back to article Google, Amazon, Starbucks are 'immoral' and 'ridiculous' over UK tax

MPs didn't shrink from telling senior execs from Amazon, Starbucks and Google that they were "ridiculous", "unbelievable" and "immoral" about their UK taxes. Under questioning from the Public Accounts Committee, Andrew Cecil, the director of public policy for Amazon, tried to claim that he had no idea what sales were made in …

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Anonymous Coward

If I sold my house to a family member or a friend at a price that bore no relation to its market value, as a tax avoidance measure, HMRC would come down on me like a tonne of bricks. So how come these non-market-rate pricing deals between units of the same business are totally ignored? Starbucks UK paying over the market cost of beans from Starbucks Switzerland to register an artificial loss... that's not immoral that's illegal. Sort it out, HRMC. Book every single Starbucks UK board member for fraud, tax evasion, the works, and see if Starbucks suddenly starts to turn a realistic profit...

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Paris Hilton

If something is a bit wonky...

...you could describe it as BENT!

Paris because she actually has her breasts registered to an off-shore tax haven!

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Paris Hilton

Re: If something is a bit wonky...

Don't you mean Paris has her breasts registered as an off-shore tax haven? ;)

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TRT
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Re: If something is a bit wonky...

Bank of Naipples?

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Happy

Re: If something is a bit wonky...

The bank that likes to say "oh fuck yeah"

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Who has apple paid off to not be in there? There have been several reports of late about how little tax they pay in the UK but they seem to have been missed in this grouping.. sureley they are a worse offender than Google or Amazon in terms of tax paid vs revenue?

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Anonymous Coward

re. Apple

I think you'll find that a lot of Apple's product is sold via third parties like Amazon.

They've even managed to outsource their tax-avoidance!

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Anonymous Coward

Reply to untitled apple comment from David Ward

Perhaps the ministers were kept quiet with some nice,shiny rounded-corner rectangles, (now there's a bit of political analysis worth doing)

Seriously though, if the UK decided to tax these massive companies more (who also bring in jobs, BTW) their corporate beancounters will simply crunch the numbers and decide when it is best to cut and run. Don't forget that Fortune 100 companies can hire lawyers who understand tax legislation MUCH BETTER than ANY of these elected windbags.

Or are we just looking at the first salvos of an upcoming trade war......either way it is bad for business.

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Flame

So....

...government passes tax laws with loop-holes.

Government cuts HMRC inspectors.

Government follows advice from accountants and bankers on tax (those with the biggest incentive to avoid it).

Government engages in fiddles to avoid revealing true costs (i.e. PFI)

Government allows "non-doms" to get away with little or no tax (when they aren't really non-dom)

Government...it's long list...

What the government is annoyed at here is that the information is public. People only used to suspect that the major high-street chains and other paid little-to-no tax; but now we know. Up until they information was public, the government were very happy for their rich cronies to get away with paying nothing, whilst the lower-middle and working class get gouged for just about every penny.

These companies are wrong for not paying their due, but the government is even more wrong for trying to be all high-and-might about it. It was the Tories and Labour who created this mess in the first place.

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Re: So....

Oh, and I forgot one, if you want to avoid paying billions in tax; it will only cost you a nice dinner and a handshake!

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Facepalm

What a load of bollocks...

Let me sum this up...

1) Morality and the law *DO NOT* have any connection, look at your own expenses at the end of the month, yes i know you fiddle em a bit, everyone who has expenses does, or you have done at some point.

2) The companies all work within the law, LAW IS THE WORD, its what you HAVE TO OBEY, and you obey the word of the law *NOT* what it means or what its mean to mean.

3) There is nothing that can be done, WITHOUT CHANGING THE LAW <- that is the important bit, refer back to point number 1 and 2.

4) Nothing will change since all the MP's own companies are doing exactly the same thing, but at a lower point so we dont know about it.

5) If you are a working man, then bend over, here it comes again - you are happy not to risk anything in the world of business, so you sheeple get to reap the rewards.

6) This post will be down voted so hard, it might actually bounce :D - mind you, i dont actually care. (BTW this is a not a troll post, its how it really works in the world.)

