have found a neat trick to avoid corporation tax which is actually paying your employees? No idea WTF that was about.

Re:Clarification question

[Ash-Fox]

My thinking exactly. I'm no accountant (far from) but I doubt you can register inflated shares as "expenses"

Are you intentionally being dense?

The summary even accurately described the figure is based on profit, not turnover and then in the very last sentence, "Staff compensation goes up, compensation is an expense, expenses can be deducted from revenue".

Re:Clarification question

[hord]

It would depend on British law. In the US you have to exercise the option and turn it into actual stock before you have a tax liability. It's possible that British law just includes stock options are part of your overall compensation and uses some nominal market value to report it. It does seem weird to me to include non-vested options in a dynamic financial instrument as "compensation" even if it is used to supplement actual money.

Re: Clarification question

[Anonymous Coward]

With the cybernetic titanium teeth I've augmented my anus with, go right in.

Re: Clarification question

[Entrope]

I don't know how UK law works, or whether Amazon UK did something like this (assuming it is possible), but something like this is common in US tech companies. It's called a stock option grant.

A stock option is a contract that one party fulfills by selling some number of shares of the stock to the other other party for a given price. For a typical tech employee, this takes the form of an incentive stock option, where the employee usually has to stay employed (perhaps full-time) in good status (rather than being on administrative leave, or in prison, or what not) for some period of time. For example, the grant might say that the employee can buy 25% of the options after one year, another 25% after two years, and so forth.

The price the employee has to pay (say, $X/share) is called the strike price. If this is different than the market value of the stock, it counts as compensation when the option is granted. Because this isn't very convenient for employees, usually the strike price is the market value at the time of the grant.

When the employee exercises the option to buy the share(s), the difference between the market value at the time of exercise and the strike price is deductible by the employer as a compensation cost. If the market price was $3X, and the strike price was $X, then the employer has essentially given up $2X to the employee. (The employee has to pay taxes on proceeds when they sell the stock to someone else, and the usual rules for capital gains apply: If they held the share for less than a year, it basically counts as ordinary income; if they held it for longer, it counts as a long-term capital gain or loss.)

Again, that's how it would work in the US, but I don't know that this is exactly how Amazon UK did it.

Re: Clarification question

[Falconhell]

In the UK the companies gve actual shares, not options.

Re:Clarification question

[Anonymous Coward]

expenses can be deducted from revenue

But in this case, the expense is not fixed.

case 1) If AMZN buys/allocates 1,000 BP shares at time T for the employee and holds them in a safe somewhere, it's expense is 1,000 BP. AMZN deducts 1,000 BP from revenue as expense.

case 2) AMZN buys 2,000 BP shares at time T+2 years. AMZN deducts 2,000 BP from revenue as expense.

case 3) AMZN buys 1,000 BP shares at time T. AMZN deducts 2,000 BP from revenue as expense for year T+2years.

Case 3 is obviously fraudulent.

Re:Clarification question

[LynnwoodRooster]

It is, technically, a liability and thus shows up on the expense side of things. As your liabilities increase, they offset accrued profits of the company.

Re:Clarification question

[rtb61]

From the article "Each full-time employee gets given at least £1,000 worth of shares every year." Those are not stock option, the option to buy shares some time in the future at a defined stock option price, lasting the life of the stock option. They are being paid in shares as a bonus, as it can not be included in the normal award rate, as the stock has no real defined value until it is actually traded. It is questionable, that Amazon being allowed to tax deduct the share payment, is questionable because it can simply print more shares and devalue all other shares in the company but fudge on the declared taxable value, sounds like a real shonky scam put in by British Banks to cheat on taxes. You cheap printing shares, devaluing existing ones but get the original tax deduction value. So start with 10,000 shares valued at $1,000 dollars each, pay 1 share get a $1,000 tax deduction. Print 10,000 more, now they are valued at $500 but you still get that original $1,000 tax deduction basically cheating the tax system of $500, keep printing and issuing devaluing shares and never pay tax, really sounds like a British scam (keep in mind they were the originators of Tax Havens with the backing of the entirely corrupt monarchy). You can see exactly how they would cheat the system with billions of shares and billions of dollars, pretty much printing free tax paid dollars.

Re: Clarification question

[Entrope]

Interesting. In the US, that would count as ordinary income in the year the stock was given; the tax effects make it an uncommon practice. We don't have anything like the £3,600 exclusion that is mentioned in the article. US companies also (as far as I know) can't restrict how long the employee works for the company before selling an actual share that has already been granted. Perhaps the Amazon UK write-off is related to how they structure that incentive scheme.

