back to article UK taxman spent six times more with AWS last year than cloud firm paid in corporation tax

AWS has been accused of treating the British public like "mugs" after it emerged HMRC splashed £11m with the cloud giant last year, more than six times the amount it received in corporation tax from the US firm. In total, UK government has awarded the cloud arm of Amazon 36 public sector contracts worth £660m in the past four …

  1. N2 Silver badge

    And so it goes on...

    Until the law is changed and implemented correctly.

    1. SMITCH79

      Re: And so it goes on...

      "Until the law is changed and implemented correctly."

      So never then?

      Enforcement seems to the issue these days (even when they legislate properly, look at GDPR)

      Early days though, early days . . . . . . . . .

    2. DougS Silver badge

      Don't feel bad

      Amazon paid $0 in US taxes in 2017 (not sure if 2018 numbers are public yet) so you're doing better than we are.

      Clearly there is something very wrong with everyone's corporate tax code.

      1. Kabukiwookie Silver badge

        Re: Don't feel bad

        Apparently they received a tax rebate of $129m last tax period.

    3. streaky Silver badge

      Re: And so it goes on...

      The law can't be changed until we leave the EU. The taxes Amazon pay are a reality of EU membership. The right to pay tax wherever you feel like or is convenient for tax purposes is literally baked into the Single Market that many round here love so much. Can't have it both ways - this stuff keeps Luxembourg and Ireland solvent.

      1. Anonymous Coward
        Anonymous Coward

        Re: And so it goes on...

        Just like Trump supporters, you brexiters blame the other side for a problem of your own doing which the other side is trying to stop.

        The denial and hypocrisy is astounding.

        https://www.irishtimes.com/business/economy/eu-rules-to-eliminate-tax-loopholes-come-into-effect-1.3744565

        1. Doctor Syntax Silver badge

          Re: And so it goes on...

          "The denial and hypocrisy is astounding."

          Or sheer ignorance. Once you think you know the answers why go looking for facts?

        2. streaky Silver badge

          Re: And so it goes on...

          Just like Trump supporters, you brexiters blame the other side for a problem of your own doing which the other side is trying to stop.

          Yeah who is it that has had what BEPS and the EU directive do in law for years to the point that when they came out their law only needed minor tweaks to match? Which country was it that drove all that work at the OECD?

          Could it possibly be the UK? Nooooooo.. Not possible!

          By the way, none of that deals with the Amazon, Starbucks, Microsoft, Google, Apple et al issue in Europe that is SOLELY and COMPLETELY a function of the single market. If you can make sales anywhere for anywhere and pay tax where you claim regardless of where they're actually made and the thing that makes that a thing is a function of the Single Market then maybe it's possible, just possible, that maybe you need to get out of the Single Market aka leave the EU. I could be crazy, but if you see the panic that Ireland is in over this the reality should dawn.

          1. Roland6 Silver badge

            Re: And so it goes on...

            >then maybe it's possible, just possible, that maybe you need to get out of the Single Market aka leave the EU.

            Well given the Single Market is a few steps ahead of the WTO ie. because it only has/had 32 members (EU28 + 4 others) and so can move quicker than the WTO, it does make one question the Brexiteer belief that trading under WTO rules is going to be so much better. It can't be long before Farage, Johnson, Mogg et al decide the UK should also leave the WTO...

    4. Anonymous Coward
      Anonymous Coward

      Re: And so it goes on...

      Corporations don't pay tax. People do. How much tax do employees of AWS, or any "tax evading" multinational pay? It's simple maths, corporation tax comes out of the left over profits once people have been paid (amongst other deductions). In my company if I have a lot of profit in the bank at the end of the year, rather than give a chunk of it directly to the tax man, I pay myself a pay-rise. The tax man then gets his cut of that instead, and I'm better off.

  2. Anonymous Coward
    Anonymous Coward

    NPfIT

    Did Fujitsu ever finish suing the government for being thrown off that contract?

  3. fnusnu

    What has the amount of tax which they pay have to do with anything? They pay every penny the law says they have to.

    1. Gordon 10 Silver badge
      Mushroom

      True. But lobbying to change international tax legislation too hard for our policy makers, when lobbing a PR grenade to a news outlet is trivial.

      1. streaky Silver badge

        But lobbying to change international tax legislation too hard for our policy makers

        We're literally the only country in the world trying to actually get this done. Also leaving the EU would solve it easily anyway. Amazing what you could do by putting the current occupants of #10 and #11 out on the street where they belong - and the tax thing too.

        1. Anonymous Coward
          Anonymous Coward

          The trouble is, its all a balancing act.

          As part of the EU, we are part of a large market where big corporations can pick and choose where they pay their tax, under legitimate and legal frameworks, but by doing so, they have to deal with the whole market.