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This is Britain

Our laws are one thing. There are a lot of unwritten rules too.

It's like lots of things in life - they're better if everyone plays by the spirit of the law as well as the letter of it. Making some attempt to be reasonable counts for a lot.

Google, Starbucks, Amazon et al are like a greedy person who spends hours grazing at an all-you-can-eat buffet, then walks out with bulging pockets full of food. Yes, they maybe didn't break any rules, but they are certainly not being a good sport about it.

I quite like the idea of shaming companies into being reasonable - and consumers voting with their feet. With Starbucks it is easy, as coffee shops are everywhere and all provide similar products for similar prices; sadly Google and Amazon both sport "one of a kind" status which limits your ability to go elsewhere without detriment to yourself (poorer search results than Google; more expensive and reduced choice than Amazon).

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Re: This is Britain

For the former: duckduckgo.com (for general searches, anyway)

For the latter: more difficult, but you'd do well to hit some of the price comparison sites and see what other (e)retailers are out there.

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Flame

Re: This is Britain

@Tom Wood.

Yes, here in the UK the law "in spirit" rather than "by the letter" is how it's generally been run over the years. In the US, the "letter" of the law seems to be the be all and all.

This leads to grey areas which most sensible and normal people are aware of and leads to gentle "bending" of the law in minor cases. The problems arise when too many people push the limits to find out where the line is. When too many bend the law and push the limits, that's when more restrictive and "specialist" laws appear which restrict everyone in ways that usually affects the rest of us in negative ways.

It seems that all of these "worst offenders" are US companies who don't understand the local culture and are riding roughshod by imposing their own. Oh wait....

Not sure I've been as clear as I mean to be, but sod it, I know what I mean :-)

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Close the loop-holes

You know, change the bits you have power over, rather than "We fukced up, you have taken advantage of that, thats un-fair". Sorry what was the quote "its within the rules".

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Boffin

Easy solution

adds another complication but hey that's the tax system for you.

All you have to do is tax all royalty payments and give tax relief on all royalty reciepts.

Suddenly it becomes better to keep your royalty holder in the UK.

No need for cross border tariffs to annoy the EU.

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Anonymous Coward

A tax on a sale...

...should be a tax on a sale in that teritory. When I buy something, the price is made up of X amount of tax. This money should automatically be put to one side and go to the tax man.

Yes, that would mean that the cheap goods from china would automatically have 20% added to them, even on e-bay, but that is the only way I can see of getting around the problem.

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Re: A tax on a sale...

Um, that is (similar to) VAT. Starbucks, Amazon and Google all collect VAT and do pay it to the government. Note it's a tax on the value added, not the whole of the sale, otherwise anything that is bought and resold (e.g. by a wholesaler) would get very expensive very quickly.

The argument here is about corporation tax i.e. a tax on corporate profits.

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Devil

Re: A tax on a sale...

I think his point is that you can drop corporation tax (maybe for certain classes of businesses - let's argue that Coffee Shops is a class of UK business) and introduce a final sale tax (fixed percentage of final sale price, e.g., 10%, in addition to VAT) to all business -> consumer transactions.

Starbucks: Doesn't benefit from the drop in corporation tax, has to raise price of coffee to compensate for additional sales tax, because they are tied to paying 20% over market price for coffee from their profit-offshoring subsidiary.

£3.00 ("zero profit") -> £3.00 -> £3.30 customer price

Costa, Nero, Nanny Tea Shoppe, etc: Benefits from drop in corporation tax (24% -> 10%), and can use that drop to reduce their pre-sales-tax price of their coffees.

£3.00 (100p profit, 24p of which goes in corporation tax = 76p net) -> £2.85 (85p profit, 8.5p corporation tax, 76.5p net) -> £3.14 customer price

Therefore making the tax avoiding scummy immoral company less competitive compared to the moral companies...

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Re: A tax on a sale...

Amazon also avoid VAT: mostly by selling through places like Jersey, where there is no VAT charged then shipping to mainland UK. This gives them quite an advantage over Waterstones, WH Smiths and HMV - being able to undercut prices by 20%.

I'm not sure if Google does anything similar: they may well do.