Re:Clarification question

[Mr D from 63]

The compensation relevant for taxes is the 1000 GBP the stock is worth when Amazon gives it and not its value at the end, right?

all speculation here....Its possible that it does not count as income until the employee actually sells it, which would simply be a deferral. Taxes received would be higher or lower as well according to the stock price at the time of sale. It would get complicated if the employee could claim it as capital gains, but I don't think that would be allowed (don't have a clue about UK capital gains rules though)

Re:Clarification question

[Mr D from 63]

I re-read some of it and agree. They are paying their employees more by giving them an additional stock 'bonus' each year, therefore showing less profit and paying less taxes.

Re:Clarification question

[schini]

Neat breakdown.
case 3) is - as you said - obviously fraudulent, I would never believe Amazon would be stupid enough to attempt something like this.
case 2), while not actually fraudulent in relation to the tax thing, is highly unlikely I guess, since the shares "given" to the employees on a certain date would have to exist "at this point in time", otherwise it would be kind of fraudulent towrds the the employee (unless the summary somehow was not accurate concerning the shares)

=> I think we need to assume 1)

Thus, the share thing and the rising share price has nothing to do with the declining tax.

Re:Clarification question

[Mr D from 63]

Well, there is no way to deduct based on a future price, and you must deduct an expense when you incurr it, I think tax law is pretty concise in this area, at least it is in the US. From the article, it appears Amazon is deducting the expense at market price the time it is given. Which is fair. They are paying less taxes because they are paying their employees more.

Re:Clarification question

[rmdingler]

There you go with your concise, accurate depiction of the state of things.

Now there's nothing more to squabble about...

except the evil US online retailer that's cheatin' us, mate!

Re: Clarification question

[JonnyCalcutta]

Not true. It can be either. I have been given both in the past.

Re:Clarification question

[hord]

This whole thing is strange because it mentions that they have to vest for two or three years before cashing out. It sounds like Amazon is both taking advantage of share dilution and a loop-hole for tax-free payments via stock. It ends up working out for the employee because they don't pay taxes on the "income". I guess in the US that would probably be taxed at 15% under capital gains but IANATL.

Re:Clarification question

[Mr D from 63]

Amazon has a vested interest in keeping their share price movement upward, a whole lot more than they would gain from dilution to offset this employee bonus tax deduction. They are simply doing what many other companies do and have been doing for a long time. The only difference is that Amazon is big and its popular to make them the villain. They are increasing employee compensation and paying less taxes.

Re:Clarification question

[hsmith]

Depends. Vested stock is treated differently than just options. Options are taxed when exercised. vested stock, you are taxed when it is fully vested since there are restrictions on it (i.e. vesting).

Re:Clarification question

[Ash-Fox]

But in this case, the expense is not fixed.

You just put down what your expenses were at that point in time when you paid out, just like any other expense... Why is this so hard to grasp?

Re: Clarification question

[swillden]

Interesting. In the US, that would count as ordinary income in the year the stock was given; the tax effects make it an uncommon practice

False, on both counts.

In the US, such stock grants are called Restricted Stock Units (RSUs), and they're actually quite common in large tech companies, and in some other parts of industry. My employer (Google) grants them, and I get them; in fact they constitute about a third of my income.

The way it works is that the grants vest on some schedule. For example, each year after my performance review I'm given another bloc of RSUs, on a four-year vesting schedule. Each month, 1/48th of each grant vests. At the point in time when the stock vests, not when it is granted, it becomes income to the employee and a cost to the company. At vesting time, some of the shares are sold to cover income taxes and the rest are deposited into a brokerage account for the employee.

(Actually, I have asked to have my shares automatically sold upon vesting and the cash deposited into my bank account, then I move it to my brokerage and invest it in index funds, on the theory that my financial future is already tightly bound with Google's success, so I should diversify. I recommend that anyone who receives stock or option grants consider doing the same.)

Re:Clarification question

[bugs2squash]

I'm not sure that Amazon buys any stock for this - I'm pretty sure they just print it, diluting the value for everyone else. It's not really a cost to Amazon's business at all.

Really business taxes on profit should be on the high side and businesses should be encouraged to minimise their taxes/profits by paying their workers more or investing in infrastructure

Re: Clarification question

[Entrope]

I said "given", not granted. Until your option or stock vests, ask you own is a piece of paper.

And RSUs are uncommon in general. They are recently popular in Sili Valley, but otherwise about as common as defined-benefit pensions in private companies.

Re: Clarification question

[green1]

Not in the UK, and we have no £3,600 exclusion, however I do get given shares, and I am not allowed to sell them before the end of the year (I don't think it's contingent on how long I work for the company, just that I have to hold them for a specific length of time before selling)

Re: Clarification question

[Entrope]

So the BBC's business editor was wrong when he wrote "HMRC rules allow employees to receive £3,600 worth of shares from their employer tax free every year"?

Re: Clarification question

[green1]

I think you missed the first bit of my comment that specified I wasn't in the UK.