          Outside the EU, as a lone nation, increasing the amount of tax paid on profits, or drastically changing the tax regime so it has a negative effect on large multinationals, *might* still get almost zero corporation tax because if it costs more in tax than its worth, they can just close up shop and leave, then continue to operate from the EU, selling to the UK, making us pay VAT, import duty and shipping just to get items from Amazons special depot in France or Ireland. I mean, as it stands, you can buy from most, if not all, international Amazon stores.

          On the other hand, other actions could balance it out, lower corporation tax for example, and maintain the status quo, but its a gamble slightly in our favour because as a single country, we can react faster than the EU can.

          As we have seen from the Brexit "negotiations", you can want something all you like, but if the other side refuses, because they believe you will suffer more than them, you end up with a problem.

          It's not like companies have never left unprofitable or over-regulated markets before.

        2. Doctor Syntax Silver badge

          Here we go again, having to explain the obvious about the fact that for multinationals there's a competitive market in taxation.

          You attract business by having lower tax rates. If you're a country's finance minister you have to work out whether that's a good thing to do because your local businesses pay the same take rates as multinationals. If you have a large economy of local businesses lower tax rates mean you bring in less taxes. You might attract some big multinationals but their taxes won't compensate for the losses.

          If you have a small local economy bringing in multinationals is a double win. The multinational taxes more than cover the losses from local businesses so you're in the black and the lower tax rates help local businesses become more profitable. Having a small local economy means either having a small population for that economy to support or having a larger but impoverished population.

          Being in the EU there's no legal reason why we couldn't lower our CT rates to compete with Ireland or Luxembourg - after all, those two are also EU members. If we'd tried it in the past HM Treasury would have been greatly out of pocket because of the lower tax take from local businesses and VAT and/or income tax/NI would have had to go up and I'm sure you'd have complained about that.

          You could, however, be right about our having greater freedom outside the EU. Remember that the precondition for making money from multi-nationals is to have a much smaller local economy and if the population size doesn't change that means they each get poorer. Are you quite sure that's that you want to do?

    2. fnusnu

      I wonder why the downvoters don't bring a private prosecution if they think Amazon are evading taxes. Oh yes, because they aren't.

      I could go on to point out that an increase in tax on Amazon will simply see that cost being passed on to the government which is itself funded by the taxpayer, but they would likely downvote that too.

      1. SMITCH79

        If they can't play by the same rules (not every company hires PWC to find loopholes for them, some companies act ethically when it comes to tax) and be competitive then the market decideds for them and they lose business.

        Thats how capitalism is suppossed to work.

        Unfortunately like every other system the human race creates it becomes corrupted for the benefit of the elite.

        1. Anonymous Coward
          Anonymous Coward

          "not every company hires PWC to find loopholes for them"

          Yes, some hire KPMG, Deloitte or EY...

          The problem with our tax system (and the global tax system in general) is that we aren't good at dealing with individuals or companies with huge amounts of money that don't need to use it for large periods of time.

          Being able to move money from one country to another isn't a huge issue as long as tax is paid somewhere within a fixed time period (ideally one year to keep everyone happy around revenue vs profit vs tax). Having it sit in offshore accounts until it's needed is the current challenge.

          While AWS "builds" by spending a significant amount of their revenue and taxed on profit, arguing over the tax they pay misses the point about how other businesses built up their wealth and resources in the past.

          If the argument is over how Amazon are given unfair advantages over competitors in their business model either through poor compliance practices (i.e. making money off goods sold with no VAT) or underpaying warehouse/delivery staff, then make that the argument - don't use "low tax payments are unfair" as a proxy for other arguments.

          1. SMITCH79

            "don't use "low tax payments are unfair" as a proxy for other arguments"

            It's not about low tax payments being unfair its about the fact that employing these mechanisms to avoid tax are ethically repugnant. These companies don't have a low tax status they rig the system in their favour through political and financial means.

            Unfortunately for us the indivuals/groups who operate in this way are often in the elite. Capitalism is not a bad idea if it administrated properly but it's not at the moment. Who suffers and who benefits?

            I don't need to be told how to argue. I stand by my original comment AC.

            1. Anonymous Coward
              Anonymous Coward

              "It's not about low tax payments being unfair its about the fact that employing these mechanisms to avoid tax are ethically repugnant. "

              Revenues - expenditure = profits. Tax is on profits. If you inflate your expenditure by focussing on expansion of services and reduce profits in the interim, you also reduce your tax burden. Is that ethically repugnant?

              I suggested you were using it as a proxy argument because I don't see where the issue is with AWS's approach. Wanting a company to pay more tax if they are playing by the rules means you have to either change the rules or reassess your argument.

