back to article EU: Explain your tax affairs. Google, Amazon, Facebook: Mmm... nah

Amazon, Facebook and Google are among those who have been invited to a pow-wow with MEPs over their tax practices – but not all plan to show up. MEPs said on Tuesday that it's regrettable that the multinationals “seem unable to find time to discuss their tax practices in public before the European Parliament’s Tax Rulings …

  1. Anonymous Coward
    Anonymous Coward

    Blocking all their sites within the EU would certainly get their attention... What a wonderful place it would be as well during the block.

    1. Anonymous Coward
      Anonymous Coward

      To the downvoters...

      You're all Cowards! ........ Enjoy TTIP!

  2. Tromos

    Do what the energy companies do

    Drop a highly inflated 'estimated' bill on them.

  3. Anonymous Coward
    Anonymous Coward

    Surprising

    They have all done this a couple of time in front of UK committees. I wonder why they wouldn't come this time.

    1. Pellinor

      Re: Surprising

      Yes, they've been before the Public Accounts Committee a couple of times, where they were roundly told they were in the wrong and should be ashamed of themselves, and anything they said in their defence was either interrupted, dismissed, or simply ignored.

      I wonder why they won't go along to another similar session?

      1. Anonymous Coward
        Anonymous Coward

        Re: Surprising

        not only were they roundly ignored, they were criticised for alleged tax avoidance by a known tax avoider

  4. Paul Smith

    Get a life

    Some minor 'elected' representative from a constituency you have never heard of wants you to drop what you are doing, fly to a country you have no interest in and answer in detail an bunch of unfocused questions that could cover any, and every aspect of your business, and in return you will get... nothing.

    If said official has reason to believe a law is being broken - and remember that they are the ones who made the laws in the first place - then they have plenty of ways of having it investigated and corrected. If no law is being broken, and the officials have no power to reward attendance or punish absence, then why on earth would major CEO's want to help them aggrandise themselves.

    1. Zippy's Sausage Factory

      Re: Get a life

      Not quite. This panel could heavily influence tax policies in the EU for the next few years, and it's likely that not turning up and playing nice could turn out to be a very serious mistake.

      In US terms, it's perhaps the equivalent of being invited to a friendly discussion with a few Congressmen on a subcommittee. On the surface, perfectly ignorable. But behind the scenes, perhaps a lot more influential than you might think.

      1. Bob Wheeler

        Re: Get a life

        Not quite. This panel may well heavily influence tax policies in the EU for the next few years. But the issue of internataional tax is dealt with at International Law & Trade treaties level.

        I suspect that when a lot of this was done back in the day when international trade involved selling cars, or food, or raw products (coal, steel) etc around the world rather than thse more intangiable 'electronic goods'

    2. Anonymous Coward
      Anonymous Coward

      Re: Get a life

      They're MEP's pretty much the most fairly elected and representative politician we'll ever encounter. Just because the UK is full of lunatic xenophobes that have no desire to engage in a grown up fashion with the rest of the continent doesn't erase that particular fact.

      Have you ever bothered attempting to engage or are you rambling from a position of blissful ignorance?

      I'd actually wonder, how many of your own national MPs can you name?

      1. TitterYeNot
        Joke

        Re: Get a life

        "They're MEP's pretty much the most fairly elected and representative politician we'll ever encounter. Just because the UK is full of lunatic xenophobes...."

        Ahem, I think you forgot to use the correct icon ->

        1. Anonymous Coward
          Anonymous Coward

          Re: Get a life

          Not really as I think he might be right.

      2. Doctor Syntax Silver badge

        Re: Get a life

        "They're MEP's pretty much the most fairly elected and representative politician we'll ever encounter."

        Powerless. You forgot powerless. The European Parliament is a fairly powerless talking shop.

        It's the officials who have the power. They're appointed. We're not allowed to vote for them.

        The powers given to the officials are given by treaties. We're not often allowed to vote on the treaties. When people have been allowed to vote & voted No they've been told to vote again until they gave the right answer.

        So perhaps the disenchantment in Britain stems from the fact that we're not allowed to engage in any democratically meaningful way.

        1. Anonymous Coward
          Anonymous Coward

          Re: Get a life

          However the reason the Commission has most of the power is due to the elected representatives of the nation states not wanting to give the power to the elected representatives to the union. The commission is selected by the heads of the nation states.