Re:Clarification question

[Anonymous Coward]

What if AMZN allocates 1,000 BP shares to employee, and further undertakes a contractual obligation to purchase those shares from said employee at time T+2 years, deducting 1,000 BP from its revenue as expense at time of allocation. Then, at time T+2 years, AMZN purchases those shares back from employee for 2,000 BP, fulfilling their contractual obligation, and deducts 1,000 BP from their revenue as expense for year T+2 years.

Re: Clarification question

[Entrope]

No, I just read your sentence fragment as meaning "[That's not so] in the UK", because my comment was rather narrowly about the UK vs US tax treatments of this kind of compensation.

Re:Clarification question

[rtb61]

Amazon is making use of an existing loop hole purposefully created by corrupt banks, the monarchy and the UK government. The tax cheating does not really count for the $1000 share issues but for a multi-million dollar share issue to insiders, a tax deduction without any taxes being paid ever, except on the dividend those shares earn, well, as long as they are not transferred to a tax haven location and than the dividend is no longer taxable. So not much to do with Amazon and more to do with high level institutionalised tax fraud, creating laws to allow corrupt evasion of taxes, hell, even the fucking prime minister of England had off shore tax avoidance accounts, to cheat the government providing him a salary, residence, primary health care way beyond what any other citizen gets and I'll bet everyone who has been picked for the job by the corrupt monarchy (as far as they are concerned only peasants should pay taxes) and the corporations also had offshore tax haven. accounts. So Amazon not a big villain in this case just a tiny one making use of corrupt laws brought into place by big villains

Re: Clarification question

[swillden]

I said "given", not granted. Until your option or stock vests, ask you own is a piece of paper.

You should use unambiguous language.

And RSUs are uncommon in general. They are recently popular in Sili Valley, but otherwise about as common as defined-benefit pensions in private companies.

I've had them at three companies, only one of which is in SV, or has any relation to SV.

Re:Clarification question

[Mr D from 63]

but for a multi-million dollar share issue to insiders, a tax deduction without any taxes being paid ever, except on the dividend those shares earn,

I think you assume stuff is happening that isn't. Taxes are paid on the stock gift amount as income, only the increases are taxed as capital gains, or decreases as losses, from the legally defined time of issuance. Individuals pay income taxes on that compensation, not corporations.

Re:Clarification question

[rtb61]

You have to have a capital gain before you can tax it, so zero taxes are paid until the shares are sold, yet they earn the equivalent of bank interest, hmmm, something definitely suss going on their, I wonder who it benefits, the poor earning a pittance on bank interest or the rich earning millions as off shored tax haven dividends, paying for their luxury holidays basically with the taxes of the poor.

Re:Clarification question

[Mr D from 63]

But capital gains are only on the increase in value, not the initial value. That is taxed as income.

what if the stock goes down?

[headlessbrick]

So, if the stock goes down, will Amazon have to pay higher taxes? That doesn't make much sense..

Re:what if the stock goes down?

[Ash-Fox]

So, if the stock goes down, will Amazon have to pay higher taxes?

As long as their overall profits are higher due to not needing to pay employees extra benefits (or just generally) etc. Yes.

Re:what if the stock goes down?

[Mr D from 63]

So, if the stock goes down, will Amazon have to pay higher taxes? That doesn't make much sense..

No. Amazon's taxes should not change no matter what the stock does, they deduct that expense when they pay the employee just like they deduct any salary or bonus. If it goes up the employee pays more taxes on it when they cash it out.

Re:what if the stock goes down?

[bluefoxlucid]

It makes sense if Amazon holds the stock and then gives it to the employee, losing an asset.

It doesn't make sense if Amazon issues new stock, since that creates an asset (and dilutes the share value). That new asset is income to Amazon, then is handed over and is an expense; if it's issued directly to the employee, then the value of that income-expense is net-zero and it shouldn't get them a tax discount.

Re:what if the stock goes down?

[swillden]

So, if the stock goes down, will Amazon have to pay higher taxes? That doesn't make much sense..

No. Amazon's taxes should not change no matter what the stock does, they deduct that expense when they pay the employee just like they deduct any salary or bonus. If it goes up the employee pays more taxes on it when they cash it out.

Not if UK income tax law works like US income tax law (and the article implies it does). Such stock grants are not considered income to the employee or an expense to the company until they vest, which happens well after the grant and on some specific schedule.

In the US, these are called Restricted Stock Units. http://www.investopedia.com/te...

Re:what if the stock goes down?

[Mr D from 63]

Well something must not be correct because the article claims they are legally taking the expense. Maybe there are alternative legal ways to account for that expense. Thanks for the added info.

