A superb Speech and Vow by Cameron well above expectations
Discussion
Rovinghawk said:
CamMoreRon said:
People comparing this to ISA's - I hope you can see the absurdity of that argument.
I can't- would you please explain it to me?CamMoreRon said:
Is this fair?
If you understand that the same rules apply to both organisations, it could very easily be called fair.CamMoreRon said:
My brother....... pays his full tax responsibility; whereas Amazon............. pay a pitiful percentage of theirs.
AIUI amazon pay their full tax responsibility- it's just that their responsibility is quite low.CamMoreRon said:
Because they are rich enough to exploit the system and hide their trails.
They don't hide their trail- the whole point of what they do is that it's in plain sight. Don't let facts get in the way, though.CamMoreRon said:
I KNOW IT IS LEGAL. That is the problem. You are misunderstanding the point. The laws need to change to make this ILLEGAL.
Tell me how you would do this without adverse consequences for normal businesses, or have you not thought it through that far?I have a business. I set my expenses against tax. Your brother does the same, presumably. Why can big companies not set their expenses against tax? If you want different rules for them compared to eg your brother, is this 'fair'?
"If you abuse our tax system, you abuse the trust of the British people. And my message to those companies is clear: we will put a stop to it."
http://uk.reuters.com/article/2014/09/29/uk-britai...
He may well have been dragged into this by OECD who seem to be buying in to the idea that tax is due on the profits of the business you have in a particular country. As I understand it, Amazon & Google hold that they don't actually transact any sales here, and therefore no tax is due. Their "sales" staff are merely fulfilment agents. I'd be very surprised if anyone thinks that Google don't actually make a profit from its sales made to the UK. It's an opportunity that isn't open to many other businesses, also with transfer pricing, so can be called unfair competition. That's why UK retailers didn't like the Jersey CD / VAT setup & it's now been stopped.
Sure, avoidance is legal until the law is changed or until the courts rule against a scheme. Companies and individuals knowingly (sometimes unknowingly it seems) take a risk when they enter into an avoidance scheme or an accounting construct. Do they declare these risks in their annual reports to shareholders?
CamMoreRon said:
I think I should explain this further..
Amazon, for example, are not just offsetting VAT to reduce their obligations. They are creating debts on their balance sheet to reduce the profit they declare. This is a very, very important distinction to make.
You're accusing Amazon et al of false accounting? That's a criminal offence. Are you sure you want to make libellous accusations like that on a public forum? You're a brave man.Amazon, for example, are not just offsetting VAT to reduce their obligations. They are creating debts on their balance sheet to reduce the profit they declare. This is a very, very important distinction to make.
CamMoreRon said:
My brother, for example, runs a successful printing business. His profits are in the region of £100k annually, and he is obligated by the law to hand over ~20% of that to the government. He employs 6 people and pays them a living wage.
Amazon, on the other hand, made a UK turnover of £6.5 BILLION in 2012, and paid £3.2 MILLION. They have, because they can afford to have, complex systems that reduce their tax burden by exploiting the laws we have and making use of tax havens.
You do understand Amazon does not have a UK turnover of £6.5 billion. Amazon is a Luxembourg company who sells £6.5bn of goods to the UK. Amazon, on the other hand, made a UK turnover of £6.5 BILLION in 2012, and paid £3.2 MILLION. They have, because they can afford to have, complex systems that reduce their tax burden by exploiting the laws we have and making use of tax havens.
It also pays very little tax in Luxembourg because it makes no profit. (Companies pay tax on profit not turnover)
http://www.telegraph.co.uk/finance/newsbysector/re...
How long the business model will work I do not know but it has for some years.
edh said:
Sure, avoidance is legal until the law is changed or until the courts rule against a scheme. Companies and individuals knowingly (sometimes unknowingly it seems) take a risk when they enter into an avoidance scheme or an accounting construct. Do they declare these risks in their annual reports to shareholders?