              1. SMITCH79

                "either change the rules or reassess your argument"

                Sure. But . . . . .

                How can the rules be changed when those with the ears of the policy makers are those who benefit from the rules (Regulatory capture). This is a problem that just seems to be getting worse and worse with the more Lassiez Faire approach to capitalism that has taken hold.

                If it went to a vote of the prolateriat (as a straight question) I'm sure we would want these companies/individuals pay tax at the specified rates but the truth is a lot of people don't understand how they achieve this and so just assume its the way it works.

                This isn't just about AWS its about all companies who reduce their profits by making loans to themselves and moving those profits out of the country they were made for the purposes of lowering their tax burden.

                You may think its fair, I don't. I won't be re-assessing my argument.

                1. Doctor Syntax Silver badge

                  You seem to be repeatedly missing the A/Cs point. Amazon has the reputation of reinvesting income to grow instead of taking on loans. That means that real profits, on which taxes are charged is a lower percentage of turnover.

                  You could, of course, replace taxes on profits with taxes on turnover but you then make businesses in markets that operate on low profit margins go under, either because they then run at a loss or they have to raise their prices and lose custom.

                  I agree that there are business models which rely on constructing internal trade so that the biggest mark-ups happen to take place in low CT countries and it may well be that Amazon's business model includes an element of that. I've also pointed out in another post that the competitive market in corporation tax on multinationals is tilted in favour of countries with a relatively small local economy and that's not something the UK should want to be in a position to take advantage of.

                  One point that is relevant in the present case is whether AWS (or, indeed any multi-national alternative) relies on performing the work in a lower tax country because that would mean transferring data and, given the nature of the data this ought to be a major concern. Given the US's attitude of "what's yours is mine" in terms of data there ought to be considerable concern about data sovereignty even if all the processing is carried out in the UK.

                2. Anonymous Coward
                  Anonymous Coward

                  "You may think its fair, I don't. I won't be re-assessing my argument."

                  OK, I'll put it very bluntly then. Your arguments are based around small companies based solely in the UK and don't reflect how multinational companies fund expansion.

                  If a company (in this case Amazon) invests a significant amount of money into the UK to start new businesses, then expecting them to pay a lot of tax in the UK will likely reduce the amount that is invested into the UK in the first place.

                  If we move away from the Amazon to other companies that use loans/intellectual property charges from overseas entities to reduce their profits (lets call this the Starbucks example), the challenge is that if the UK says this is morally wrong but doesn't change the rules, then the UK is clearly hypocritical as UK companies benefit from doing the same with their non-UK businesses.

                  Hence my argument that we either need to change the rules because we don't agree with how things are done at present (BUT we need to be very careful about the consequences to UK business) or re-think our own objections.

                  "You may think its fair, I don't. I won't be re-assessing my argument."

                  In my opinion, the current practices are fair or slightly favor the UK in the current model due to the UK's colonial legacy resulting in the UK having significant foreign assets. I do, however, believe that global corporate tax laws need to change to stop companies sitting on large pools of funds "in transit" avoiding both tax at source and tax in the companies country of residence, mainly because it results in both a loss of public funds somewhere but also that large amounts of money not being used for anything useful for long periods of time while companies hope for regulatory changes or tax holidays.

                  I acknowledge that this is not something that the UK can easily do independently and the best fudge may be higher consumption taxes (with exceptions for products classified as essentials to make it more progressive but I pray they would keep it simple) combined with lower corporate taxes to prevent things like the "double Irish with a dutch sandwich" providing any business benefits.

                  As for not being prepared to re-assess your argument, lets agree to disagree then...

                  1. SMITCH79

                    "lets agree to disagree then..."

                    I can agree to that. :)

                    I certainly take your points and would agree this is not something the UK could do alone without economic issues - we need a overarching consensus globally (but I'm not naive enough to believe that could happen in my lifetime). I also agree that (in the case of Amazon) they do re-invest but also take advantage of tax credits in the US (or in the case of my locale) subsidies from my government to build their fulfilment centres, avoiding tax is just is a step too far (along with the other issues you mention in one of your earlier posts)

                    Okay it is legal and you may think my view of "ethically repugnant" is hyperbole but if David Cameron (someone who I disagreed with about everything else) can call Jimmy Carrs tax avoidance morally repugnant then I think I can safely apply definition to Amazon et al.

                    Certainly I come at this from the point of view of smaller business operations but I do understand how countries offer attractive tax regimes to attract investment from multinationals and that it is a competitive market.