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Dm4

Welcome to the capitalist world...

We all love good value for money, but we cant see beyond our noses.

Large foreign corporations undercut our local smaller business, ultimately putting them out of business and then take our money outside of the UK. We are shooting our selves in the foot !

Aside.... it is not just Google, Amazon and Starbucks that are at this. Any business with an inventive accountant will look at methods to pay the least amount of tax they have to.

Make the tax system favourable to bring business to the UK and make them pay accordingly.

It might put prices up, but at least the high street shop might be able to compete.

=========

Sent from my Google Phone

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Devil

Re: Welcome to the capitalist world...

"We all love good value for money"

That rules out Starbucks, then.

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They're US companies, surely they should be paying tax in the US.

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The point is they're not paying corporation tax on profits generated by sales in UK.

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No they are Bahamanian (sp?) Grand-Caymen or Liberian companies.

They just happen to have a lot of US shareholders

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Silver badge

What's two plus two?

Engineer: about four

Arithmeticion: four

Accountant: What would you like it to be?

Twenty million profit on nine point three billion turnover? Why are they in business? Their shareholders can't be getting a good ROI off that one.

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Headmaster

Re: What's two plus two?

"Arithmeticion"

Did you mean "Mathematician"?

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Did you mean "Mathematician"?

No a Mathematician would reply, define 'two' and what do you mean by 'plus'

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Anonymous Coward

At least pretend to be playing nicely

If someone offered me a way to reduce my bills by 90% legally I'd be there. Who wouldn't?

But if/when it became public, I'd apologise, spout some crap about not knowing what my accountant was doing (as I don't understand tax)... and then change it to 80% instead.

A gross over simplification but how about this....

IF (multinational=true AND Gross UK income>=£25m) then

Tax Gross UK income

ELSE

Tax profits

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Coffee/keyboard

"MPs didn't shrink from telling senior execs from Amazon, Starbucks and Google that they were "ridiculous", "unbelievable" and "immoral""

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Anonymous Coward

No Vodafone?

Oh no, that's right, they avoid tax with the permission of HMRC because the heads of both are mates.

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Anonymous Coward

Ethics Morality and Law

Some commentators have said these companies are working within the law so it's no big thing and morality doesn't come into it

But some of these companies make a big noise of their proud ethical stance.

Starbucks "believes that conducting business ethically and striving to do the right thing are vital to the success of the company" http://starbucks.co.uk/about-us/company-information/business-ethics-and-compliance

Googles "no evil" is well known

So while a certain coffee chain goes out its way to pay a reasonable price for its coffee beans from hard pressed farmers, its not so happy to contribut back to the well-being of the country where the bulk of its profit on the final product is actually generated. Tax income paid to the country which helps provide some of the nation's services towards the coffee chain's staff and customers.

Lastly, the PAC is a Select Committee "... check and report on areas ranging from the work of government departments to economic affairs. The results of these inquiries are public and many require a response from the government. "

So the PAC is doing its job by" interviewing" representatives of big business on how it carries out trade.

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Re: Ethics Morality and Law

Somewhat ironically, when attempting to click through for the PDF detailing Starbucks' ethical stance the file can't be found.

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Re: Ethics Morality and Law

Good call AC

Looking at Starbuck website, we find the "Standards of Business Conduct" is not accessible (in any of the 9 translations.

Meanwhile, on their "Shared Planet" page they state "We've always been committed to doing business responsibly and conducting ourselves in ways that earn the trust and respect of our customers and neighbours "

In their Mission Statement, they claim "Every store is part of a community, and we take our responsibility to be good neighbours seriously."

They seem to be losing some of that trust and respect by being unethical neighbours. Probably a conflict between their stated aims of being ethical and US laws requiring them to earn profits at all costs.

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Revenue/Sales/Turnover != Profit

Corporation tax is only paid on profit. It has nothing to do with revenue, sales, or turnover. Some companies have high costs and make a profit by small margins on a high turnover. Others do it by making a big margin on a small turnover. Taxing sales (which is effectively VAT) would harm the low margin companies.