Companies like Amazon which are managing their affairs in exact accordance with EU rules should have little to fear....NormalWisdom said:
If this country did not have these tax rules, the likes of Amazon, Vodafone, Starbucks and a lot of other foreign mulitnationals would leave the UK. Unemployment would spiral out of control, Income tax receipts would plummet and the country's economy would be in tatters. But that's fine for you I guess........
Why are Starbucks here when they don't make any profits from their UK business? seems odd. What a waste of resources that could be better employed in other parts of the world and generate better returns for their shareholders.CamMoreRon said:
Again, all you have done is deny what I have said. You're using an age-old tactic of diverting attention by trying to insult my character rather than respond to my points.
I don't know you so can't really insult your character.I can certainly insult your (lack of) knowledge based on the rubbish you've posted!
edh said:
As I understand it, Amazon & Google hold that they don't actually transact any sales here, and therefore no tax is due. Their "sales" staff are merely fulfilment agents. I'd be very surprised if anyone thinks that Google don't actually make a profit from its sales made to the UK. It's an opportunity that isn't open to many other businesses, also with transfer pricing, so can be called unfair competition. That's why UK retailers didn't like the Jersey CD / VAT setup & it's now been stopped.
This is very true - In fact the majority of Amazon's UK turnover is deemed to have been sold out of Luxembourg.The Transfer Pricing one though is something that has been around for at least my working lifetime (35 years). When I first started work at a US computer (then) giant, they "sold" all their products to international subsidiaries at inflated prices so the subsidiaries made a loss and paid no tax. When Ireland started offering significant tax incentives they sold all their products to Ireland at a loss and then Ireland sold them to foreign subs at inflated prices. Ireland made all the profit and therefore the corporation paid very little tax.
edh said:
Why are Starbucks here when they don't make any profits from their UK business? seems odd. What a waste of resources that could be better employed in other parts of the world and generate better returns for their shareholders.
Their work here allows their overseas businesses to be profitable, as you well know.What we need to do is persuade them to have their overseas businesses allowing their UK operations to be profitable. Though you won't like the concept, the way to do this is reduce their tax liability percentages here rather than increase them.
sidicks said:
edh said:
Sure, avoidance is legal until the law is changed or until the courts rule against a scheme. Companies and individuals knowingly (sometimes unknowingly it seems) take a risk when they enter into an avoidance scheme or an accounting construct. Do they declare these risks in their annual reports to shareholders?
Companies like Amazon which are managing their affairs in exact accordance with EU rules should have little to fear....Country by country reporting should make things much clearer though.
Alibaba is the next interesting one I think - not from a UK tax perspective but more a corporate governance perspective.
Rovinghawk said:
edh said:
Why are Starbucks here when they don't make any profits from their UK business? seems odd. What a waste of resources that could be better employed in other parts of the world and generate better returns for their shareholders.
Their work here allows their overseas businesses to be profitable, as you well know.What we need to do is persuade them to have their overseas businesses allowing their UK operations to be profitable. Though you won't like the concept, the way to do this is reduce their tax liability percentages here rather than increase them.
1. Starbucks reduces its UK tax liability by its UK company paying a royalty for the use of the brand. Such a royalty payment would have to be applied across the whole company to be tax allowable in the UK. Such royalty payments are accepted internationally and many UK companies receive such payments from overseas subsiduaries.
2. The coffee making business is very low margin and highly competitive. As such I believe Starbucks is not making much money in the UK. However, it has made a long term strategy to develop in the UK and as such has major, staff, premises commitments which would be expensive to terminate.
Rovinghawk said:
edh said:
Why are Starbucks here when they don't make any profits from their UK business? seems odd. What a waste of resources that could be better employed in other parts of the world and generate better returns for their shareholders.