Capital gains

[GeekWithAKnife]

So when employees cash out they will have to pay tax. In the UK once they convert assets to fiat they will have to pay 20%

The interesting this about this is that you can earn A LOT more than than the usual 20% tax bracket and still pay 20%

The company is essentially pushing tax deductions on the employee with the employee seeing this a great deal to pay less tax as well...maybe even make profit as stock appreciates. It all falls apart however when share price goes sharply down and people may end up earning less than they thought they will AND pay tax on it when they cash out.

Re:Capital gains

[Anonymous Coward]

Capital gains has thresholds too, there's an allowance of 10k or so with 0% tax, So lower paid individuals paid this way, who don't have lots of other shares or other appreciating assets sold in the same year, might do quite well out of it.

Re:Capital gains

[Mr D from 63]

How is this different than any other company that gives their employees stock as part of compensation? Its not that unusual. The author is making it out to be some kind of trick. Amazon is paying their employees more, paying less taxes.

Re:Capital gains

[Anonymous Coward]

Not true. You only pay capital gains if your _profit_ (not the total value of shares but how much they have grown since you acquired them) is over £10000 or so.

So majority of employees who get £1000 won't pay capital gains tax at all.

Re:Capital gains

[swillden]

So when employees cash out they will have to pay tax. In the UK once they convert assets to fiat they will have to pay 20%

FWIW, if you're right about UK law, this works differently in the US. Stock grants are considered regular income to the employee (and an expense to the company) at the point in time when they vest. At time of vesting, a fair market value (FMV) is assessed (usually the stock price at closing on the day before the vesting date, IIRC), and that amount of money is counted as part of the employee's gross income. If the employee holds onto the stock for another year before selling, and the stock price goes up, then the difference between the sale price and the FMV at vesting is considered a capital gain, and taxed at the lower long-term capital gains tax rate (of course, if the employee sells in less than a year, it's a short-term capital gain, and those are taxed as normal income). If the price goes down, it's a long-term capital loss which can offset other long-term capital gains, or perhaps deferred to offset future long-term capital gains.

Re:Capital gains

[Solandri]

The interesting this about this is that you can earn A LOT more than than the usual 20% tax bracket and still pay 20%

Everyone focuses on this side of capital gains taxes, never the flip side. I think the flip side is the more important one.

If you're in a lower tax bracket, you still pay 20% capital gains tax. This has the effect of discouraging middle- and low-income people from investing in stocks. And since stocks on average have a much higher rate of return than interest in a bank savings account, you steer low- and middle-income people away from the best way to accumulate wealth short of starting a company.

In the U.S., the long-term capital gains tax is 15%. After accounting for deductions and credits, the $100k-$200k income bracket pays a net 12.7% in income taxes (column T). The $200k-$500k income bracket pays a net 19.5%. So 15% is somewhere around $200k. The flat 15% capital gains tax rate discourages people making less than $200k from investing in stocks.

We need to get rid of the flat capital gains tax rate. If you still want to encourage investment in stocks (the reason it exists), change the capital gains tax rate to your income tax bracket minus 10%. That way all income classes receive that encouragement, not just higher incomes.

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BP?

[stealth_finger]

Seriously? Use the very standard GBP if your keyboard doesn't have a £. Maybe if it doesn't you can go on amazon and spend some AD on a new one.

Re:BP?

[Anonymous Coward]

Or cut-and-paste a '£' from somewhere else. Or just learn how to enter a '£' on your system – Windows, Mac OS, and Linux/Unix all have the capability. (AC because I moderated.)

Re:BP?

[Anonymous Coward]

Although because we're apparently becoming insular, xenophobic, leaving the EU, preferring to insult and ignore our neighbours, and steal benefits from the poorest in society in the name of 'austerity' maybe the 'great' part will be dropped in the future

Re:BP?

[GrumpySteen]

Eh.... I'm just surprised that the editor/submitter took the time to fix the UTF errors even if they didn't get the proper abbreviation in there. At least it's not filled with instances of £

Re:BP?

[Big Hairy Ian]

He certainly managed to find the $ key

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Re:That's not right...

[Anonymous Coward]

Basically anyone over 40k loses half their wage to taxes

Erm, no. They only pay the 40% rate on earnings above 40k. So if they are earning 50k pa, only 10k of that gets taxed at the 40% rate.

People in the UK are surprisingly fucking retarded about tax.

Kettle. Pot. Black.

Just say NO to Amazon

[Anonymous Coward]

and buy from UK Based retailers that pay proper tax.
If you don't then there won't be any retailers left and Amazon will have won.

Re:Just say NO to Amazon

[Anonymous Coward]

"and buy from UK Based retailers that pay proper tax."

They won't do that either because those are all Pakis, Pollacks and other nationalities they also despise.

Re:Just say NO to Amazon

[Anonymous Coward]

Why? Because they're running a business? It's the government that's responsible for tax laws.

Re:That's not right...

[Anonymous Coward]

You only found one major mistake in GP post! Dude, try harder.