                    My view is if they want to operate in this country they pay the correct local taxes for their ongoing business operations and that the legislation should exist to enforce this. I'm also sure they could find the money/investment to build their own fulfilment centres if they want (and I'm sure they do) to do business here - I know we were originally talking about AWS. The fact that they seem to continually to have their hand out really sticks in my craw. Also they sometimes they lie about the quality/quantity of job opportunties they will be offering to obtain subsidies (Trump in Aberdeen for example - I live in Scotland so you can imagine my opinion)

                    Properly implemented taxation rules are important to me since (as I say) I live in an ex mining community in the West Coast of Scotland. I have seen many communities devestated and without taxation to improve public services the situation becomes more and more dire. I can only see this situation getting worse and worse and employing accountant acrobatics does not sit well with me. My father built up a business over many years, paid his tax and his employees shared in the profits. (Actually when he retired the employees were able to buy him out)

                    I could set certainly myself up with an offshore company and employ the services of a lawyer and accountant (my sister) to facilitate this but I don't because I genuinely believe that this approach just concentrates wealth back to the already wealthy when I believe in redistribution and closing the wealth gap. Access to better public services to me means better opportunites for those for those deprived areas and since I live in one this sets my agenda along with my fathers example. I am not an out and out capitalist (you might have guessed) but neither am I an out and out socialist. I believe capitalism can be a good system but it is being damaged by the many people who game the system for their own benefit.

                    Imagine if we all did what Amazon et al did, it would be a shit show. You may consider it a glib interpretation but I would take Greece as an example of what happens when tax laws aren't properly enforced. Short term gain, lotta pain later and I think thats where we are all headed with the system the way it is at the moment.

                    I agree that there could be unintended consequences regarding taxation on turnover instead and I remain to be convinced it is the solution (I need to look at it more) but I'm certainly not happy with the way it sits at the moment. In some cases I can see slowing company expansion (through proper taxation) may be a good idea since it allows regulatory bodies to get an idea of how the companies actually operate. This can lead to better and more appropriate legislation that in the end benefits us all.

                    I think this is very important in times of frontier technology companies/dispruptors although I'm sure some of my American chums would disagree.

                    I agree with the poster above you, I did miss your point yesterday (busy and harrassed) and thankyou for being blunt because I was certainly being that way.

                    Thankyou, it's nice to read a cogent and reasoned argument from the other side. It's a shame you went A/C (it would've been nice to know who you are), I'm going to try and recognise you from your writing style.

                    I still disagree with you though :)

        2. sal II

          Ethics

          "some companies act ethically when it comes to tax"

          Which company is that? You can't volunteer to overpay corporate tax even if you wanted. You will get a refund from HMRC.

          Don't hate the players, hate the rules.

          1. SMITCH79

            Re: Ethics

            Learn something about how tax avoidance works and then come back to me.

            My father ran a business (director/part owner) which paid all of its corporation tax at the specified (headline) rate (small business - 7 employees) Didn't make loans to itself (one of the favourite ways to avoid tax) and the employees shared in the profits directly.

            I don't hate the game, I hate the dicks.

            1. Boris the Cockroach Silver badge
              IT Angle

              Re: Ethics

              Quote

              I don't hate the game, I hate the dicks.

              I work for a small british based company.. 23 employees at the moment.... couple of million in turnover, if you want to annoy my tories forever boss , all you have to do is mention how much corp tax the likes of amazon et al pay

              "But its not evasion, it perfectly legal" comes the reply... yes because as lots of other people have mentioned , amazon et al lobby to have the tax code written to suit them, plus theres always that revolving door between government and big private companies.

              And the bitter irony for most people is being hauled over the coals by the benefits agency for mis claiming a £5 a month disability allowance, while the likes of amazon et al get away with billions.... sorry pay what is due after someone rewrites the tax code to exclude multi-nationals from paying any tax at all....

              1. TDog

                Re: Ethics

                The rules should be very simple. Whenever a company is challenged (threatened) with a Tax Process (I'll use that because there are lots of things it could have been) then the government should be required by law to prove that this is not part of any process that is accepted from any other organisation.

                And that is fine. Because then you have to apply it to everybody. Many years ago the Inland Revenue claimed that if you gave them your info then they would do your tax return. I asked them if they would give me every tax advantage available or merely give me whatever they thought I should get? Well they changed the wording afterwards which was a casual admission that they would rather stuff you than be hones.

                And only if they can show that exactly the same rules have been applied to the players who didn't pay the taxes, then they should be required to state exactly how it would have been impossible (other than accountancy, for every one knows that accountants are honest. Or simply incompetent, so as an after thought lets allow accountancy and their clever games to be copied too) for that company to have failed to have the benefit of those rules.

                Of course some companies will have better accountancy teams or lawyers than other companies. So what? The law should be equal to all, and it should be one of the primary duties of any government to ensure that that is the case.

