back to article UK slaps 25 per cent 'Google Tax' on tech multinationals

Chancellor George Osborne has announced a 25 per cent tax on company profits made in UK but diverted abroad - singling out tech companies for a so-called "Google tax." In his Autumn Statement Osborne pointed the finger at large multinational companies, particularly those in the tech sector, that use "elaborate tax structures" …

  1. william 10

    I think you will find this is more a Amazon / Starbucks tax, if you want to tax Google the best way would be to place VAT on advertising.

    1. Yet Another Anonymous coward Silver badge

      VAT is a tax on luxuries, like clothing - you can't tax an essential like advertising.

      1. Gannon (J.) Dick
        Coffee/keyboard

        I myself have been struggling with a long term addiction to food and shelter.

        Been there, done that. You mean there was a T-Shirt too ?

    2. Anonymous Coward
      Anonymous Coward

      VAT is chargeable on advertising however it is the "customer" of Google who pays the VAT. They would then reclaim it back.

      1. Anonymous Blowhard

        VAT for Dummies

        "VAT is chargeable on advertising however it is the "customer" of Google who pays the VAT. They would then reclaim it back."

        VAT is Value Added Tax; businesses can only claim VAT relief on VAT they pay on goods and services they buy, not the VAT on what they sell. The real fiddle here is to make it look like you're paying out more VAT than you charge yourself, then HMRC will be paying you!

        http://en.wikipedia.org/wiki/Missing_trader_fraud

        The real problem is that by making it look as if they make no profit (so no value added) they get away with hardly any corporation tax and hardly any VAT; two for one!

        1. Sir Runcible Spoon Silver badge

          Re: VAT for Dummies

          The only real way to address this is to not allow multinationals to offset their taxes, or apply a sales tax based on yearly turnover in the UK.

          1. Charles 9 Silver badge

            Re: VAT for Dummies

            But they get around THOSE by (a) not allowing the taxable revenues to ever enter the country in question and (b) cook their books such that the company has NO local turnover. Either way, they basically trade in the country but have ZERO revenues to show for it, and any percentage of zero is still zero.

            1. Anonymous Coward
              Anonymous Coward

              Re: VAT for Dummies

              "(b) cook their books such that the company has NO local turnover"

              This is precisely what Starbucks do. They operate in such a way that their central 'wholesale' function sells beans and other point of sale guff to its 'retail' franchise network - at a carefully calculated premium which leaves the franchises with very little tangible profit in each of their respective local markets. This allows them to hoover the majority of the actual profit back to their central operation for distribution to shareholders and senior management.

              I don't see what sort of legislation would tackle this sort of underhanded behavior, quite frankly.

              1. Anonymous Coward
                Anonymous Coward

                Re: VAT for Dummies

                Don't be ignorant; Starbucks sells beans to it's wholly owned shops and to its franchisees at the same price as it has to to; so the transactions have the same effect as a theoretical 'arms length" third party sale. They also own their IP (basically the value of the name, such as it is) in one EU country and charge that similarly. EU Tax rules prevent the UK from taxing that revenue stream. So where's the complaint.

                And all of you mug punters forget, that in the end you'll be paying any extra tax that is levied, just the said corporations will collect it for the government if they end up paying. But governments love this sort of trick, it's right out of the Gruber playbook: You are all basically too stupid to see that tax incidence means that levying a higher corporate tax = taxing the taxpayers even more but getting someone else to do it for them.

                1. John Brown (no body) Silver badge

                  Re: VAT for Dummies

                  "you'll be paying any extra tax that is levied"

                  And yet, other coffee shops manage to compete on price and often win on quality and they pay the taxes which Starbuck manage to not pay. So if Starbucks have to start paying taxes and they increase prices to maintain profits, everyone else will be undercutting them.

        2. Anonymous Coward
          Anonymous Coward

          Re: VAT for Dummies

          "VAT is Value Added Tax; businesses can only claim VAT relief on VAT they pay on goods and services they buy, not the VAT on what they sell."

          Yes, the goods and services are bought by the companies that buys the advertising space from Google, Google's customers.

          Google sells an Ad slot for £100. Company x pays £120 for the ad slot (£100 + 20% VAT). Google pay the £20 to HMRC. Company x reclaims £20 from HMRC. HMRC net gain = £0.

          Even if VAT was increased to 1000% on advertising it wouldn't increase the government's coffers.

          Not sure why you are trying to give me a "dummies" lesson?

          1. Anonymous Coward
            Anonymous Coward

            Re: VAT for Dummies

            "Google sells an Ad slot for £100. Company x pays £120 for the ad slot (£100 + 20% VAT). Google pay the £20 to HMRC. Company x reclaims £20 from HMRC. HMRC net gain = £0."

            No, not quite.

            You're missing the leg of the equation where Company x has sold a whole bunch of product/services thanks to its advertising spend and hoovered in a whole bunch more VAT on that. This means that they merely offset that £20 against the £1,000's they collected from end customers, and the net difference is payable to HMRC.

            HMRC should ££profit££ here ... any retail company which is claiming back from VAT spend on advertising year on year than it is submitting to HMRC on sales is not in profit and is doomed(*).

            (* Depressingly, been there/done that)

    3. JeffyPoooh Silver badge
      Pint

      Slap an import duty on Trademark Rights being "imported"

      “Intangible assets such as IP are easier to move [than having fixed assets],” he said. “Companies such as Google and Apple are known for being particularly aggressive in tax avoidance.”

      --

      When they export profits, import tax (duty) on whatever it is that they are claiming to be importing to balance the books. Often "Trademark Rights". Easy.

      1. qzdave

        Re: Slap an import duty on Trademark Rights being "imported"

        That, sir, is pure genius.

        1. Tom 7 Silver badge

          Re: Slap an import duty on Trademark Rights being "imported"

          They'd just import the rights through another EU country so no tax allowed.

      2. Tom 35 Silver badge

        Re: Slap an import duty on Trademark Rights being "imported"

        Drug companies are just as bad as the tech companies. The drug costs loads to develop, then pennies to produce so they can have fun shifting the money around between different countries.

  2. Anonymous Coward
    Anonymous Coward

    How exactly will this be enforced I wonder.

    1. Anonymous Coward
      Anonymous Coward

      Bear in mind that they've just changed the Europe wide rules for VAT, so that instead of the rate prevailing at the place where the seller pretends to conduct business, it will soon need to be the rate applied in the country of the purchaser and will go to that country's coffers.

      I would guess that the Germans, French and Italians are no more happy than the British government over multinational tax avoidance, so the bleating from piss-pot tax havens that benefit (such as Luxembourg) will not be heeded, and I'd guess Ireland's defence of its low corporation taxes will be similarly ignored.

      This is a good move, belated by a decade or two.

      1. Irongut

        @Ledswinger

        Changing rules for VAT will make no difference whatsoever to the tax paid by Google, etc. VAT is paid by the purchaser, not the seller, and anyway it is claimed back by almost every company.

        The only people who pay VAT are mugs voters like you and me.

        1. What was the question

          Re: @Ledswinger

          ^ Faulty arithmetic there. The buyer pays ALL costs, always (assuming only that the product is not sold at a loss). Whether part of that payment goes to the government via Google or is remitted direct is irrelevant (except in terms of practicality of collection).

          Google and Apple and their ilk sell for less (or book more profit somewhere in Taxhavenstan) than honest local companies. Either way, forcing an appropriate level of tax on the transaction levels the playing field.

          1. Quotes

            Re: @Ledswinger

            "The buyer pays ALL Costs"

            We can safely assume that if a business such as Google has developed accounting practices to avoid paying tax, this assists in reducing the price of the product/service to the end-user. This means that the end-users are currently the beneficiaries of such accounting methods, thus the tax being missed is not being exported out of the country but is being enjoyed as a subsidy on the price being paid by the end-user. It's the corollary of saying that if a new tax is levied the costs will go up.

            1. Mark 65

              Re: @Ledswinger

              We can safely assume that if a business such as Google has developed accounting practices to avoid paying tax, this assists in reducing the price of the product/service to the end-user.

              Wrong. It reduces the cost of production and thereby maximises the profit. No savings get passed on in the modern World, margins just fatten.

  3. Ashton Black

    I'm confused...

    To avoid corp tax, which is on profit. (revenue - costs), the UK divisions, "pay" their Irish/Other HQ for "costs" such as IP which just happens to cost roughly the same as the profit they would have made, without these HQ costs and therefore the UK division pays very little corp tax.

    If this 25% is on profit, then it STILL won't be very much. So either:

    1) Gidion knows this and is telling porkie pies.

    2) Gidion doesn't know this and is an idiot.

    or

    3) I've misread/misunderstood something and am also an idiot.