          Just remember the sulking Cameron kicked off when they dared have the elected people elect a head of the commission in a democratic way.

        2. John Crisp

          Re: Get a life

          "So perhaps the disenchantment in Britain stems from the fact that we're not allowed to engage in any democratically meaningful way."

          You forget that the it is the goverment WE elect (for better or worse) that appoints and dictates to the officials that set policy. So you do have a some influence. Regrettably nowhere near enough because the politicians want you to be worried about the health service or whatever. Smoke ans mirrors.

          Yes, the problem with Europe is there is no democracy but that is because goverments will not cede their authority to the democratically (and proportionally represented) EU Parliament.

          If people could overcome their xenophobia and understand the best way to run Europe is via the democratically elected parliament life might be a tad easier. The current system is a mess. But the voters get swayed by emotive (and largely irrelevant) subjects like immigration so they don't see the objective issues like democracy.

          And I can't see national politicians wanting to give up the power they spent years climbing greasy poles to achieve.....

          This is not about what is best for you, me, or the nation. Purely what is best for your politicians.

          Waiting for the downvotes of UKIP supporters....

    3. big_D Silver badge

      Re: Get a life

      Some minor 'elected' representative from a constituency you have never heard of wants you to drop what you are doing, fly to a country you have no interest in and answer in detail an bunch of unfocused questions that could cover any, and every aspect of your business, and in return you will get... nothing.

      A country you have no interest in? The EU is a bigger economic market than the USA. That is a huge market to suddenly not be interested in.

      If they decide to reform the tax laws of those countries (like they just did with sales tax / VAT - Amazon now has to pay the VAT in the land where the customer is located, not the tax haven where the company says it is operating from (E.g. customer in Germany, warehouse in Germany, sale "from" Luxembourg)) and the multinationals can't be bothered to explain their tax avoidance, then they could be in for a few surprises, when the new rules are announced.

  5. Richard Jones 1
    WTF?

    Toothless Tiger Meows?

    Since the committee has no powers to compel anyone to attend it might be wise for it to address its own weakness as a matter of urgency. Since the other bodies in question claim to follow all relevant local tax laws, (I am not saying they do this - only that they CLAIM to do so) the committee is between the rock and a hard place.

    National tax bodies could do what is needed if, but only if, they can find evidence that tax law has been broken or incorrectly applied. Then it comes down to whose lawyers argue the better case.

    It does appear for the moment that the committee has about the same standing as any other obscure special interest group trying to exceed its powers (remember this one has NO POWER to force attendance). For the moment it is like standing next to an unconnected light switch demanding the lights come on because you have thrown the switch to on.

    Given the glacial speed with which most EU bodies work resorting to law could be the least favourable option for all parties, the fact that laws have been very badly created to distort the terms of trade is not a very useful state of affairs and needs to be addressed urgently so expect that to take about 10+ years

    For the record, I would like to see all business conducted within an country/location/geographical entity to have to follow all laws and rules pertaining to that place, including tax, health and safety, product safety, etc. However, any laws do need to be well drawn up and not resemble lace curtains with most of the lace removed.

  6. msknight Silver badge

    Can someone help me ...

    I'm about to put something forward so simple that it is very likely full of holes, because I'm very likely talking out of my arse and just need someone to explain why my thought process is that of a lunatic but ... here we go anyway.

    The problem as I understand it from the press, is that company ABC does a sum of business in country A and shifts the profits to another country by various means, such as overpaying for supplies, etc.

    Corporate tax is a tax on profits made in that country, but the company must make known the amount of sales in country A. The company also has to report global profits.

    So, let's say for example, that a company reports global sales of £100,000 and profits on those sales of £50,000 ... and country A knows that ABC made sales of £10,000 in their country ...

    ... then to me it is simple maths that their tax bill should be worked out as a percentage of global profit weighed against local sales. Sounds fair to me.

    Ergo, profit made in that country assumed to be £5,000, 20% corporation tax of which is £1,000, thank you very much Mr. Won't-play-ball.

    So ... what have I missed?

    1. Kracula
      Alien

      Re: Can someone help me ...

      Let me take a crack at it ...