Their work here allows their overseas businesses to be profitable, as you well know.What we need to do is persuade them to have their overseas businesses allowing their UK operations to be profitable. Though you won't like the concept, the way to do this is reduce their tax liability percentages here rather than increase them.
Something has to give - The US don't like what's happening with inversions, US corps are sitting in billions in foreign subsidiaries, presumably hoping for some sort of amnesty.
edh said:
You mean they can transfer their profits to another country and pay little or no tax? Why would they have any incentive to change that? How low would corp tax rates need to be before they chose to report profits in the UK & how long before some other country cut theirs even further.
No, transfer pricing rules are quite strict on what is and is not allowed.edh said:
You mean they can transfer their profits to another country and pay little or no tax?
Yes, subject to Sidick's comments.edh said:
Why would they have any incentive to change that?
If we were to have attractive tax rates then they'd consider that an incentive.edh said:
How low would corp tax rates need to be before they chose to report profits in the UK & how long before some other country cut theirs even further.
My crystal ball is currently away for recalibration, so I don't know.edh said:
The US don't like what's happening with inversions
I'm sorry to hear that.edh said:
US corps are sitting in billions in foreign subsidiaries, presumably hoping for some sort of amnesty.
I have no idea what you're talking about here. Do you?Mrr T said:
Rovinghawk said:
edh said:
Why are Starbucks here when they don't make any profits from their UK business? seems odd. What a waste of resources that could be better employed in other parts of the world and generate better returns for their shareholders.
Their work here allows their overseas businesses to be profitable, as you well know.What we need to do is persuade them to have their overseas businesses allowing their UK operations to be profitable. Though you won't like the concept, the way to do this is reduce their tax liability percentages here rather than increase them.
1. Starbucks reduces its UK tax liability by its UK company paying a royalty for the use of the brand. Such a royalty payment would have to be applied across the whole company to be tax allowable in the UK. Such royalty payments are accepted internationally and many UK companies receive such payments from overseas subsiduaries.
2. The coffee making business is very low margin and highly competitive. As such I believe Starbucks is not making much money in the UK. However, it has made a long term strategy to develop in the UK and as such has major, staff, premises commitments which would be expensive to terminate.
3. Starbucks UK buys its coffee beans (via the Netherlands) from Starbucks Switzerland. This has the effect of transferring profits to Switzerland by paying a high price for beans & allows them to reduce their overall tax rate. Tax on commodity trading profits @ 5% in Switzerland
There must be thousands of clever lawyers and accountants working on these sorts of constructions - maybe they would be better employed working out how to divest the NHS of its huge property portfolio and how to integrate health and social care.
edh said:
Don't forget
3. Starbucks UK buys its coffee beans (via the Netherlands) from Starbucks Switzerland. This has the effect of transferring profits to Switzerland by paying a high price for beans & allows them to reduce their overall tax rate. Tax on commodity trading profits @ 5% in Switzerland
Don't forget, that would be illegal under UK transfer pricing rules (indeed, it would be be illegal to charge less than the fair market price) (as I understand it) - and in any case the cost of coffee is a miniscule fraction of the cost of coffee, so would have minimal impact on the profit achieved in the UK though.3. Starbucks UK buys its coffee beans (via the Netherlands) from Starbucks Switzerland. This has the effect of transferring profits to Switzerland by paying a high price for beans & allows them to reduce their overall tax rate. Tax on commodity trading profits @ 5% in Switzerland
Nice try though....
Edited to add disclaimer!
Edited by sidicks on Thursday 2nd October 14:13
Rovinghawk said:
edh said:
US corps are sitting in billions in foreign subsidiaries, presumably hoping for some sort of amnesty.