    Anyone help?

    1. SolidSquid

      Re: I'm confused...

      If you're an idiot then you're not alone, that's pretty much how I thought it worked too. It's weird that he'd give actual numbers if that's the case though, generally they're more vague than that so they can't be called out on it later

      1. Tom_

        Re: I'm confused...

        It turns out that they don't give a shit if they're called out on it later. They just say it's because "warning lights are flashing over the global economy." Apparently that means they're not responsible for the state of the country's finances, unlike the other lot who were in power when the global economy went tits up who were obviously responsible because reasons.

    2. Tom 38 Silver badge
      Headmaster

      Re: I'm confused...

      "Gideon". At least troll him accurately.

      1. Paul Webb

        Re: I'm confused...

        "Gideot" more like.

    3. Anonymous Coward
      Anonymous Coward

      Re: I'm confused...

      The whole point is that this on "diverted profits". It's pretty clear that many of the arrangements in question are intentionally designed to divert profits to avoid paying tax. You can easily calculate what a company's cost of capital is, how much capital it uses, what its group margins are, what operating costs are, and therefore estimate with some accuracy the true profit that they will be making.

      US multinationals are pretty imperialistic (to the point of pig headed stupidity) so I'm sure they'll contest any changes, but with almost every European government looking to increase the tax take, they're on to a loser in the long term.

      1. SolidSquid

        Re: I'm confused...

        That's going to be fiddly to work with though, they're going to have to be *really* careful about how the define "diverted profits" since we're really talking about companies purchasing something from other companies which happen to be subsidiaries of the same parent. Hopefully they'll find a way to deal with it, but with their track record I can't see it going well

        1. localzuk

          Re: I'm confused...

          I think a simple rule of "costs paid to any company in the same legal group (ie. parent company, company owned by the same parent company, subsidiary etc...) do not count as costs for taxation purposes in the UK", or something like that would help.

          1. Yet Another Anonymous coward Silver badge

            Re: I'm confused...

            >"costs paid to any company in the same legal group (ie. parent company, company owned by the same > parent company, subsidiary etc...) do not count as costs for taxation purposes in the UK",

            Might make it tricky to sell petrol if you can't count the cost of the oil and refining and have to pay 25% of the price at the pump along with the other 75% petrol tax

            1. localzuk

              Re: I'm confused...

              @YANC & AC - Oh, yeah, my idea would need a lot of work to make it actually workable.

              The problem we have is not just with internet companies, companies like Starbucks also do this by charging for branding etc... But they also charge for products imported from other countries/subsidiaries, so there'd need to be something to cover real costs.

          2. Anonymous Coward
            Anonymous Coward

            Re: I'm confused...

            "I think a simple rule of "costs paid to any company in the same legal group (ie. parent company, company owned by the same parent company, subsidiary etc...) do not count as costs for taxation purposes in the UK", or something like that would help."

            But some of these subsidiaries and so on are subject to the laws of other sovereign nations, which means you can have sovereign rights clash and/or complaints of double taxation.

            1. Olius

              Re: I'm confused...

              The trouble is that some of these "costs" can be genuine. A franchisee genuinely does need to pay it's parent legitimate license costs and a company with a subsidury is another county may have genuine need to loan money to prop up that branch during a slightly bad year. So how does one create a fair system that isn't open to abuse?

        2. Missing Semicolon
          WTF?

          Re: I'm confused...

          I don't understand why HMRC can't apply the same rules to Coporation tax as they apply to income tax - any financial arrangement that looks like it has been set up for the specific purpose of tax avoidance in the judgement of HMRC is deemed not to have taken place, so tax & NI is still due.

          1. Gordon 10 Silver badge

            Re: I'm confused...

            I would guess the main reason is that Income Tax payers don't usually have a fleet of high paid lawyers on standby.....

            And there are less punitive international treaties on cross taxation of corporate revenues compared to individuals income. cf the US's crazy income taxation policies where it doesn't matter where you live.

      2. Anonymous Coward
        Anonymous Coward

        Re: I'm confused...@Ledswinger

        There arent many UK multinationals left because bleeding heart liberals like you have voted in morons like Gideon, who tax them to death to support all the vote buying handouts they give to layabouts and goodfornothings.

        Soon, only an IDIOT would do any business in the EUC because the pig headed stupid bastards are taxing the only employers out of competivity and thus out of business. Soon, due to ignorant policies like this one, there won't be any US Multinationals doing ANY business in the UK.

        If you think it easy to "calculate what a company's cost of capital is, how much capital it uses, what its group margins are, what operating costs are, and therefore estimate with some accuracy the true profit that they will be making" you must think you are a fucking mindreader as well as a socialist moron.

        And by the way the British Empire INVENTED imperialism.

        1. Roo
          Windows

          Re: I'm confused...@Ledswinger

          "There arent many UK multinationals left because bleeding heart liberals like you have voted in morons like Gideon, who tax them to death to support all the vote buying handouts they give to layabouts and goodfornothings."

          The ones that died while I was paying attention went tits up under the allegedly "business friendly" reign of the Conservatives. In my career I worked for two British multi-nationals, in both cases the tax bill failed to kill either of them. Like many of their contemporaries they were mismanaged into the ground or simply starved of working capital by lenders - then split up and asset stripped so that the management and bankers could make a tidy wedge while the grunts were left to try and reclaim their unpaid wages at the tax payer's expense.

          In the case of Exhibit A they were unable to secure a relatively small amount of cash from lenders to develop their next gen products - so they sat on the sidelines for 5 years or so while the competition streaked ahead - unable to raise the enough money from falling sales and margins... Exhibit B's demise was triggered by a major cheese deciding to redirect a ton of company money from R&D into spaffing money on investments which tanked, and then to make it all better they borrowed a ton more money and spaffed it on more investments which also tanked...

          1. Roo
            Windows

            Re: I'm confused...@Ledswinger

            Sadly the facts behind the demise of Exhibits A & B won't change however many times my observations are downvoted. I wish it were otherwise because there was some good engineering and good people done in those places, the result was a terrible waste of potential. :)

          2. Missing Semicolon
            Happy

            Re: I'm confused...@Ledswinger

            Let me see....

            Rover Group and Marconi?

            1. Roo
              Windows

              Re: I'm confused...@Ledswinger

              "Rover Group and Marconi?"

              Good guess & 50% right. :)

        2. Roj Blake Silver badge

          Re: I'm confused...@Ledswinger

          "There arent many UK multinationals left because bleeding heart liberals like you have voted in morons like Gideon, who tax them to death to support all the vote buying handouts they give to layabouts and goodfornothings."

          No, the reason for the lack of UK multinationals is that anyone can buy our businesses while other countries have rules that limit foreign ownership.

        3. Joel 1

          Re: I'm confused...@AC

          "And by the way the British Empire INVENTED imperialism."

          I think the Romans might have something to say about that... and the Persians ...and the Chinese

          Oh, Ming the Merciless also wants a word. And I hear that a long time ago, in a galaxy far, far away...

    4. Anonymous Coward
      Anonymous Coward

      Re: I'm confused...

      I think Gideon is mendacious. Look at his record. I can't believe anyone would be stupid enough to create a low wage economy and then wonder, shock/horror, why tax revenues are decreasing. That's basic adding up, init?

      I think the end game is:

      - Government still gets the taxes it's so addicted to, for its ideological vanity projects

      - While providing minimum or no services, for those taxes.

      Think fist world taxes, third world public hospitals, bad infrastructure* and really scary riot police (just like Brazil).

      * After all, roads don't really matter when you can afford your own helicopter.

      1. Bloakey1

        Re: I'm confused...

        <snip>

        "Think fist world taxes, third world public hospitals, bad infrastructure* and really scary riot police (just like Brazil)."

        <snip>

        I thought that Fist World was a publication and therefore exempt from VAT? as for Brazilians I an not sure how that would effect the activity, perhaps some form of topiary levy.

      2. codejunky Silver badge

        Re: I'm confused...

        @AC

        "I think Gideon is mendacious. Look at his record. I can't believe anyone would be stupid enough to create a low wage economy and then wonder, shock/horror, why tax revenues are decreasing. That's basic adding up, init?"

        The gov didnt make a low wage economy. The gov doesnt create jobs, it only has the capacity to take them away. The change in the wage situation probably had more to do with the recession that came and theoretically went but thats an amusing discussion on its own. From that point we had the simple facts to work with-

        > Less money in the economy (actually the lack of money to debt was exposed, the money didnt vanish, it wasnt there in the first place)

        > People in fear of their jobs

        > Public spending already FUBAR and future commitments already made on top of scorched earth policies of previous government

        We can ignore the first part as a larger topic but the second point is huge. The fear of losing your job causes its own issues and combined with the 3rd point a lot of excess public staff were gonna be back on the market. Normally a load of people would be out of a job and the world would end, but instead it didnt happen (yet anyway). Instead people kept their jobs allowing them to keep their income and security although it did have the consequence of not increasing their wages much if at all. The trade off and what is the good news is the employment issue that everyone feared was averted!