                I'm not a socialist, nor am I a capitalist. If anything I am an egalitarian, which simply means there are no acceptable circumstances for money (capitalism), group fascism (often trades unions), or any other power group claiming special exemptions of circumstances. And the easiest way to do that is to simply extend any particular view or exemption to everybody. And it seems to me that that should be a duty of government.

            2. Roland6 Silver badge

              Re: Ethics

              >My father ran a business (director/part owner) which paid all of its corporation tax at the specified (headline) rate

              Then you will know that (UK) Corporation tax is a voluntary tax, the business owner has a simple choice: Declare the surplus monies as a profit and either distribute to the staff through a recognised profit share scheme or pay corporation tax, alternatively spend the monies eg. buy a new CNC machine and avoid/don't pay corporation tax.

              The big differences between your father's business and Amazon et al. are:

              1. They are HQ'd outside of the UK.

              2. They have non-UK resident directors.

              3. They have operations and sales in other countries.

              4. They have sufficiently large revenues to make it both feasible and worthwhile spending money on ways to save money.

              5. All of the above enable and permit them (according to international tax law) to move monies between tax jurisdictions, using all the well established and accepted normal tax practises...

              1. SMITCH79

                Re: Ethics

                "well established and accepted normal tax practises..."

                Sure but thats my issue. I know how it works and I don't like it (along with others). See my reply to A/C above for the reasons. It's just my opinion, I know the practical problems associated with change but I still think a change needs to come.

          2. Joeyjoejojrshabado

            Re: Ethics

            The companies that can't afford to do otherwise

      2. localzuk

        Evading vs avoiding. Illegal vs immoral.

        Entirely proper that people express disgust at a company not paying its fair share and causing its employees to need ambulances at 14x the rate as similarly sized employers...

        1. Arthur the cat Silver badge

          Evading vs avoiding. Illegal vs immoral.

          Who says avoiding tax is immoral? Anyone who has money in National Savings or an ISA is avoiding taxes. That's a significant part of the UK population.

          1. SMITCH79

            "Anyone who has money in National Savings or an ISA is avoiding taxes"

            These are capped (and therefore regulated in a sane manner). Not the same thing by a long way.

          2. Joeyjoejojrshabado

            You can also avoid tax by not making any money.

            1. Anonymous Coward
              Anonymous Coward

              I'm a tax avoider!!!

        2. LucreLout Silver badge

          "Government departments using AWS are seeing a 40 per cent to 60 per cent cost saving."

          So the GMB want us, the tax payer, to spend twice as much money in order to comply with the GMB's own morally bankrupt ideology? Ok, why?

          Service provision != tax collection. They're different things.

          Interesting to note that the union actively support, encourage, and provide services to members in order to avoid tax: -https://www.gmblondon.org.uk/benefits/guardian-taxation

          Not only that, but they seem to be avoiding millions in taxes each year themselves:- https://www.telegraph.co.uk/news/politics/10353397/Revealed-11-unions-make-millions-in-stocks-and-shares-but-pay-no-tax-on-the-profits.html

          So your position, given your views on tax avoidance, is that the GMB union are immoral and by extension then, so are all of their members? BTW, you'll find this applies to ALL of the trade unions, so I do hope you're not an "immoral" union member.

      3. jmch Silver badge

        "why the downvoters don't bring a private prosecution if they think Amazon are evading taxes"

        That's probably because us mere downvoters earn in a year what such a lawsuit would cost in a couple of weeks. As with many other things, one of the main reasons the system is broken is the reward structure. Why would the best tax lawyers and experts work on a fixed payscale for HMRC when they can earn at least 10 times as much working for a big consultancy or corporation? And why would parliamentarians risk their future well-paid directorships, pork, and electoral funding, when it's not them whose services are cut due to lack of tax income?

        I know, in both cases the answer is a sense of morals, civic duty and a spine, but we all know how often filthy lucre trumps that.

      4. Joeyjoejojrshabado

        Rubbish. They've already signed a contract. All Amazon need to do is pay their fair share of tax out of the millions that it is earning from taxpayers.

    3. jmch Silver badge

      If the law really says they have to pay 2.35% tax on profits* of £72.4 million then there's something wrong with the law. Equally probably there's something wrong with the way the law is implemented.

      *not even entering into the argument here of how much their expenses are being artificially inflated to have such a small profit, given that their UK revenue is probably in the high hundred millions or low billions

  4. BebopWeBop Silver badge
    Devil

    Amazons accountants and lawyer are obviously (probably) worth the money they must pay them

    1. Wellyboot Silver badge
      Alert

      Lawyers shouldn't have any way of avoiding country based taxes - So, do Amazons UK lawyers pay more tax than Amazon UK itself?