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Re: Revenue/Sales/Turnover != Profit

And some do it by pretending that they have to pay a huge royalty to a subsiduary in Grand-Caymen or the Dutch Antilles

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FAIL

Simple solution, lower corporation tax, make it more sense for them to put their profits here than abroad, and then they WILL make their profits arrive here, and maybe move their HQ's here... it is as simple as that...

I would rather the UK gov get a 10% cut of global profits, than a 30% cut of nearly no profits...

I am sure I will get downvotes, but as this is a tech blog, I hope somebody here can do maths... For sure the guys in charge of our economy cant....

The companies are ran for shareholders, so it is in their interest to HQ where they will pay less tax...

VAT is where we make money from big companies running in the UK, 20% on pretty much all sales.. So in effect for ever £1 the consumer spends, roughly 17p goes to the treasury (83p ex-vat, VAT @20% is 17p *)

*figures are approximate

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Go

That's true: 10% corporate tax is available in EU

I just do not understand the fuss, the big money comes from the VAT not taxing the profit. Well I understand - media stunt.

Taxing companies profits is somehow weird as their is dividend tax too. The tax exists mostly to prevent hoarding large lumps of unused cash.

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Lower it to below the zero % for the Dutch Antilles?

And of course the same would apply to all the companies currently paying tax. So Tesco, M&S, RollsRoyce etc would suddenyly have billions to give to their directors?

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"I'm a satisfied customer," Austin Mitchell, Labour MP, said. "I love those emails you send asking me if I want that biography of John Major".

Knight this man for services to sarcasm!

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Read his blog - it's about the best that an MP has made.

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Anonymous Coward

You missed the punchline:

biography of John Major = Fifty Shades of Grey

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Black Helicopters

Perhaps Hodgy should take a good look at herself in the mirror?

http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html

I vote for her - as hippocrite of the year!

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TRT
Silver badge

Re: Perhaps Hodgy should take a good look at herself in the mirror?

I suspect the meeting was more of a "You made billions in profits in the UK and I have here a £10 note which is actually your tax return... How did you do it? Come on, there's only 60 days until I have to file my returns."

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Kettles question Pots

triy and decide whose blackest

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Margaret Hodge - tax avoider

Excuse the source:

Multi-millionaire Labour MP's family business 'paid just 0.25% tax on its profits'

http://www.dailymail.co.uk/news/article-2230915/Margaret-Hodge-Multi-millionaire-Labour-MPs-family-business-paid-just-0-25-tax-profits.html

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FAIL

Re: Margaret Hodge - tax avoider

I'd probably look for a more objective - or at least factual - source than the Mail. They seem to shift between Revenue and Profit at will and aren't particularly clear on which is which. They report global revenue, global profits, and the percentage of revenue earned in the UK. They skip profits in the UK (which is the bit they are actually taxed on). Stemcor's explanation is they had a really bad year in the UK - consequently their profits were poor and that's what they paid tax on. They also overpaid in the previous year, further reducing their 2011 tax bill.

There may be a story here but the Mail's penchant for skipping facts to get to sensationalism has left it out.

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FAIL

I'm not defending the large corporations as they are playing the rules to their own advantage, however those crying foul really need to learn a bit more about business:

"Turnover is vanity, profit is sanity, cash is reality"

It IS possible for a business to turn over billions and make little or no profit. Turnover and profit are NOT directly linked. Some MPs and Journalists need to learn some basic business facts.

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FAIL

Maybe those businesses should be registered as Not For Profit entities then...

Fact is, Starbucks, globally, is making a massive profit once it reconciles all the money that it has moved around the globe avoiding tax.

Problem is, all that money is in bank accounts in the final resting place of that moving, e.g., Bermuda. They can't move it back without incurring corporation tax on it! This is why Apple is trying to press for a reduced rate for repatriation of money into the US!

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Anonymous Coward

Globalisation

As ever, the large multi-nationals will do their best to exploit the globalisation of the market - which is to be expected. "There are no border...", "We are an EU-wide operation..." etc, and yet when the customer tries to take advantage of globalisation "I want to get around geoblocking" "I want to get my TV from Greece.." the same organisations go postal.

Globalisation I can live with - hypocrisy I can't

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