        But as we know people dont like to be happy. So people who kept their job when they could have been cut then wanted a pay rise. The idea changing from a fear of no job to an irritation of no pay rise. Greed sets in and demands for money (back to point 1 doesnt exist) so tellies can be bought on black friday cause a fuss. How can our country be doing well with bad news? The honest answer depends how often and badly you move the goal posts.

        Of course the problem is not in a vacuum as the global recession based on very dodgy world wide dealing and stupidity (not just the US and not just the banks but also govs) through to the current state of the eurozone trying to sink itself and high debt/money printing has an effect on us too.

        The certainty is that public services and jobs have to be cut (this is a concept still beyond some people) due to the cost being far beyond the tax collected and that tax must go up. These awful truths are of countries living beyond their means, leaders offering bribes and pilfering the till and voters being greedy monsters who want the expensive toys and no cost. But everything must be paid for and so the children are sold. Future generations having less services and higher tax to pay for the joys we have today. And with those joys people continue to complain ignoring that they have a job and we dont look like the eurozone.

        1. TheOtherHobbes

          Re: I'm confused...

          >The gov doesnt create jobs

          Apart from all those public sector jobs. And the ones created by big infrastructure projects. And the ones spun off from academic research funded with grant money.

          > The gov didnt make a low wage economy.

          Oh yes it did.

          The Tories have been playing the same old two-faced 'Bring in lots of super-cheap immigrant labour while stoking up racism to distract the noobs from what we're doing' game for literally decades now.

          I'm sure Cameron is terribly, terribly sorry that he hasn't managed to cut immigration. No really, he is.

          This has been going on since at least the Empire Windrush. (Possibly much longer.)

          > The certainty is that public services and jobs have to be cut (this is a concept still beyond some people) due to the cost being far beyond the tax collected and that tax must go up.

          That's the peculiar thing about useful public investment - it creates multipliers. If you do it right eventually you get out a lot more than you put it in.

          Cutting spending in the wrong ways creates multipliers too. If you do it wrong you lose a lot more than you think, because it has a chilling effect across the economy - as Gideon has proved so brilliantly during his exemplary term as fiscal peasant-kicker in chief.

          People like you, who seem to think running a country is just a bigger version of running a bank account and it's all simple, in a stands-to-reason-dunnit market trader kind of a way, shouldn't be allowed anywhere near economics, because you don't understand how fiscal policy actually works.

          Keynes understood it, and Keynesians have a much better record of correct predictions than the loony monetarists and supply-siders who currently run things - but since the loonies run things for their own benefit and not anyone else's, it's debatable if this is a bug or a feature.

          1. codejunky Silver badge

            Re: I'm confused...

            @ TheOtherHobbes

            ">The gov doesnt create jobs

            Apart from all those public sector jobs. And the ones created by big infrastructure projects. And the ones spun off from academic research funded with grant money."

            Yes. Well said. So they cannot create jobs they can only take them away. To pay for the public sector workers (from the workers to the parasites and their expenses) the gov must take money out of the hands of those who earned it. The gov makes no money, they dont earn anything, they take it from the population to provide public services. This is something we accept as we want public health, education, etc but the money for it comes out of the pockets of people earning money. When you take money away from people they cannot spend it. So a business can be taxed out of existence, a business can be taxed out of hiring workers, a person can be taxed out of hiring childcare or cleaning services etc. All of the money the gov throws your way was taken from your pocket and a large amount skimmed to pay the admin costs before being presented back to you.

            "The Tories have been playing the same old two-faced 'Bring in lots of super-cheap immigrant labour while stoking up racism to distract the noobs from what we're doing' game for literally decades now.

            I'm sure Cameron is terribly, terribly sorry that he hasn't managed to cut immigration. No really, he is."

            I hope you are feeling better after 13 yrs in a coma. Seriously? This gov aint doing very well at cutting immigration, and no they aint a great gov. At what point does that remove all of the years before that of exceptional immigration under the last gov? And who thought he could cut immigration when we have an open border arrangement but only if your what we class as 'European'? And the immigration debate has restarted now labour are not in power calling everyone racist after they accepted the racist open border system.

            "That's the peculiar thing about useful public investment - it creates multipliers. If you do it right eventually you get out a lot more than you put it in."

            That is such a true statement but not in the way you mean it. If it worked the way you think then our national debt would be falling after extreme investment by the last gov even as they borrowed during a boom and sold gold to prop up their public investment glut. If you do it right requires a crystal ball or great luck. If you keep it simple and provide the very basics then yes it is easy to improve the working situation but then it doesnt provide all the social niceties people want. The only multiplier with absolute demonstration (with multiple countries proving this) is that relying on credit increases your dependency on credit.

            "Cutting spending in the wrong ways creates multipliers too. If you do it wrong you lose a lot more than you think, because it has a chilling effect across the economy - as Gideon has proved so brilliantly during his exemplary term as fiscal peasant-kicker in chief."

            Cutting spending badly would cause problems as it causes a crisis in confidence so I agree with that. The gov has an array of decisions which very few provide a good outcome for the country but they rarely match the election requirements. You can call him the peasant kicker but the simple fact is the last gov borrowed to give money to those (as you call them) 'peasants' at the cost of everyone. The money does not exist, not there, an illusion, it is debt! Once you overcome that required understanding you see that those people and a hell of a lot more think they have money, but they dont. They think they are wealthy or middle class, but its on the back of debt not money. If you dont believe me then look at the amount of debt and the way it is and has been going. It gets bigger. You are blaming this gov for being honest and showing you (only part of) the true situation. Less money for the first part of your comment because it is paying off this part of your comment.

            "People like you, who seem to think running a country is just a bigger version of running a bank account and it's all simple, in a stands-to-reason-dunnit market trader kind of a way, shouldn't be allowed anywhere near economics, because you don't understand how fiscal policy actually works."

            It is funny how we have the same opinion of each other. I point out that cuts must be made and more tax raised and you think more should be spent and higher debt is good. I have a credit card to sell you, your gonna love it. And instead of paying for the services we want and need you think we should be paying more in interest. The hole in your argument is so huge I could fit a planet through it! I save, I work, I had no debt until my recent modest mortgage that I am overpaying. You are selling people like me because your pockets are empty! I understand that you are telling me this is a stick up because you cannot control your spending. Seek help please. And the more you cost the country the more poor people you create (you call em peasants).

            "Keynes understood it, and Keynesians have a much better record of correct predictions than the loony monetarists and supply-siders who currently run things - but since the loonies run things for their own benefit and not anyone else's, it's debatable if this is a bug or a feature."

            Your last line is very important. You want larger interest payments eating public money instead of funding services because you are not the loony one? And buying shiny shiny now to pass on a huge bill is not for your own benefit but for theirs? I am gonna make you soooo happy now. I offer you the opportunity to pay my bills for me. I dont care if you consider it a bug or a feature.

            1. Otto is a bear.

              Re: I'm confused...

              And there was me thinking that the main reason the last government ran out of money was that there was a financial crash that substantially reduced tax income, and forced the government to spend lots of money on bailing out the banks, and benefits because of the resultant unemployment, whilst still having to pay for its commitments.

              Thinking of the "Peasants" I know, I don't think any of them thought life was a bed of roses on benefits under the last government, or that they had any substantial handouts, can you? I suspect any you can think of, were earning on the side, basically defrauding the taxpayer, which, unless you are a Daily Liar reader, is actually a very small percentage.

              BTW. There is a phrase that HMRC like, it's "Wholly and Exclusively", which means that VAT can't be reclaimed on every business expense, or for that matter Tax offset. A trivial advantage, is that an Advertisement wishing your CEO a happy bonus day is not VAT refundable.

              1. codejunky Silver badge

                Re: I'm confused...

                @ Otto is a bear.

                "And there was me thinking that the main reason the last government ran out of money was that there was a financial crash that substantially reduced tax income, and forced the government to spend lots of money on bailing out the banks, and benefits because of the resultant unemployment, whilst still having to pay for its commitments."