      1. LucreLout Silver badge

        Lawyers shouldn't have any way of avoiding country based taxes

        Why on earth would you think that? My local coffee shop is headquartered in the Caribbean for tax purposes. It's literally an owner ran one premises coffee shop in the high street, it's just that the owner knows someone who knows how to structure legal entities to reduce their onshore tax bill.

        You might not like that, you might even be positively miffed about it, but that doesn't confer any sort of obstacle to him doing it, and nor would it for a UK lawyer.

        1. Roland6 Silver badge

          > it's just that the owner knows someone who knows how to structure legal entities to reduce their onshore tax bill.

          And clearly having the means to do it cost effectively...

          One of the big things about legal tax avoidance is the cost of the arrangements. This was a big factor in why HMRC grossed less tax revenues when the government set the top rate at 50% than now when (due to HMRC lobbying) it was reduced to 45%. This change meant that it became either not financially viable or marginal for a comparatively large number of tax payers in the £150,000~£1M bracket to invest in off-shore tax avoidance arrangements.

          1. LucreLout Silver badge

            And clearly having the means to do it cost effectively...

            I've just done about 15 mins research with google and from what I can tell, I could set up a favorable tax arrangement via a couple of legal entities for about £1000, with an annual run cost of around the same (filing fees etc).

            Most people don't look at structured tax planning because they make faulty assumptions - it's too hard, it's too expensive, I can't do it etc etc And yet it's way more widespread than most would believe - your union does it, your favorite left leaning newspaper group does an awful lot of it, the BBC does stacks of it etc etc

            The reason collection rates dropped when the tax rate went up is neatly explained by the Laffer curve - you can have high taxes or high public spending, but you cannot have both. The higher the tax the greater the benefit in avoiding it, the lower the tax, the greater the benefit of paying it (simple, no grey areas, money switches to being tax paid rather than tax due internationally etc etc).

  5. gfx

    Sneaky

    Amazon charges the customer for VAT in their country (21%) and pay(?) a lower rate in Luxembourg.

    1. AMBxx Silver badge

      Re: Sneaky

      VAT's irrelevant on business sales.

      Problem for Amazon and VAT is overseas sellers not charging VAT. Government needs to make Amazon liable for any VAT fraud - they'd soon fix it.

      1. Roland6 Silver badge

        Re: Sneaky

        >VAT's irrelevant on business sales.

        Clearly, not running a VAT registered business: Just because businesses will quote prices excluding VAT, doesn't mean that VAT is irrelevant, quite the contrary - the price (ex. VAT) I quote is the minimum amount that you will have to pay for my services, how much of the VAT element you will actually end up paying depends wholly on your business.

        For example, I have a third-sector client, who deliver zero-rated services, they are able to fully recover input VAT, this factor influences their supplier selection criteria.

  6. Ben1892

    Double Irish with a Dutch sandwich

    Won't it be lovely when we leave the EU and companies that make money here have to pay tax here rather than licensing through tax havens

    1. SMITCH79

      Re: Double Irish with a Dutch sandwich

      You do know that most tax havens are an echo from the time of British Colonialism.

      When the empire fell the UK captured the world financial system by creating complicated financial (obfuscation really) structures that relied on the co-operation of these remaining colonial partners. Much like the Romans with religion.

      We'll be lucky if we don't become a tax haven and suffer the same sort of social/econmic problems that natives of these specific colonies endure.

      1. Yet Another Anonymous coward Silver badge

        Re: Double Irish with a Dutch sandwich

        Imagine a post-Brexit future where all that tax is avoided in the British Virgin Islands rather than the Dutch Antilles

        1. Wellyboot Silver badge

          Re: Double Irish with a Dutch sandwich

          Hurrah for the BVI - no change for the rest of us.

      2. Snowy Silver badge
        Flame

        Re: Double Irish with a Dutch sandwich

        From the looks of it is also I large reason why the rich want a no deal Brexit https://www.youtube.com/watch?v=_HDFegpX5gI

    2. Dan 55 Silver badge

      Re: Double Irish with a Dutch sandwich

      Won't it be lovely when we leave the EU and companies that make money here have to pay tax here rather than licensing through tax havens

      If only you had read something like this first...

      History of tax havens

    3. sal II

      Re: Double Irish with a Dutch sandwich

      If only taxation in the UK had anything to do with the EU...

      Contrary to what each consecutive UK Government in the past 30 years has told you - the majority of the UK problems are not related to the EU in the slightest. And their resolution is fully in the hands of Westminster without the need to "take back control".

      Large portion of the tax avoidance is done through ex-British colonies and current Crown dependencies.