      The main flaw in your argument is that fiscal authorities cannot assume anything. That's why as a company you have to keep tons of receipts, invoices, contracts etc. All that paperwork should be the base of what you report to the Tax man.

      The way the tech giants do it is that they make sales of GBP 100,000 in the UK and report expenses of GBP 99,000, leaving peanuts for the UK taxman. When you dig deeper into the GBP 99,000 you will probably see that GBP 45,000 are actually expenses paid to other group companies: royalties, R&D, training, support services.

      So you could be tempted to say, just ignore the GBP 45,000 exchanged between group companies and tax the difference, but that would be unfair if those services were actually performed because if someone in Google spent 10,000 man-hours developing code for all of Google subsidiaries to use and sell stuff based on that code, then Google subsidiaries should pay up for the development time.

      In essence, how does the tax man know what is the real value of those cross-charges and working in such a structure myself I can honestly tell you we don't know either. Some gross-fromage just puts a number down and we run with it.

      Thus, returning to the main problem: what's a fair tax amount? And because the world tends to operate on the "innocent until proven guilty" assumption - the tax guys cannot ask for more payments unless they have solid proof that the company actually cheated.

      Makes more sense now?

      1. msknight Silver badge

        Re: Can someone help me ...

        It makes perfect sense. I probably didn't explain my viewpoint.

        Why bother with the subsidiary thing at all? Just take the profits of the whole company and tax a percentage of that which relates to UK sales? That way, whatever the company does internally, doesn't matter.

        I did sit and think that there was an immediate way around this, by having a parent company under a different name and registration ... and so long as the parent company doesn't do any businesses in the other countries, that effectively nuts the whole thing.

        1. Horned-Devil

          Re: Can someone help me ...

          What do you define as sales - as another poster pointed out you could have a lot of sales which are actually to other group companies (and which don't get taken into the global number as they essentially get eliminated within the overall accounts)

          Different countries have different rules on accounting - so your 'sales' number that you post in Madeupistan based on their accounting practice could be vastly different to what the tax man deemeth revenue in the UK

          It would also require all companies to have completely transparent and consistent accounting globally to allow for this which would involve harmonisation of this from every country, and you can imagine how easy that would be...

          1. msknight Silver badge

            Re: Can someone help me ...

            I thought I'd hit a brick wall somewhere along the line!

            Many thanks for taking the time, folks.

    2. ChrisInAStrangeLand
      Stop

      Re: Can someone help me ...

      "So ... what have I missed?"

      European manufacturing and agricultural exporters.

      If you're required to pay profits in the country of sale then Germany and France are going to get their budgets destroyed come tax time.

  7. codejunky Silver badge

    Good on em

    There is little to be gained by handing yourself over to the people who will do anything to take more hard earned cash, even when they made up the rules in the first place. Attacking companies like google, amazon, facebook or any other multinational company in an attempt to distract the electorates from incompetent or unpopular government and then politely asking them to come and answer questions on how they avoid the grubby mitts from stealing their earnings sounds like stupidity. I am not shocked that it is government that does this.

    It is a shame that success is seen as a bad thing. It is a shame that people think they are entitled to other peoples pockets. It is more shameful when the financially amusing governments do it. I expect google, amazon and facebook have more power than Greece when dealing with the EU.

    1. Lars Silver badge
      Happy

      Re: Good on em

      Am I successful if I rob a bank,

      1. codejunky Silver badge

        Re: Good on em

        @ Lars

        "Am I successful if I rob a bank,"

        I assume that is a random thought for the day? It doesnt seem to relate to my post unless you are referring to the governments helping themselves to other peoples pockets, which in that case you are successful if you can get the mob to support you. But I like to think at least some people would consider it criminal.

        1. Flynn O'Thick
          Coat

          Re: Good on em

          So a local coffee shop in the UK pays 20% corp tax. Starbucks pays none - is that fair? Like most multi-national companies it cross charges costs to its own subsidiary subsidiary -it's called "transfer pricing". Governments are imperfect, and big companies will always be able to afford better more expensive lawyers than public servants. Many large IT companies have their European HQ based in Ireland (where corp tax is very low) - it isn't for the nice weather.