                Unfortunately there are some people who still think that regardless of the facts (shocking aint it)! We know Blair/Brown had a wonderful boom, the thing that typically comes before the crash, where they spent it all and then even more! But how did they spend more you ask? They raided earnings, they sold gold on the cheap and they took on debt. of course this also went into one illegal and one dubious war but mostly it was to feed the public the illusion that the gov were doing well. And then the house of cards collapsed and Brown was left holding the bag but had nothing to support the currency (bail banks) nor to support his over-bloated public sector (and off the books public workers). But he didnt leave it there! Brown was a master (of disaster)! he then went all scorched earth on the next gov by committing us to even more bad contracts without money to pay with.

                "Thinking of the "Peasants" I know, I don't think any of them thought life was a bed of roses on benefits under the last government, or that they had any substantial handouts, can you? I suspect any you can think of, were earning on the side, basically defrauding the taxpayer, which, unless you are a Daily Liar reader, is actually a very small percentage."

                Nice argument but those aint the people I was talking about (and peasants wasnt my choice of word). How many people are propped up currently by the low interest rate just so they can keep their house? How many people were employed into a bloated public sector and how many non-jobs or excesses had to be cut when the truth hit home? How many people are not getting a wage rise because the money dont exist and how many people rely on the wage rise to fund their existence? In some cases those people overspent on credit (I expect quite a few) but also those who didnt were still living on credit, the government! And the worst part is they wouldnt have known it. The unsustainable spending spree was based on an assumption 'No more boom or bust' do you remember? That was the hope, fantasy and dream that underpinned all of that spending. At great cost to the people now. Dont believe me? Then you can prove there is no deficit (and no you cant).

            2. Charles 9 Silver badge

              Re: I'm confused...

              "Yes. Well said. So they cannot create jobs they can only take them away. To pay for the public sector workers (from the workers to the parasites and their expenses) the gov must take money out of the hands of those who earned it. The gov makes no money, they dont earn anything, they take it from the population to provide public services. This is something we accept as we want public health, education, etc but the money for it comes out of the pockets of people earning money. When you take money away from people they cannot spend it. So a business can be taxed out of existence, a business can be taxed out of hiring workers, a person can be taxed out of hiring childcare or cleaning services etc. All of the money the gov throws your way was taken from your pocket and a large amount skimmed to pay the admin costs before being presented back to you."

              Correct me if I'm wrong, but isn't that in essence true of ANY enterprise? After all, businesses don't create wealth and money from nothing most of the time. They need to provide good and services just like the public sector does. Now, the return may not be in money, but ease of use and quality of life are just as important as money. Otherwise, why isn't the private sector providing what the public sector is doing now? Because some things are more important than money.

              1. codejunky Silver badge

                Re: I'm confused...

                @ Charles 9

                "Correct me if I'm wrong, but isn't that in essence true of ANY enterprise? After all, businesses don't create wealth and money from nothing most of the time. They need to provide good and services just like the public sector does."

                Are you arguing that you have to pay google a tax rate that they set and then enforce on everyone for the pleasure of existing? The gov does and can (and does) make up whatever excuses it wants to take money from you, which is not due to purchasing services or products. If you cant see a difference between a business charging for its products/service's vs tax then I urge you find someone willing to dedicate the time to explain it to you.

                "Now, the return may not be in money, but ease of use and quality of life are just as important as money."

                Thats great, but how do you sell that to an investor? We are borrowing a lot of money to keep things running and even borrowing to pay interest on previous borrowing. So how do you repay that if not with money?

                "Otherwise, why isn't the private sector providing what the public sector is doing now? Because some things are more important than money."

                Actually they do even though by government law people have to pay into the monopoly government versions too, which most people agree with providing education and health for all through the public funding. But there is private education/health/etc and doing everything they are allowed to do anyway. However the problem is that we are paying more tax, selling off assets and borrowing more money because the existing tax take (and through labours term too) and coffers are not enough to pay our obligations. Even if you are using this for an easier and better quality life, the cost does not go away because you get shiny shiny now. The cost lingers but also compounds. This is the trap that sunk many families on credit, sunk Greece, sinking the eurozone and is a constant problem for a lot of major countries in this world.

                The problem with pushing the obligation down to the next generations is you make the obligation larger until it can no longer be afforded. How will you pay it off? Or do you hope you can pass the parcel before the music stops? And larger portions of tax take goes into paying debt NOT providing the services you want for a better quality of life that is easier. Instead you get a poor quality of life and hardship as you work off your debt. On in the case of a country loss of jobs, income, services, effective government, confidence, currency, freedom.

            3. asdf Silver badge

              Re: I'm confused...

              >Yes. Well said. So they cannot create jobs they can only take them away. To pay for the public sector workers (from the workers to the parasites and their expenses) the gov must take money out of the hands of those who earned it.

              Hard to create jobs and make money when your neighbors invade every few years and take away all your food (thus a need for national defense, and by the way in the US the majority of federal government employees or parasites as you call them are soldiers). Other things government does like roads, police and criminal justice and fire are a touch necessary for most business as well. As for privatizing those instead, paradises like Somalia, Afghanistan, Libya show replacing government with ad hoc strong men warlords (or call them billionaires if in the west if you wish) may be a libertarians wet dream (kind of like the world in Mad Max) but seldom work well in the real world. I have yet to see one example where privatizing the rule of law has worked well for a nation state in the long term.

              1. codejunky Silver badge

                Re: I'm confused...

                @ asdf

                And so people want these public sector items. And so how happy are we to have an increasing debt which our tax money is used on instead of the services we want? How happy are we about electoral bribes for the voters? Are we happy that tax keeps increasing instead of going away?

                The extremes either way are not good. You can point to warlords but you can also point to the great USSR, N Korea and other socialist paradises with no money but a spending habit.

                Your comment of privatisation of the rule of law is a good point. And abroad we have soldiers for that. And in the last 2 wars at least we had a strong presence of private forces being applied and we were paying for that. It helped with hiding the costs and the death toll. So just because I dont support an extreme doesnt mean I support the situation we are in either.

                1. asdf Silver badge

                  Re: I'm confused...

                  I also won't deny the original (modern) experiment in democracy/the republic in the US is a pre alpha version of government horribly broken and has never succeeded anywhere else for a reason and to the point that MacArthur setup a parliamentary system in Japan after WW2 because we needed them to succeed. I also won't deny for spending 18 trillion dollars we didn't have we sure didn't get near as much in return as we should have. I agree balance is important.

    5. Robert E A Harvey
      Thumb Down

      Re: Anyone help?

      Giteon is not trying to raise revenue, he is trying to raise headlines.

      "Make Google and Amazon pay their tax" is a mantra on the left. He thinks if he joins in with the chanting we will be fooled into voting for him.

      At this point in the cycle fiscal announcements have nothing at all to do with the economy, or balancing the budget, but everything to do with the impending election.

      Giteon is not foolish, and his officials will have reminded him that you can't tax a fart, but he may very well have decided that we are foolish enough to fall for posturing.

      1. Olius

        Re: Anyone help?

        "Giteon is not trying to raise revenue, he is trying to raise headlines."

        If i wasn't on my phone, I'd find several links to private eye articles from the last couple of years showing Giteon deliberately creating new tax loopholes for his mates, as well as hmrc simply ignoring the law to do several large deals, which prove your point nicely.

        This govt has made it very clear that tax is something only poor people pay.

    6. This post has been deleted by its author

    7. Olius

      Re: I'm confused...

      Gideon knows this and that's why he's claiming that a few million divided by 15bil is 25%.

  4. Tom 7 Silver badge

    So its not VAT

    and it wont acutally raise any tax revenues. Its a missed opportunity so Total Waste of A Tax.

    1. Ashton Black

      Re: So its not VAT

      I see what you did there.... have an up.

    2. Blane Bramble

      Re: So its not VAT

      No, it's a Completely Unenforceable New Tax

      1. Tim Jenkins

        Re: So its not VAT

        Hmmmmmm; do I upvote for a cunning pun, or downvote for implied misogyny ?

        1. Anonymous Coward
          Anonymous Coward

          Re: So its not VAT

          Hmmmmmm; do I upvote for a cunning pun, or downvote for implied misogyny ?

          It is not implied misogyny. As my late dad used to say: "Son, do not mistake a V for a C. The former is a part of female anatomy. The latter is a type of male character".

  5. Dan 55 Silver badge
    WTF?

    Apple and Amazon... intangible?

    I don't think you can get any more tangible than shiny bling being shipped up and down the country in lorries.

    1. Flocke Kroes Silver badge

      Shiny bling with patents

      Four rows of icons was invented in Luxembourg. Got to pay royalties to the the Luxembourg division.

      Glass to the edge of the device was invented in Ireland. Got to pay royalties to the Irish division.

      The colour black was invented in the Caymen Islands. Got to pay royalties to the Caymen Islands division.

      Any competent tech multinational can move profits anywhere they want - and there is a tax cut for paying and for receiving patent royalties.