      1. flokie
    4. Ben1892

      Re: Double Irish with a Dutch sandwich

      tbh I was expecting a reply along the lines of "but what about Jersey?" as I like a reasoned debate, but why is it Amazon EU S.a.r.L who bills me? Not sure that tax paid in Luxembourg will go to fixing the roads 1-Click deliveries use. Yes, I did read the reports and watch the video - the argument seems to be "we may as well give it to Ireland and Luxembourg because we won't get the tax benefits anyway"

  7. macjules Silver badge
    Megaphone

    Trotters in trough?

    Liam Maxwell ... joined AWS in a senior role in October 2018

    Alex Holmes ... was hired by AWS to work in its global public sector division

    Labour's Rebecca Long-Bailey, Shadow Business Secretary ..."We will clamp down on tax avoidance and evasion" etc etc

    Sounds like someone is angling for a job at AWS, no doubt as "Senior Advisor to the Tax Transparency and Enforcement Programme"

    1. Anonymous Coward
      Anonymous Coward

      Re: Trotters in trough?

      "Liam Maxwell ... joined AWS in a senior role in October 2018

      Alex Holmes ... was hired by AWS to work in its global public sector division"

      If the architecture and internal selling of government systems is being moved to cloud providers, is it any wonder the architects and sales people move?

  8. Tezfair
    FAIL

    hmmmmmm

    All that tax / profit going abroad along with jobs.

    1. }{amis}{ Silver badge
      Holmes

      Re: hmmmmmm

      All that tax / profit going abroad along with jobs.

      Some possible but not much, the U.K. is the worlds 5th largest economy and even a substantial recession likely wouldn't change that fact.

      All companies exist to make a profit and that means being where your customers are.

      The current problems with the internet giants stem from them exploiting loopholes debility written in the law under the assumption that any large company would employ lots of taxpayers, who would in turn fuel the economy with their wages.

      https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

      1. LucreLout Silver badge

        Re: hmmmmmm

        All companies exist to make a profit and that means being where your customers are.

        More correctly it means having a presence where your customers are that while being the legal entity through which your derive most of your income from your customers, it may or may not be the legal entity through which most of your profit is made.

        Lout UK sells dog turds to you for £50 per box. Lout UK buys those turds from Lout Cook Islands Ltd, for £40 per box. Lout UK also buys branding services from Lout Holland Ltd at a cost of about £5 per box of turds.

        The gross profit for Lout UK is then actually £5 minus any onshore costs of operation. The fact that Lout Cook Islands is paying only £10 per box of turds means it makes most of the profit and pays none of the tax. Lout Holland Ltd also makes £5 profit because ip isn't taxed there the way you think it should be (it's why Bonio and his band have their ip rights owned via their hedge fund in that locale).

        All of this is legal, all of it complies with EU and UK law. Your moral perspective on it is your own, not the person closest to you or anyone else in the world, so regrettably, the rest of the planet won't be using it as a basis for law.

        This won't be a popular intrusion of facts into this debate, but they are the facts nonetheless.

        1. Doctor Syntax Silver badge

          Re: hmmmmmm

          "The fact that Lout Cook Islands is paying only £10 per box of turds means it makes most of the profit and pays none of the tax."

          The reason it can afford to charge little or no CT, of course, is that it has a small population and the income it brings in is worth much more than is lost from the taxation it would have got from local businesses if it had tax rates comparable with the UK's.

          1. LucreLout Silver badge

            Re: hmmmmmm

            it has a small population and the income it brings in is worth much more than is lost from the taxation it would have got from local businesses if it had tax rates comparable with the UK's

            Yup - a small slice of a large pie is worth a lot more than a larger slice of nothing, or at best a very small pie. It's not really related to population size though - it's why the EU fears Brexit, because we could drop our trousers on Corp Tax and gain a huge hit on the revenue bong and their multinationals flock from their jurisdictions here.

            Ideologues from various bankrupt ideologies such as socialism or communism hate the idea of being a tax haven, but economically at least, it's the correct thing to do if you want to finance your public spending. Note, low CT does not require the abolition of CT, merely set it at a low rate in a legally stable nation.

  9. Anonymous Coward
    Anonymous Coward

    Waaaahhhhh why aren't we stealing mooooore from them??

    lets ignore the litany of other penny pinching taxes that one has to deal with operating out of the UK.

    If it hurts so much, how about proposing changes to your blood sucking tax code? Oh? Every business worth their salt will leave instead of offering up a vein to suckle on? How surprising.

    How about using the funding you saved by moving to AWS on an investigation into how to stop your residents from being stabbed to death while taking a leisurely stroll in London.

    Bureaucrats can pound sand.

    1. sal II

      Re: Waaaahhhhh why aren't we stealing mooooore from them??

      "Every business worth their salt will leave instead of offering up a vein to suckle on?"