Very ironic, very satirical

[Archtech]

The employees are rewarded with shares that keep increasing in value. Why are the shares increasing in value? Because Amazon's expenses are so low. Why are Amazon's expenses so low? Because it skimps on employee salaries. How does it manage that? By giving the employees shares.

Ponzi scheme
n noun a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

ORIGIN
        named after Charles Ponzi, who carried out such a fraud (1919–20).

Re:That's not right...

[Anonymous Coward]

ok, another mistake, there's a 11k tax free allowance for capital gains, then it's 20% only on everything over the 11k gain.

In other words

[GrumpySteen]

"Hey, let's give corporations tax deductions for the cost of stocks they give to their CEOs!"
"Jolly good idea! CEOs can barely afford a third vacation house and a private jet. They need more shares of stock!"

...time passes...

"WTF? Why are we giving corporations tax deductions for the cost of stocks given to the peasants? This is an outrage!"

Re:In other words

[El Cubano]

Or even better:

"Hey, Amazon and other companies pay crap salaries and have crap benefits; their employees even live in tents in the office park."

...time passes...

"Hey Amazon is compensating their employees better and they pay lower corporate taxes because of it; the need to stop that right now!"

(BTW, in the entire civilized world employee compensation is a normal business expense and pretty much no matter how you compensate the employee, the business gets to deduct the cost of salary and benefits as operating expenses; the only trickery is the parts that the government ignores for tax purposes, like employer-paid healthcare in the US thanks to the work of unions, until Obamacare started taxing "Cadillac" plans, also thanks to the work of unions.)

Re:That's not right...

[Entrope]

Secondly, if the stock goes up, you get taxed _again_ when you sell it. The company isn't paying shit in taxes for this, mind you, they're passing it on to the employe[e...]

That's how capital gains work. Say I pay 1000 GBP for stock, or someone buys it for me at that price. That becomes my "cost basis" for the stock. The market value of that stock increases to 2000 GBP. I have 1000 GBP of capital gains, and if I sell at that price, I pay taxes on that gain. The company doesn't owe taxes on that gain because they sold the share before those gains accrued, so nothing is being "passed on" to the employee.

Something fishy about this

[Anonymous Coward]

So Amazon doing right by its employees by reinvesting in them is supposed to look like Amazon gaming taxes and saddling employees with a higher tax burden? BS. This is pure smarmy clickbait.

Weird business case.

[Anonymous Coward]

To think of it,

Amazon makes less then 1% of profit on their turnover. About a 1000 GBP of profit/employee. That is extremely low, even the worst (heatlthy) companies make more then 1000 GBP profit/employee/year.

Something fishy is going on here.

Re:Weird business case.

[Anonymous Coward]

it is very weird, but not fishy at all,
Amazon does not try to maximize profit like most corporations, instead they try to keep profit under 1% and drop prices as low as possible so they can get as much market share,
they will increase prices and start making profit and pay much more taxes once 100% of everything in world is sold only on Amazon/there is no competition/they become monopoly, that is more or less what Amazon CEO told to investors, and investors are fine with that plan because in 10 or 20 years they will be making big bucks

for now Amazon does not earn anything (some years they even loose a lot) so there is not much to tax

Re:That's not right...

[lifeisshort]

If it is the same UK where I work and pay taxes, then pay is billed at 20%, 40% and 45% from ~11.5k, 33.5k and then 150-fucking-k.

Re:That's not right...

[lifeisshort]

In reality, someone with about 60k salary will lose to the taxman ~17.5k, which is not exactly half. Bear in mind that this includes access to healthcare free as in beer.

Lower Profit, or Higher Transfer Pricing?

[Anonymous Coward]

With all due respect to the author, when revenues increase and profits decrease, you need to look at transfer pricing. Transfer pricing is the pricing arrangement between sister companies.

For instance, Amazon may well have increased the price of leasing its online service to its UK subsidiary, with those profits going to a low tax jurisdiction.

Occam's Razor would suggest this is exactly what is happening, and we know this is happening all over the world and the reason that the OECD is working on a "Base Erosion and Profit Shifting" agreement.

Re:Lower Profit, or Higher Transfer Pricing?

[Anonymous Coward]

in general you are correct, but Amazon is exception, they intentionally keep profits under 1% to increase market share long term, so one day they can become monopoly, taxes are low because they really dont earn much, because they dont want to earn much

both taxes and prices will jump a lot once they become monopoly, this is publicly know plan by Amazon CEO, and investors are fine with this long term plan

Re:That's not right...

[Anonymous Coward]

> People in the UK are surprisingly fucking retarded

One need not read further.