    2. MrXavia
      Gimp

      Re: Apple and Amazon... intangible?

      Why not lets have an Apple tax.. tax Apple specifically 25% off the turnover..

      Apple users are already used to paying a premium I am sure they wouldn't even notice....

      1. Dominion

        Re: Apple and Amazon... intangible?

        Ah but where is the turnover? UK, or somewhere else? When you buy your ishit do you buy it in the UK, or buy it somewhere else, eg Luxembourg, even though your ishit is actually in the UK. The devious thieves in Luxembourg then pay £1 to a company in the UK for warehousing and distribution for you to get your ishit. 25% of bugger all then raises.... bugger all.

        1. P. Lee Silver badge

          Re: Apple and Amazon... intangible?

          It's easy to fix. Use the accounts Megacorp produce for shareholders and divide by an estimate of units shipped in your jurisdiction.

          If MegaCorp is unhappy with your estimate, they are welcome to provide the actual numbers.

          The inland revenue have no problem assessing people for tax regardless of the figures produced. Its a bit like IR35...

          It won't be paid though. As has been mentioned, its just headlines for the masses.

      2. Lamont Cranston

        Re: Apple and Amazon... intangible?

        Apple Turnover? Only taxed if you buy it warm, I believe.

      3. Robert E A Harvey

        Re: Apple users are already used to paying a premium

        I suggest that Apple users are effectively already paying the tax, it just isn't going to the right coffers.

      4. calmeilles

        Re: Apple and Amazon... intangible?

        If someone wants a quarter of the apple turnover they'd better say if that's with or without custard.

  6. The Godfather
    Meh

    Pull the other one..it's got bells on

    Wasted breath....nothing will come of this and it'll be buried amongst many other pre-election posturing elements

    Fact is most don't show profit in the UK and that is deliberate and because UK rules allow it. Instead of taxing perceived diverted profit, deal with the root cause. Simply taxing it sends a message of 'OK boys, I know this may hurt a little but I have to demonstrate I'm doing something and really....it won't hurt much at all'

    This is not just Google, Amazon, Starbucks et al...it's almost every vendor and even extends to distributors too. They're all at it, and why not, if the rules allow it and it's not illegal?

    1. Bloakey1

      Re: Pull the other one..it's got bells on

      Exactly. It is not evasion it is avoidance and totally legal. They are all playing by the rules and slapping some random unenforceable tax on them does nothing but create further levels of confusion, obfuscation and reason for argument.

      This is all a blatant load of old bollocks, if I walk home with no money in my pockets a mugger can't take any off me.

      Is there an election coming up over there or are they pandering to the masses?

      1. Yet Another Anonymous coward Silver badge

        Re: Pull the other one..it's got bells on

        Schemes which are solely designed to reduce tax - like a certain software company charging itself 100quid/copy for the rights to the name which is held by a Cayman island company - are illegal.

        So if a government was prepared to stand upto a business it might decide that a swiss subsidiary charging 2.50 for 25p worth of beans might just be evasion in the same way as Jimmy Carr being paid in interest free loans

    2. Anonymous Coward
      Anonymous Coward

      Re: Pull the other one..it's got bells on

      It's made worse by the fact many of the companies doing this are doing so with the full consent and by invitation of the government to set up offices here.

      Worse is the ignorance about the other taxes paid. We will likely shut up shop in the UK now and move to a lower tax country so that's > 100 jobs gone and about 1 million a year in employee and employer taxes with it.

      It's soundbite stupidity of the highest order

  7. game0fyou

    I think George is hoping he is going to pull a clever idea, enforcement of a tax is the hardest problem. He however is giving companies an option either pay corporation tax here at 21%, or try to get away with exporting profits and then get the tax rate levied at 25%. I think he is hoping a number of companies will just fall in line, therefore saving alot on enforcement, and the 4% difference is an cut for the enforcement costs.

    1. The Godfather

      Ah, but they won't..and why should they?

  8. Anonymous Coward
    Anonymous Coward

    In the Google v. EU comments

    somebody mentioned Google "buying" a jurisdiction. Missing the point that with as much money as they have, Google *are* a jurisdiction.

    Students of history will know that in the past, private companies did act like their own little countries, with armies and navies ... the Dutch East India company spring to mind.

    1. sandman

      Re: In the Google v. EU comments

      The East India Company never really made real profits either, they were hived off by the guys in India (who got fabulously wealthy - any comparison to modern CEOs would be mendacious). The return for shareholders was created by asking the Indian rulers for donations, with menaces. When the company finally went just about bust the Govt stepped in and took it (and India) over.

  9. Simon Ward

    Mmmm .... I love the smell of cooking books in the morning.

    Expect a miraculous outbreak of 'losses' amongst the usual suspects.

  10. Richard C.

    Who are you actually paying?

    I believe that when you pay Google for advertising, you are paying "Google Ireland" and when you order from Amazon, you are ordering from "Amazon Luxembourg" - who then pay/subcontract to "Amazon UK" to actually fulfil your order. So in neither of these cases are "diverted profits" going to apply as you are actually paying non-UK entities. Yes, you can probably try and "fine" Amazon UK or Google UK (which, IIRC, provides support and/or "marketing recommendations/introduction to Ireland sales reps"), but they don't actually "make" money or receive payments from UK people - so that won't work..

    Another lot of bluster to make it actually look like they are doing something in the run up to the election...

    1. I ain't Spartacus Gold badge

      Re: Who are you actually paying?

      They are doing some stuff. EU VAT rules have just been changed. Actually that's the most recent, there was something done last year to stop the Channel Islands VAT avoidance dodge.

      Also at the EU level there are changes being proposed to the way companies can move revenue around inside the single market. I think there's enough will that these will actually amount to something.

      There have also been international moves (since just before the financial crisis hit) to cut some of the worst tax avasion via international banking tax havens. The crisis gave those moves quite a bit more bite.

      For most of this stuff we have to negotiate very slowly at EU level, unless we choose to pull out of the EU - as lots of this stuff is covered under the Single Market. The idea being that you can set up in one country, then trade throughout the whole EU. This is good for the European economy as a whole, but has lead to certain countries being a little too eager to nick everyone else's VAT and Corporation Tax receipts. That'll probably never go away entirely, but will be (and is being) reigned in quite a lot.

  11. Chris G Silver badge

    I have known a few individuals who over the years have come to the attention of the British tax man for one reason or another; they couldn't without an inspector checking it to see if was generated by something taxable and/or fineable. The slightest mistake or anything to indicate you are, as an individual trying to pay less tax, you're in trouble, particularly if you are self employed, if however you are a multinational who should be paying thousands of times as much money as the aforementioned individuals and you don't feel like paying it, you can cook the books in ten minutes and say 'fuck off taxman' and get away with it.

    For British subjects tax evasion and tax avoidance are crimes extending to those who may withhold information about something they may allegedly know that you are doing, for multinationals the government just bleats.

    It makes one wonder if they understand, that in theory they were elected to act in the best interests of the British People.

    1. Bloakey1

      <snip>

      "For British subjects tax evasion and tax avoidance are crimes"

      <snip>

      Tax avoidance is no crime and there are fiscal rules in existence that help you do just that. Tax evasion is however a crime.

      1. Chris G Silver badge

        Ah, excuse me I am a little out of date. I remember reading about anti- tax avoidance proposals that were apparently set to go through in I think 2010. It was going to make it illegal to give tax avoiding advice and even make it a crime not to report someone who was actively avoiding tax.

        Fortunately I don't live there anymore so I don't keep up with HMRC's ravages on the British people.

  12. Elmer Phud

    Spring Offensive

    "The Diverted Profits Tax will be applied at a rate of 25 per cent from 1 April 2015. "

    Everything is 'The world will be shiny and wonderful next spring - honest guv.'

  13. Anonymous Coward
    Anonymous Coward

    Could be he has advance warning of something coming.

    Apparently the Governments of France, Germany and Italy among others have written to the EU's Economics and Tax minister about this abuse of tax by large companies (Yes it's legal but it is taking advantage), it could be with agreement from the larger Governments, that new legislation is already in the offing and Osbourne is just using knowledge of this to his advantage. Luxembourg and Ireland aren't going to have the clout to stand up to the major countries saying "enough is enough" on this, the UK on it's own trying to impose something has a slim chance of succeeding, all EU countries?, I think even Amazon and Apple would have a hard time trying to fight a Europe wide consensus.

  14. splodge

    It'll all be irrelevant once TTIP is signed, anyway.

    This is all just bullshit to make idiots believe the gubmint gives a shit about people.