          If companies pay little or no tax then we can't complain when the roads, hospitals , waste, schools, parks, don't work. Eventually there'll not be even enough money for Govt to pay IT Consultants. hmm..

  8. Busby

    Google, Amazon et al are well within their rights not to attend,

    However failure to attend should mean no lobbying to the European Parliament is allowed for a set period. Say 12 months ban per employee per invite. Have a feeling if that was the case then suddenly a few people's diaries may open up.

    1. TheTick

      So if they are not going to show up to a show trial, then the politicians should not let them bribe them anymore, is that what you are saying?

      1. Busby

        I consider most forms of lobbying as (badly) disguised bribery anyway so yes that's exactly what I'm saying.

        If Governments want to permit lobbying it should be under strict conditions.

        My ideal scenario for the UK would be a purpose built building with numerous conference rooms. Lobbyists should register in advance and all appointments should be visible to the public online for at least 7 days prior to the meeting along with the agenda/bill being lobbied and names of people attending and the Org they represent. Once underway the majority should be streamed live on the internet for any interested parties to view and recordings retained indefinitely and available under the FOI act. Would also suggest we provide sandwiches and soft drinks so no need to treat an MP on your expense account.

        Once this is in place any attempt to lobby outside of this environment is a criminal offence resulting in jail time a large fine and lifetime ban on lobbying. If the politician or civil servant involved didn't end the conversation and engaged in a discussion where they agreed to consider what was discussed then they should face misconduct in a public office charges.

        1. TheTick

          I'll agree with you that lobbying is (badly) disguised bribery as you say.

          My solution would be to remove the power from the politicians to make laws and regulations that gives these firms the advantages they lobby for.

  9. naive

    It is actually simple, but one needs to do it

    All companies, special US ones, report in the USA profit and revenues in a SEC approved format. Sales are often specified by region.

    So then it is simple, if the big US giants do not wish to cooperate, and avoid taxes by hiring half of Goldman Sachs to find loopholes, just issue laws allowing EU to use a formula:

    for instance, if EMEA sales are 30% of total world wide sales of apple in 2014, this translates into 30% of the net profit Apple had in 2014. So the EU is allowed to tax 30% of 13 billion dollar they reported for the SEC in 2014. With common sense this seems fair, unless they play nice and behave like the shop keeper on the corner, who pays more tax than they do. I am sure they wont pull back from the EU markets because of this.

    It will be interesting to watch how TTIP is going to influence this.

    1. MAPINGUARI

      Re: It is actually simple, but one needs to do it

      There is so much wrong with this I have no idea where to start

      1. naive

        Re: It is actually simple, but one needs to do it

        Perhaps it would be useful to perhaps give at least a few hints. It is hard to accept that companies like Apple have a revenue of billions in the EU, pay peanut tax here by siphoning profits to some tax haven, while in USA they report 13 billion of net profit.

        With the rules as i proposed, they can do as they wish, in the end they are going to pay their fair share, since taxation is based on the US figures they report over the company as a whole. So over 2014 Apple would pay 25% over 4 billion, instead of perhaps 50 million of tax avoidance fee they pay now to the tax services of Ireland/Luxembourg or the Netherlands.

        1. Anonymous Coward
          Anonymous Coward

          Re: It is actually simple, but one needs to do it

          > while in USA they report 13 billion of net profit

          It is funny -- In the US the compalint is the other way around -- Apple is hiding profits in Europe to avoid taxation in USA.

          http://www.npr.org/sections/thetwo-way/2013/05/20/185639686/apples-complex-web-helped-it-avoid-taxes-panel-finds

          I guess Europe just need a unified tax code...

    2. Tim Worstal

      Re: It is actually simple, but one needs to do it

      This is proposed as a solution. It's called "unitary taxation".

      The only real problem with it is that you've got to go around and entirely change the way that international tax law has operated for the past century. That's possible but ain't gonna be easy or immediate.

  10. Aristotles slow and dimwitted horse Silver badge

    Whilst I'm sure they should attend...

    They have no legal obligation to do so - as they are not breaking the law. Until Europe formally investigate and charge these companies with some form of tax crime - then its all hot air.

  11. All names Taken
    Joke

    So, so, so naive

    Bureaucrats Tsk!

    You humans, you never seem to learn do you?

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019