Actually you do

[Anonymous Coward]

Depending on the type of stock given, when you receive the stock it gets added to your income at the end of the year and appears in your W2 (in the US at least) as income. When you go to sell it, anything you made above the received amount is also taxed as income, although not EARNED income, but stock income, and taxed at one of two rates, depending on whether you sell the moment it's vested (1-3 years in this case) or if you hold it an additional year, and then it's long term investment income, and taxed at a lower rate.

Re:Actually you do

[EvilSS]

It depends on how the stock is awarded. If it's in options, for example, you don't get taxed until you exercise the option. Which is why you never, ever, ever exercise options then hold the stock, you always sell it right away. People got left holding massive 6 and 7 figure tax bills for worthless shares doing this when the last tech bubble burst.

Re: Actually you do

[Anonymous Coward]

In USA, you exercise then wait 18 months-2 years (I forget which) for long-term capital gains. Unless you have insider knowledge to dump faster. :-)

Re: Actually you do

[EvilSS]

That can be very dangerous if you get pushed into AMT due to the options conversion. You could end up with worthless stock and a 6-figure tax liability. This happened to a thousands of people during the last tech bubble bust. If it's a stable company then yes, but most times those big options packages (unless you are an exec) are coming from startups. No thank you. Convert and sell.

Re:That's not right...

[Mr D from 63]

Err passing it on to the -- s/employer/employee. And a minor addition: The point being companies are paying LESS tax, people are paying MORE tax, and they don't get that it's basically them getting fleeced. It's as if collecting tax will suddenly stop Amazon, Microsoft, Google, and whomever else from operating in the UK entirely. Cowards.

The people are only paying more tax because they are making more money. That's how it works. Amazon is making less profit, paying employees more, and paying less taxes. Employees are making more, how much more depends on the value of stock when they sell it. I honestly think some people here would rather have Amazon not pay these bonuses to employees, and make more profit just so they can pay more taxes.

Re:That's not right...

[Mr D from 63]

Its not fleecing the UK. It is perfectly legal and common practice. It is compensating employees with stock vs cash in proportion to what makes the best business sense according to established law. There is a reason that a large majority of most employees pay is still the traditional paycheck. Bonuses in the form of stock are desirable to employers and employees. Change the laws and the ratio of stock bonus to paycheck would change accordingly. The number you cited drive the behavior, but its not fleecing. Amazon is giving up equity so they can keep cash. Cash rich companies spend money, which benefits countries in other ways. Rising stock prices benefits all stockholders, many of whom are UK taxpayers but not employees of Amazon, therefore benefiting the UK as well.

Find a Chartered Accountant

[Anonymous Coward]

This article needs a lot of rewrite with the help of someone who knows something about British Tax laws.
First question I had was "what about the VAT?"

Value of unexercised grants?

[mpercy]

If employees are granted options to purchase stock at current value at some future date following, say 3-5 year vesting period, the employee has not received anything of value. After the vesting period, the employee can choose to exercise the option and buy the stock from the company at the promised value. In US tax system this triggers an income tax on the option value. If the employee sells the stocks (not uncommon in this deal, a buy/sell agreement), he or she will also then face a short-term capital gains tax on the profit.

So, say Company offers employee 1000 shares of option at $1/per share with a 5 year vesting period (current stock price). The employee has not received any tangible benefit at this time, and so faces no tax for the 5 year period. After the 5 years, he is vested and with the stock now at $5/share, he decides to buy/sell and cash out. he does have $1000, so borrows $1000 from the company to buy the stock, sells the stock back at $5000, pays off the $1000 loan from the proceeds basically all at the same time. He has $4000 in profit. On his taxes he will face income tax for the $1000, and ST CG for the $4000. But all this is 5 years after the original grant. If in the intervening 5 years, the stock price instead went to $0.50 the employee faces a loss if he exercises the option, so he will probably not accept the option at that time. Why should he get taxed on money he never had in his hands?

Re:Value of unexercised grants?

[Pembers]

It works more or less like that in the UK too. If the company grants the employee share options rather than actual shares, the employee doesn't owe any tax when he receives them.

The article says Amazon is giving their employees shares, not share options, but then says the employees can't benefit from the shares for one to three years. That suggests they're really getting share options, but the reporter doesn't understand the difference, or doesn't feel like trying to explain it. (I've been given share options a few times, and have always struggled to explain them to anyone who hasn't worked for a company that gave them.)

Re:Value of unexercised grants?

[green1]

The article says Amazon is giving their employees shares, not share options, but then says the employees can't benefit from the shares for one to three years. That suggests they're really getting share options, but the reporter doesn't understand the difference, or doesn't feel like trying to explain it. (I've been given share options a few times, and have always struggled to explain them to anyone who hasn't worked for a company that gave them.)