  15. ScottME
    FAIL

    Better/easier ways to tackle the problem

    Why don't they put rules in place to close the loopholes and accounting tricks that companies use to avoid tax? For example, they could refuse to give tax relief on "loans" that companies make to themselves via overseas subsidiaries/parent/child companies. If the company to which the "loan repayments" are made has the same ultimate ownership, then you can't offset the repayments against your profits to avoid paying tax.

    1. Anonymous Coward
      Anonymous Coward

      Re: Better/easier ways to tackle the problem

      Because closing the loopholes usually results in collateral damage. IOW, trying to will likely hurt the honest taxpayer in some way. Even if it means threatening the "nuclear" option of removing all presence (and thus ability to assess taxes) from the country in question (that's how oil companies hold the US hostage--they simply threaten to pull up roots and relocate to South America or something: 10% if something is better than 100% of nothing). The accountants and lawyers aren't paid their salaries for nothing. They're paid to finds ways to basically hold the countries hostage.

    2. <shakes head>

      Re: Better/easier ways to tackle the problem

      Please define ultimate parent as my work in financial reg has a least 3 that I know of.

  16. David Kelly 2

    Tune In Next Year and we hear ...

    … tax revenues are down. Employment is down. The "Google Tax" priced UK services out of the market. Tech industries moved elsewhere.

    1. DavCrav Silver badge

      Re: Tune In Next Year and we hear ...

      "Tech industries moved elsewhere."

      They can't, that's the point. They want to sell to British consumers, so they have to be here, basically. VAT rules are changing so they will pay British VAT when selling to Britons regardless of where they themselves are based.

      If this actually works it will be a miracle, but I want to see what the proposal actually is before I say it's rubbish.

  17. Rick Giles
    Pirate

    That's our strategy...

    'that use "elaborate tax structures" to avoid paying tax'

    That is the domain of Government employees and elected officials...

    1. <shakes head>

      Re: That's our strategy...

      Hmrc employes have a £7.50 unreceipted lunch allowance, mine is a fiver with a receipt

  18. This post has been deleted by its author

  19. Boris the Cockroach Silver badge
    Flame

    They should pay tax here

    And if they dont, they get banned from trading here

    Extreme maybe (and cue the whiners going "no more apple"). but consider this

    They use UK electricity infrastructure built by the taxpayers

    They use our police and fireservices to protect their buildings

    They benefit from their employeees here getting free healthcare

    They use the roads built at public expense to deliver their parcels(Amazon)

    They even use the sewers again built by taxpayers.

    In fact they benefit greatly by buying and selling goods here, and yet.. they wont pay anything towards the upkeep of said services used by them to run their businesses.

    That sounds like a grade 1 scrounger to me

    And whats worse, the bill for providing those services is picked up by taxpayers like me, you and the local companies we work for

    1. This post has been deleted by its author

      1. king of foo

        Re: They should pay tax here

        Um, remind me what the government spend all that tax on again...

        I pay road tax, yet potholes.

        I pay income tax, yet unemployment.

        Etc.

        1. Robert E A Harvey

          Re: They should pay tax here

          There is no road tax. There is a tax on owning a vehicle

      2. DavCrav Silver badge

        Re: They should pay tax here

        "Taxation probably the biggest killer the world has ever known."

        No. Just no. Stop being an idiot. Almost everyone killed in your ridiculous arguments was killed by something metal, so actually metal is the biggest killer the world has ever known. Because I get all road accidents as well.

        Or, if you are going to make silly arguments, without money there couldn't be the kind of taxation you are talking about, so in fact money is the largest killer. You can also throw in all the money-related crime and suicide then, to do better.

        1. This post has been deleted by its author

  20. Slx

    What is sauce for the goose is sauce for the gander!

    I assume the banks, investment houses and hedge funds of the City of London will also be immediately brought into line and will immediately stop all complex tax avoidance systems too?

    Or, is this only for sexy, well-known foreign companies with big consumer and tech brandnames like Google and Apple and maybe do a bit of bashing a few smaller EU countries along the way?

    I think if the UK's going go hell for leather after Ireland and others, it seems only fair that we immediately push for a huge inquest into 'The City'.

    If we're going to clean things up, let's clean everything up, not just do it selectively

    1. Tom 7 Silver badge

      Re: What is sauce for the goose is sauce for the gander!

      They've already go a load of letter heads printed with 'goosander' written on the so they will avoid any attempts at taxation (by negotiation with tory party donations inc.)

  21. DougS Silver badge

    Wouldn't this discourage companies from having a presence in the UK?

    Let's say you start a software company, or a company selling widgets, based in the US. If people in the UK want to buy your products, they go online to your web site or to Amazon, and order it, and it is shipped to you. Other than VAT, how exactly can the UK claim a penny of tax from you?

    Now Apple isn't going to close the Apple stores in the UK, Google isn't going to giving up selling ads in the UK, but let's say Xiaomi wanted to start selling phones in the UK. What's their incentive to hire a single person or rent a single foot of space in the UK, if they're going to be subject to a 25% tax on the profits? The UK would have to attack them via tariff, and that would become very tricky, very quickly.

    Not saying that countries shouldn't try to get their fair share of tax revenue, but hitting up the multinationals that have built up business in the UK today in this manner will simply discourage the next generation of multinationals from setting up in the UK tomorrow. Or at the very least cause them to delay their presence in the UK as they will see it as a less profitable market due to the additional tax.

    1. DavCrav Silver badge

      Re: Wouldn't this discourage companies from having a presence in the UK?

      "What's their incentive to hire a single person or rent a single foot of space in the UK, if they're going to be subject to a 25% tax on the profits?"

      If we assume that they are being taxes on their profits *somewhere*, then it's not such a big deal. If this is coupled by an international crackdown on bastards, I mean tax havens, then the incentives look better.

      The website problem is actually deeper than this though, because with websites there's no need to have big shops and a physical presence at all, so not paying business rates, which are just as important. There are already enough incentives to get rid of your physical presence as it is.

    2. Anonymous Coward
      Anonymous Coward

      Re: Wouldn't this discourage companies from having a presence in the UK?

      "What's their incentive to hire a single person or rent a single foot of space in the UK, if they're going to be subject to a 25% tax on the profits?"

      The other 75%

      1. codejunky Silver badge

        Re: Wouldn't this discourage companies from having a presence in the UK?

        @ Robert Long 1

        "The other 75%"

        So your happy to have 25% more money taken off you in tax! And you will be happy about it because you get to keep the other 75%!

        I dont know many people with that world view but you go ahead and demonstrate your commitment to the public coffers

        1. DavCrav Silver badge

          Re: Wouldn't this discourage companies from having a presence in the UK?

          "So your [sic] happy to have 25% more money taken off you in tax! And you will be happy about it because you get to keep the other 75%!

          I dont know many people with that world view but you go ahead and demonstrate your commitment to the public coffers"

          Well, if my tax rate went up by a few per cent, I would moan about it, but I wouldn't quit my job in protest.

          1. codejunky Silver badge

            Re: Wouldn't this discourage companies from having a presence in the UK?

            @ DavCrav

            "Well, if my tax rate went up by a few per cent, I would moan about it, but I wouldn't quit my job in protest."

            Wow. So go on then donate 25% of your earnings then I am sure the gov can use it. How many years until we should rise that again? And again? Tax rarely goes down and the obligations (interest) always seem to be rising.

            As for not quitting your job, good for you. So when it is no longer of value for you to go to work you will still do it. Even if you lose value going to work you will still do it? The welfare trap shows not everyone would be so self defeating.

            I like the assumption that people will pay more tax because others arbitrarily decide they earn too much or are rich (almost always someone earning more than they are). It is as absurd as the idea that taxing businesses out of the country is fine because others would pop up in their place. It is a lot of wishful thinking but more hope than judgement.

            1. DavCrav Silver badge

              Re: Wouldn't this discourage companies from having a presence in the UK?

              "Wow. So go on then donate 25% of your earnings then I am sure the gov can use it."

              Dude. Over there is a clue. Maybe you should go find it. I said I don't want to. So I won't donate it. But if I'm required to do so, under pain of imprisonment, then I will.

              "As for not quitting your job, good for you. So when it is no longer of value for you to go to work you will still do it. Even if you lose value going to work you will still do it? The welfare trap shows not everyone would be so self defeating."

              For businesses the alternative is dying. Corporation welfare (sort of) doesn't exist, unless you're a bank. And the tax is on PROFIT, not revenue. A 25% tax on the money I have left over after I've spent everything would hurt a lot less than 25% on income. And in fact up to a 100% tax on profit as an individual is still better than quitting my job, probably even a 101% tax on profit, for a while anyway, would be preferable to quitting your job.

              1. codejunky Silver badge

                Re: Wouldn't this discourage companies from having a presence in the UK?