I have no idea what you're talking about here. Do you?oh sorry, "on", not "in"
Does that help?
if not
http://online.wsj.com/news/articles/SB100014241278...
sidicks said:
edh said:
Don't forget
3. Starbucks UK buys its coffee beans (via the Netherlands) from Starbucks Switzerland. This has the effect of transferring profits to Switzerland by paying a high price for beans & allows them to reduce their overall tax rate. Tax on commodity trading profits @ 5% in Switzerland
Don't forget, that would be illegal under UK transfer pricing rules (indeed, it would be be illegal to charge less than the fair market price) - and in any case the cost of coffee is a miniscule fraction of the cost of coffee, so would have minimal impact on the profit achieved in the UK though.3. Starbucks UK buys its coffee beans (via the Netherlands) from Starbucks Switzerland. This has the effect of transferring profits to Switzerland by paying a high price for beans & allows them to reduce their overall tax rate. Tax on commodity trading profits @ 5% in Switzerland
Nice try though....
ClaphamGT3 said:
To turn this round for our crusader for fairness, your brother, as a small businessman, will be/should be accessing all kinds of reliefs/allowances/grants/concessions. I part-own a very much bigger business but I think that this is "fair" and, more importantly, sensible.
But what happens when we nail those greedy corporates who fill their boots by avoiding taxes? Well, they might go elsewhere, which means that they won't be commissioning any print from the local printers, which is bad news for small businesses like your brother. It also means that, as they won't be paying any UK tax or employing any UK people or using any UK suppliers, there might not be the money to fund small business business rate relief/small business lower rate of CT/entrepreneurs relief on CGT/funding for apprentices etc. which would all affect your brother's business.
Good post. My brother doesn't receive (and hasn't) any grants from the government, he built the business with his friend through hard graft alone.But what happens when we nail those greedy corporates who fill their boots by avoiding taxes? Well, they might go elsewhere, which means that they won't be commissioning any print from the local printers, which is bad news for small businesses like your brother. It also means that, as they won't be paying any UK tax or employing any UK people or using any UK suppliers, there might not be the money to fund small business business rate relief/small business lower rate of CT/entrepreneurs relief on CGT/funding for apprentices etc. which would all affect your brother's business.
The second part is especially interesting, as this is a common scare story when the subject of enforcing taxes is raised.
For starters, any company who is in an economy purely because of the tax breaks it offers is a low relative contributor. I don't think we would miss Amazon's £3m per year contribution much, for example!
But the more important point to make is that these companies NEED to be selling goods in our country. The market is incredibly complicated, so let's say Starbucks object to our new enforced tax regime and pull out their business.. now there is a great big Starbucks-shaped hole in the market. Is that going to stay forever? Of course not. Somebody else will fill it - somebody who is happy to run a business and pay the taxes - and it is Starbucks who will lose out, not us.
This is a very important point. A lot of people think we need these companies, when it is really the companies that need us. I do not believe for one second that Starbucks / Amazon would cease to operate in the UK if we enforced taxes.. we simply have too big a market for them not to want to tap in to.
Rovinghawk said:
You're accusing Amazon et al of false accounting? That's a criminal offence. Are you sure you want to make libellous accusations like that on a public forum? You're a brave man.
Amazon, Starbucks, Vodafone: YOU ARE RUNNING YOUR BUSINESSES IN A WAY THAT IS HIGHLY IMMORAL. YOU ARE FALSIFYING YOUR ACCOUNTS USING COMPLEX PRACTISES TO CREATE IMAGINARY LOSSES IN THIS COUNTRY IN ORDER TO REDUCE YOUR TAX BURDEN TOWARDS ZERO. YOU ARE ROBBING THE TAXPAYERS OF THIS COUNTRY AND YOU SHOULD BE ASHAMED.Sue me.
edh said:
Why are Starbucks here when they don't make any profits from their UK business? seems odd. What a waste of resources that could be better employed in other parts of the world and generate better returns for their shareholders.
Nailed it.sidicks said:
I don't know you so can't really insult your character.
I can certainly insult your (lack of) knowledge based on the rubbish you've posted!
I'm done with your trolling.I can certainly insult your (lack of) knowledge based on the rubbish you've posted!
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