Not necessarily, there are various ways of doing this, and my employer does in fact provide me with un-vested shares, not options. This is preferable to options in that regardless of if the stock goes up, down, or stays flat, I still get something (the new share value), additionally I get dividends on them even before they vest, whereas with options you'd get nothing until they vest, and even then only if the shares went up.
I have also received options in the past, but those are given out as one time special grants as opposed to the un-vested shares which are part of every paycheque (they vest annually at the end of the year and from that point on I can chose to hold or sell them)

Re:Value of unexercised grants?

[Anonymous Coward]

These ARE NOT stock options. Stock options haven't been granted to employees in tech in years. It's actual stock, although there are restrictions on when you can sell it.

Re: Value of unexercised grants?

[Anonymous Coward]

Pretty sure options are still popular in companies that haven't IPO'd.

Literacy

[Anonymous Coward]

Amazon's shady tax affairs aside, the poster and moderator should perhaps know that the british pound has an ASCII and Unicode character - £, and also that it is abbreviated as GBP, not BP as in the article. To most people abbreviation BP means British Petroleum, an oil company.

Re:That's not right...

[Anonymous Coward]

I honestly think some people here would rather have Amazon not pay these bonuses to employees, and make more profit just so they can pay more taxes.

Well, yes.

Taxes pay for civilization. Profits from businesses should, in a society that values it's people, go nearly 100% to the State so it can provide food, housing, etc to the people. Giving money to individuals is wasteful and bad for society, as they do not tend to spend that wealth in a way that maximizes the benefit to society at large, so diverting as much wealth away from individuals and into government entitlement programs as possible should be the goal of any modern government. What, do you propose trusting some yardie to spend money in the way that best benefits society? People are stupid, you can't allow them choices, that's why government is needed so that bad choices as determined by government & society are removed as an option.

Re:That's not right...

[swillden]

Firstly, any stock awarded to an employee in the UK is immediately given a "Fair Market Value" evaluation -- again that's ***on award***. So, if you get given 1,000 GBP worth of stock tomorrow, and you pay nothing for it, the UK will tax you at whatever your income rate is for that 1000 GBP.

Are you sure? The US does it differently, and in a way that is much fairer and seems more consistent with the article.

In the US, the FMV is assigned at vesting, not at date of grant. This is much better, because at vesting some of the shares can be (and generally are) automatically sold and withheld to cover income taxes, reducing the chance that the employee gets ambushed with a huge tax bill.

Also, the structure you describe seems very weird when lined up with the article, because apparently (per you), the stock's value counts as income to the employee when it is granted, and (per the article) it doesn't count as an expense against the company until it vests, and those events have different values. So employee income comes out of thin air on the grant date (because it's not from the company, which hasn't seen a corresponding expense) and then company expense goes nowhere on the grant date (because it's not paid to the employee). It seems like accountants would have to invent some sort of future liability contract to cover the grant and make the books balance.

It's not impossible that you're right, but I'm skeptical.

It's GBP, not BP

[wonkey_monkey]

The ISO code for British pounds is GBP, not BP.

So, the sky is blue.

[Anonymous Coward]

Is this to be a business lesson, 101 or what? This knob is just learning how taxes work and this is news?

Really. This isn't even news for a high school student.

Re:That's not right...

[Anonymous Coward]

The ``we're giving you stock now, but it's not yours for 1-3 years'' is not the same as "we're giving you stock".

Such an award is similar to a stock option. e.g. we're giving you this certificate, that's worthless today, but could we worth something in 1-3 years. My guess taxes are applied at that 1-3 year mark.

I call BULLSHIT

[Anonymous Coward]

The shares going up is NOT an 'extra expense' to Amazon in any way shape or form. They granted the shares at a set price at the time they were granted Amazon is NOT paying for the price some time in the far future, that's ludicrous. If the employee getting the share sells it in the future they are NOT selling it to Amazon, they are selling it 'to the market' at the current share price. In fact there is 0 way Amazon's accountants should get away with this. The share once granted belongs to the employee, at worst Amazon had to 'purchase the share' at the price at the time it was granted 'in the market'. If these are 'new shares' created out of thin air then Amazon is in fact diluting the market price of their shares, but the implication on the cost to Amazon is the same. They create or purchased the share at the price it was when they granted it. Any future movement of that share price for that stock, up OR down, has 0 impact on Amazon's as an 'expense' since once they gave it to the employee Amazon no longer 'owes' anything on that share, it is sold to the market at the price the employee can get for it. It definitely has an impact on the person who received it in terms of any taxes they may have to pay on that share.

Now, I know something about this in the US not the UK so maybe in some world the UK is different but if that's the case the UK needs to change their 'tax rules' ASAP as this simply doesn't make any good accounting sense, not that accounting HAS to make sense but this one is obvious.

USA

[antdude]

Same for USA! I like to visit local stores and buy if the prices are right for the products they have in stock. Even pricematching!

Re:That's not right...

[Anonymous Coward]

People in the UK are surprisingly fucking retarded about tax.