                @ DavCrav

                "Dude. Over there is a clue. Maybe you should go find it."

                Think you may want to go fetch.

                "I said I don't want to. So I won't donate it. But if I'm required to do so, under pain of imprisonment, then I will."

                So you dont want to pay, you want someone else to pay. And of course there is pain of imprisonment, or you could move somewhere it isnt a problem! That dont want to is the clue you are missing not me.

                "For businesses the alternative is dying. Corporation welfare (sort of) doesn't exist, unless you're a bank"

                I agree they have nowhere to fall back. Unless they move country. That way it doesnt die it carries on, makes money, provides jobs, pays tax, but doesnt die. And it isnt just the extreme of dying but a considerable cut in its resources would also be unwelcome. So while they could make a profit but slim down due to the large tax bill it may not be worth it. I do agree with the bank statement btw but since the last gov got into bed with them (not much hope the tories would have been better) the gov had to bail them out.

                "A 25% tax on the money I have left over after I've spent everything would hurt a lot less than 25% on income."

                Then hand it over. You are comparing being hit with a hammer or hit with a mallet, either way you will still be sore. Instead of giving away that money could you not provide construction jobs through maintenance of your home (such as energy saving for the coming fun)? Could you not use it toward putting your kid through college/uni? How about hiring a babysitter/childcare so you and your partner can both work and occasionally go out? And of course the people you pay that money to can then use their less taxed profits to keep their business sustainable, hire more people, or even advertise!

                I wont even entertain the end of your statement. I doubt you would be happy for long

        2. Anonymous Coward
          Anonymous Coward

          Re: Wouldn't this discourage companies from having a presence in the UK?

          "So your happy to have 25% more money taken off you in tax! And you will be happy about it because you get to keep the other 75%!"

          You are confused. Of course I am happy to pay 25% tax (which I already do, BTW), if the alternative is getting no money at all. The same applies to companies and the scare stories about packing their bags and leaving are nonsense; a profit is still a profit.

          What point did you even think you were making? That no one should pay any tax? Well, let me know when you get that one working.

          1. codejunky Silver badge

            Re: Wouldn't this discourage companies from having a presence in the UK?

            @ Robert Long 1

            "You are confused. Of course I am happy to pay 25% tax (which I already do, BTW)"

            You are confused, this is not what you already pay this is additional! This is on top of tax X,Y and Z that you already pay + accounting/admin costs. Not for better services either, it is to service the gov's debt + electoral bribes. Taken from the work you have done which you have earned.

            "The same applies to companies and the scare stories about packing their bags and leaving are nonsense; a profit is still a profit."

            Then I will happily take the money from your bank account except a tenner for you to enjoy (after bills of course, we are talking profit). But you will be happy because you are making vastly more money than *pick worker poor country*. And you wont look to go elsewhere to avoid paying far more than you need to or should (subjective term and they obviously dont think they should).

            "What point did you even think you were making? That no one should pay any tax? Well, let me know when you get that one working."

            The point I am making on this thread is how greedy little thieves like to put their hands in other peoples pockets but not their own. The point I make throughout this topic is that more of our tax money is being used on servicing debt, but more debt is being taken on because we cant afford the services we want. The outcome being that we are paying more tax but taking on more debt and will end up without public services but a huge bill at the end. And the problem comes from people plucking arbitrary numbers from their ass as the amount that should be stolen from those they perceive to be rich. The kicker being that rich people either move or find a way around the rules while the poorer get sucked into paying the tax so gov's dont need to watch their spending.

            1. Anonymous Coward
              Anonymous Coward

              Re: Wouldn't this discourage companies from having a presence in the UK?

              "You are confused, this is not what you already pay this is additional!"

              I'm not paying the tax in question. Quite the reverse, as this will reduce the tax I need to pay if it's enforced (which it won't be, but let's indulge Osborne's little lies for a moment). So, what exactly are you talking about? Be specific, use both sides of the page if necessary.

              1. codejunky Silver badge

                Re: Wouldn't this discourage companies from having a presence in the UK?

                @ Robert Long 1

                Lets go back to where I joined the discussion for simplicity. You responded to somebody-

                "What's their incentive to hire a single person or rent a single foot of space in the UK, if they're going to be subject to a 25% tax on the profits?"

                The other 75%

                So on top of all the tax already being paid. On top of the jobs creation and various costs of the business you seem to think that creaming 25% off a company for working and earning will not be a problem, they wont care, they get the other 75% so they will be happy.

                I call bull. I also suggest to people who like to steal money off others that they apply the consequences to themselves. As DavCrav has said, he wouldnt like to. You also provide a completely wrong scenario as if it is correct-

                "You are confused. Of course I am happy to pay 25% tax (which I already do, BTW), if the alternative is getting no money at all."

                You assume the alternative is no money. We are talking about a global brand with the ability to close down here and move pretty easily. And of course the people who lose their jobs will be demanding the welfare support which will have lost the money it was gaining from the activities of the business. Chopping our nose off to spite our face.

                You took my point to the extreme-

                "What point did you even think you were making? That no one should pay any tax?"

                I assume you can see the extreme of your argument which is to tax 100% but I am sure you would call that absurd (I can only hope). Which leaves a vast space. An amazing spectrum of possibility and options. But as a country based on capitalism but with a greatly expanding and consuming public sector which cannot afford its existence we must either lean more toward freedom and responsibility or taking from people for their own good. Which is why the welfare system was to be a safety net, not a bloated beast consuming for its own benefit to the expense of its people.

                The expectation that people should be expected to do 100% of the work and have vast chunks of the reward removed for 'the common good' or whatever other fuzzy statement (currently trying to balance a huge deficit before we can pay off a huge debt) is not acting in the public interest. Or if you want to go back to school level stealing is wrong

                The great lie is that tax is for the rich. And it is for the quick windfall which easily gains support from poorer people. But the problem is people make more money and more people get taxed. But the rich can afford to move and avoid legally. The burden falls on the poorer and the poorer until it is the poor. Look to the history of tax and the fact that we still now tax people on minimum wage. The higher tax's always hurt the people.

                The noble idea of tax being used for the army, education, health, etc is sweet and cute. It is amusingly inaccurate as so much tax money is required to provide that + every excess and unnecessary election trick. And even then we borrow more because the larger tax's dont provide enough.

                So we must tax more from more people, even lower earnings, because we must pay interest and provide services. But we still dont take enough money, tax more, borrow more, take more, vote for us because we will take it from them not you, until it hits you. And then you are poor. Your money is taken by the state but the services reduce. You are paying more to get less.

                But the people who enjoyed the shiny shiny are gone or leave or have moved on. Now it is just you and the bill. Arguing against privatisation of your services and no money to pay for them. But the money has already been spent. Confidence in the country is reduced and yet it still must take loans. Maybe beg the IMF. Maybe default. Maybe look like Greece, maybe look worse. And I bet you will still be pointing your finger at the very people who argued against introducing more and more tax.

                1. Anonymous Coward
                  Anonymous Coward

                  Re: Wouldn't this discourage companies from having a presence in the UK?

                  @codejunky

                  "But the rich can afford to move and avoid legally."

                  The whole point is whether this can be prevented. Of course it can; the government simply won't do it because THEY are the rich.

                  "The burden falls on the poorer and the poorer until it is the poor. Look to the history of tax and the fact that we still now tax people on minimum wage. The higher tax's always hurt the people."

                  Maybe; maybe not. Corruption in government certainly does, and that's what makes the difference. High tax can be good; low tax can be bad. And vice-versa.

                  And, finally, you seem assume that we need Google or Amazon, or Vodafone. We don't. Google could close tomorrow and I would not be in the slightest bit fussed or bothered. Amazon? Who cares? The vacuum would be filled overnight, and their staff (a tiny number, in fact) would be in work again with new logos on their shirts.

                  So, if they don't pay their tax we can just block them - not terribly hard - and they can go screw themselves while someone else takes 75% of the UK and/or EU profit and they get 0%.

                  1. codejunky Silver badge

                    Re: Wouldn't this discourage companies from having a presence in the UK?

                    @ Robert Long 1

                    "The whole point is whether this can be prevented. Of course it can; the government simply won't do it because THEY are the rich."

                    Of course it cant be prevented. They can leave and the jobs and money go too. Then who pays the debts and keeps the public services going? Are you going to make the alternative employment and provide all that money? Or do we say that they earn more than us so they are rich! We gotta take it before they spend it! We can spend it better than them. Not on jobs, not on developments but on interest payments for the countries debts.

                    "Maybe; maybe not. Corruption in government certainly does, and that's what makes the difference. High tax can be good; low tax can be bad. And vice-versa."

