Re: Tax allowance for costs is a grace
Adding another revenue based tax is really just increasing the effective VAT rate by stealth.
No, not exactly.
Amazon like other global countries play games.
The classic is Starbucks...
They buy the coffee from the source, ship it to a company that is a wholly owned subsidiary in a low tax country. Then they have the shops buy the coffee from that company (sole supplier) at an inflated price as to capture as much revenue at a lower tax rate.
Here's an example.
Suppose you pay $10.00 a pound for Starbucks coffee.
Starbucks buys the coffee for $1.00 a pound in Columbia or wherever the coffee is grown.
If they shipped it directly to your country, they would have a profit of $9.00 which is taxable in your country.
Now suppose instead, they ship the coffee to a wholly owned subsidiary in a different country which has a lower tax rate. This company purchases the coffee for $8.00 a pound capturing a profit of $7.00. It pays taxes on the $7.00 profit. It then sells the coffee to the local company store for $9.00 a pound, which still sells the coffee to you for $10.00 a pound.
So the local country collects taxes on $1.00 profits and Starbucks retains the delta on the difference in tax rates * $7.00.
All done in the name of share holder revenue back in Seattle ... ;-)
If you don't like Coffee, try advertising. Google's office is in Ireland. So when an ad is sold in France, viewed only in France, Google claims that the transaction took place in Ireland so that they get taxed at a lower rate with the money flowing to Ireland. The only tax revenue France sees is on the 'representative' who assists in the transaction... his/her salary.
The point is that accountants game the system to reduce taxes and costs to retain as much revenue as possible.