Yep. That's very true.
It's probably the most abused economy on the planet.
The tax code here is, last I checked, well over 20 THOUSAND pages.
It's revisions on top of revisions on top of exceptions on top of credits on top of more revisions.
The UK tax code led to the CREATION a whole job role to get around it's horrible spaghetti regulations.
The whole fucking thing needs to be scrapped and rewritten. Rewrite the entire damn thing, one day, it applies to everything from then onwards. DONE.

It won't. Not post-Brexit Britain. The UK is likely to become a tax haven due to it being an absolutely worthless economy that is only in its current place due to a legacy and nothing else. We have nothing. Absolutely nothing.
We can't compete with a tight-knit group of power-house countries with huge barriers of entry. Anything we can compete with is only realistic to sell to them or North Africa, because elsewhere is already getting more expensive than local goods. The exception is the few UK-exclusive exports. (because the companies are housed here)
Everything else is very limited. Oil, metals, precious metals, coal, etc. all of them will dry up quickly. We are a tiny little island with nothing. Not a huge land-mass like America, Russia, Europe, Africa or others.
Outside of that, the only thing we can sell is expertise in some industries. (like renewables)
Our whole economy is heavily consumer-centralized, and LOCAL at that. It's honestly so awful.
We've went from an industrial power-house to a bureaucrats bitch.
2 years to re-learn whole generations to take up new production jobs? ahahaha, you'll be lucky if even 10% of the country is there in 10 years!
Not that it would matter because we can't get cheap supplies to make said exports. A lot of our popular exports RELY on cheap imports from the EU and some America. America will be unchanged, in fact it might get cheaper since Trump and Scummy May are doing some back-alley deals on selling the country to megacorps.
But the cost of EU imports will very likely increase quite dramatically even WITH a deal.
Still going to cost more for us even with the American deal because it's a quarter way around the planet across a huge ocean.

Re:That's not right...

[Anonymous Coward]

No, No, No, No, NO! Just NO. Look, if Amazon paid those employees 1000 BP per year more in straight cash NOBODY would have any issue with Amazon declaring as an expense & paying whatever tax they would pay based on 'revenue - expenses' calculations (of course that 'expenses' calculation is quite difficult for a corporation but it still amounts to the same thing).

Now, what Amazon is saying they did simply CAN'T be 'proper' and the parent clearly explained that it is NOT proper & it acts in the same way as I'd expect it to act in the US (where I have received stock grants & know how that works). Amazon either created the stock out of 'thin air' or purchased on the open market to give to the employee. Once they did that it no longer belongs to Amazon at all, the expense was incurred as soon as they granted it as the price of 1000 BP.. That is the end of Amazon's 'liability'...they can NOT claim the increase in stock price as an expense for property they no longer own.

So, either the summary or article is wrong about what they actually gave the employees, e.g. maybe they gave them a 'right to buy stock at a set price' which is not 'stock' at all but but at best 'restricted stock'(...even that isn't correct I don't think) would create a POTENTIAL future liability for Amazon OR Amazon is doing something wholly illegal or it at least SHOULD be illegal. Even in the first case, if its just a 'right to buy stock at a certain price', Amazon should NOT be counting that as an expense UNTIL the employee exercises that right, so it may be a 'future liability' for which they may need to 'budget' but it certainly can NOT be counted as an 'expense' until it is actually executed. If it is a 'right to buy stock at a certain price' and the price of the stock goes up then yeah, when the employee executes that right effectively Amazon is the one making up the difference between 'what it was granted at & what it can now be sold for' and then its an 'increased expense'.

BP is an oil company

[Anonymous Coward]

The currency abbreviation is GBP. Or (heretical) you could work out how to enter "£".

Irrelevant shell game

[Anonymous Coward]

RSU grants vest over time, they aren't actually give to the employee until the vesting, and at that point, count as employee income at the fair market value on the day of vest, and company expense on that same day.

If the marginal income tax rate for the employees and the company are the same rate (p), then total taxes paid are not impacted, and the cumulative effect is that income is transferred from the company to the employees. If the corporate marginal income tax rate is lower than the employee marginal income tax rate, then more taxes end up being paid, the transfer of income from the company is split between the employees and the tax collector.

This is generally a good thing.

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GBP

[Anonymous Coward]

*GBP

The official designation for the currency is GBP, not "BP" (which is British Petroleum).

Re:That's not right...

[adhdengineer]

the 40% tax kicks in at 44k-ish not 33k, you're forgetting about the 11k tax free threshold below which you don't pay any income tax.

Re:That's not right...

[Mr D from 63]

> Amazon is making less profit, paying employees more, and paying less taxes. Really? http://www.visualcapitalist.co... Seems like Amazon is making a shitload more money than last year to me.

Don't confuse market cap, overall revenue, and UK profits with each other.

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