                    The fact is that the tax always hits those below its intended target. The burden lands on the people. Those who you aim to take the money off do what they can to move themselves or their money to places without massive theft. The people stuck with it cannot avoid it. Not the rich. You call it corruption. Other people call it common sense.

                    "And, finally, you seem assume that we need Google or Amazon, or Vodafone. We don't. Google could close tomorrow and I would not be in the slightest bit fussed or bothered. Amazon? Who cares? The vacuum would be filled overnight, and their staff (a tiny number, in fact) would be in work again with new logos on their shirts."

                    The dreamer. The clueless. And are you gonna make this magic enterprise sprout from your pixie dust into existence? No. Instead you will hear of all these people losing their jobs. You will hear how the employment figures are rising and you will demand the gov magically fix it. You will insist the privatisations of public assets is wrong and unnecessary as you ignore the increased debt, borrowing, deficit. And you will suggest more tax and insist people will magically just set up a replacement instantly and that they would be big enough to pay that stupid amount of tax.

                    "So, if they don't pay their tax we can just block them - not terribly hard - and they can go screw themselves while someone else takes 75% of the UK and/or EU profit and they get 0%."

                    While nobody takes their place. While those unemployed demand the creation of jobs while demanding welfare while the money supply falls. And you will wonder why. You wont understand, because you demonstrate you dont understand. You think money is a realm of magic and dont realise the requirement of work, investment, money. You think they will be the ones to get nothing while other countries get the tax take. Countries who want employment opportunities and want the money. And you will be free to go screw yourself because you will have the time on your hands if it is the business you used to work for. I dont think there is much chance this is your job though. If it was I doubt you could be so ignorant of harm you aim for. But maybe you are.

  22. xyz

    Classic!

    Osborne creates a "Google" tax the same day as "Brit smut slingers shafted by UK censors' stiff new stance" knackering one of Google's prime functions (looking at pr0n)

  23. NeilMc

    What a crock of shite

    HMRC have all the tools they need to address tax evasion by the wealthy and corporates but have sacked all of their experienced investigators as part of slimming down the bloated Civil Service.

    Coalition realises that Tax receipts have fallen through the floor and now there is no money to fund the Austerity programme and Tax give-aways.

    Coalition starts rehiring HMRC investigators on temp contracts and extortionate day rates. Contractors fee's are outstripping the paltry addition tax receipts being generated.

    New Corp Tax rules brought in to fix problem but is yet another fine example of "failures in joined up thinking"......

    New "Gobble" Tax is focused on Corporate Profits..............doh Starbuck has "apparently" never made a profit since 1998 when it arrived on these shores. So what has changed? FECK NOTHING!!!!

    How does a business remain "functional / operational" without making a profit? especially a business of that size and global reach? It just stinks of TAX EVASION on a massive scale.

    What needs addressing are as follows:

    Losses from previous business years being used to offset Tax liabilities in future years. Stop this

    Licenses and Royalties being used to artificially depress profits and reduce Tax Liabilities. Stop this and call it what it is EVASION.

    Bottom line is countries need Tax Receipts to pay for social infrastructure and services. If Corporates and the Wealthy don't pay their fair share then us Prols have to pick up the tab as we are doing and over fist......

    1. Anonymous Coward
      Anonymous Coward

      Re: What a crock of shite

      Most sensible and informed comment here Neil.

      I'd also add inter company loans to the list of common evasion strategies, but quite how you'd do something to determine the difference between a legit one and a profit sucking one I don't know.

      The general public seem to think that it should be possible to easily fix these blood suckers and that only corruption at senior levels prevents action being taken... if only it were so simple.

      Oh and while Google, Amazon and Apple always make the headlines, its not just them playing silly buggers with this, its also every other multinational...

      How many million per annum in tax receipts from this one Gideon? Sounds like a lot to Joe Public but that's feck all mate, hardly worth going to war with them for such a paltry amount.

  24. Anonymous Coward
    Anonymous Coward

    Farce

    Osborne has been instrumental in the non-enforcement of the laws which would have taxed the fake charges these companies use to evade tax; his pretence of bringing in something to replace it is just for show and he has no intention of enforcing these rules any more than he has of enforcing the existing ones.

    The announcement will be based on some pre-prepared material from PwC or KPMG (you don't think the chancellor bothers with any of this stuff, do you?) and they will have made sure that the details allow them to advise their customers (for a big fee) of exactly where the loopholes are, because they put them there.

    As ever, the real solution is to tax turnover at a low rate and forget about taxing profit completely. But no Tory is ever going to vote that through as the whole point of a Tory government (including Blair's) is to move cash from taxpayers to shareholders. Which is why privatization of the railroads has increased the burden they impose on the taxpayer and PFI is so vastly expensive and inefficient compared to completely publicly financed work. It's not that the Torys are stupid (well, not just), it is that they fully intend for these things to be expensive and low quality for the majority as that means more money for the tiny minority that they represent.

    If you want to understand Tory economic policy, simply imagine you are a farmer looking at a herd of sheep; once a landlord gentry elite, always a landlord gentry elite. Once you do that everything, including the stamp duty changes - or the new landlord subsidy rules, as they should be called - falls into place rather neatly.

  25. Anonymous Coward
    Anonymous Coward

    One question:

    Who the fuck is this Gideon fella?!

    1. Anonymous Coward
      Coat

      Re: One question:

      Dunno, lost track, something to with the supply of Bibles to Hotels in times gone

  26. Adolph Clickbait

    Does this disprove the old addage?

    The only certainties in life are Death, Taxes* & data loss.

    * See title

  27. J@TQD

    This does not happen in India ... copy their method

    I have a company that sells software into India. In order to ensure that India always gets their slice of tax on sales to India by foreign companies, India has something called Withholding Tax. This is based on two principles .. if you are registered in India and have a Income Tax PAN registration the tax is 10%, and i f you do not then the tax is double.

    India Tax go by the premise that you need to be registered as a Corporation Tax payer in your own country in order to have the PAN registration, in which case the Double Taxation Agreement applies and you only pay half (10%). This assumes you would pay the full 20% in your own country and would claim back the 10% you paid to India as part of your tax return.

    So if any foreign company sells, say $100M to anyone person or organization in the country they would have to pay HMRC $10M in Withholding Tax. They would then offset this against the Corporation Tax they would pay in their own country.

    So if a company has its HQ in Luxembourg where the tax is 4% they would face a problem, but the UK Government would get the tax at 10% of SALE VALUE..

    No one likes it when they do business with India, but they still flock there to sell. They manage it until they get the rebate from their own Government.

    1. Anonymous Coward
      Anonymous Coward

      Re: This does not happen in India ... copy their method

      India has special economic rules and policies to protect its "developing nation" status.

      The UK would not be allowed to implement the draconian measures that they have, it would be against EU agreements and even if you take the "farage option", nobody would want to trade with you under those terms.

      Its a massive pain in the behind trying to do import/export with India, if it wasn't for the fact that the mega corps get slave^H^H^H^H^H cheap labour nobody would try to deal with them at all.

      I know Dave and his mates would love for the future of the UK to look like India and attract all sorts of wealthy companies to come and use the readily available slave workers (hired of course from his Tory party gang masters) but hopefully, that won't happen - although to be honest Amazon (and others) are already trying this approach, which is why the government budget has gone to shit, because of all of the low paid workers.

      Its work Jim, but not as we know it!

  28. Rande Knight

    Financial Transaction Tax and Commissions

    There's several blunt force things that could be done to make them pay their taxes.

    a) Financial transaction tax. Every time money changes hands, the govt gets their cut. Send money to your parent company overseas? ->Get a cut. Downside: would _kill_ high frequency trading.

    b) Global tax accounting - if you don't pay at least our rate _somewhere_ in the world, then you get to pay the difference here. Makes it unprofitable to bother sending the money to low tax countries. USA already does this with individuals.

    And then there's paying HMRC taxmen on commission. Currently they'd rather hassle the individual because it's expensive to hassle BigCorp. Pay them on commission - say 5%, and it would suddenly seems like a really good idea to take down Vodaphone for £5billion. And not bother the little guy who made a £1000 mistake.

    1. Vic

      Re: Financial Transaction Tax and Commissions

      Every time money changes hands, the govt gets their cut. Send money to your parent company overseas? ->Get a cut

      Send a couple of quid to your nephew in Swansea? Govt. takes a cut. The Daily Mail will have a field day...

      Downside: would _kill_ high frequency trading.

      Yeah, that's not a downside...

      Vic.

      1. Charles 9 Silver badge

        Re: Financial Transaction Tax and Commissions

        Don't the money senders take a cut ANYWAY? The government would just be a tack-on.

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