      £1.7m doesn't buy a lot of salt, so if the public only stands to lose that much revenue - god speed...

      The reason why the tax code is not being updated for the 21st century mega corp reality is simple - corruption. The people that needs to make it happen are the very same that keep taking high paid positions in the Mega corps after 1-2 terms in office.

      1. werdsmith Silver badge

        Re: Waaaahhhhh why aren't we stealing mooooore from them??

        "£1.7m doesn't buy a lot of salt, so if the public only stands to lose that much revenue - god speed..."

        If you don't count all the people they employ and all the tax and NI those people pay and all the businesses that exist to supply and service them.

    2. Adelio

      Re: Waaaahhhhh why aren't we stealing mooooore from them??

      I presume you are not British, possible american?

      Look to your own country.!

    3. Anonymous Coward
      Anonymous Coward

      Re: Waaaahhhhh why aren't we stealing mooooore from them??

      Dear Mr. Trump, more Americans than Brits per capita are killed by knives.. You just don't hear about it because your cowboy gun culture swamps it out.

      Don't take my word for it, it's easily googlable.

  10. adam payne Silver badge

    "The report from the GMB is misleading. Here are the facts........

    So misleading you decide to not say anything about avoiding tax and instead sing your own praises.

  11. Kane Silver badge
    Joke

    UK taxman spent six times more with AWS last year than cloud firm paid in corporation tax...

    'How can this be?' said Lord Downey. 'Don't we pay our taxes?'

    'Ah, I thought we might come to that,' said Lord Vetinari. He raised his hand and, on cue again, his clerk placed a piece of paper in it.

    'Let me see now...ah yes. Guild of Assassins...Gross earnings in the last year: AM$13,207,048. Taxes paid in the last year: forty-seven dollars, twenty-two pence and what on examination turned out to be a Hershebian half-dong, worth one-eighth of a penny.'

    'That's all perfectly legal! The Guild of Accountants-'

    'Ah yes. Guild of Accountants: gross earnings AM$7,999,011. Taxes paid: nil. But, ah yes, I see they applied for a rebate of AM$200,000'

    'And what we received, I may say, included a Hershebian half-dong,' said Mr Frostrip of the Guild of Accountants.

    'What goes around comes around,' said Vetinari calmly.

  12. jmch Silver badge
    Facepalm

    Nice tax rate, if you can get it...

    "received £1.7m in corporation tax from AWS on profits of £72.4m for calendar 2017"

    so, effective tax rate of 2.35% ??

    The only way that is legal is if Amazon* are effectively writing or co-writing the tax rules themselves.

    Oh wait, thanks to their lobbyists and the cluelessness of parliament, they are are!

    *and their colleagues at <generic bigcorp>

  13. James Anderson Bronze badge

    Corporation tax should be abolished

    There are a number of issues here.

    1. Any large multi-national can move profits to a favourable tax regime -- legally. No matter how much you try to redefine illegal.

    2. They can afford seriously expensive lawyers and accountants to ensure this.

    3. Only "Domestic" UK owned and registered companies have to pay the full whack of corporation tax, so it ends up as a shoot yourself in the foot tax handicapping British companies.

    4. Small to medium size operations are the worst hit leaving them vulnerable to competition from the big boys,

    On a slightly different tack the "but we pay lots of VAT" defence does not hold as its the consumer who forks out the 21%.

    1. jmch Silver badge

      Re: Corporation tax should be abolished

      "Corporation tax should be abolished"

      That's an interesting approach. However it would need some accompanying adjustments. After all the argument against corporation tax is that only individuals should be taxed, and that in the end, company profits are either reinvested in jobs, infrastructure, research etc, or else distributed as dividends, or else retained on the balance sheet or used to buy back shares, in both cases increasing the stock price. In all these cases governments can benefit from increased taxation on individuals.

      So if you remove corporation tax, then you should consider dividend and capital gains income on the same par as employment income and tax higher bands at a higher rate. You would also have to include any and all company-provided perks as income.

      The problem is that it is so easy for the ultra-rich to set up holding companies and trusts in tax havens that own all the other companies, so dividends only flow out of corporate structures in tax havens. So you need an additional layer saying that companies are only non-taxable to the extent that their shareholders are domiciled in participating countries, and all participating countries have the same ring-fencing scheme AND an agreed minimum of personal tax

    2. Jellied Eel Silver badge

      Re: Corporation tax should be abolished

      Amazon explains it..

      "Government departments using AWS are seeing a 40 per cent to 60 per cent cost saving. They could choose more expensive or less reliable options, but that would be a disservice to their constituents."

      Not every option would include a company staffed with lawyers and accountants expert in tax minimisation. Thus allowing AWS to undercut any competitors that can't use the same financial engineering tricks, and thus removing that competition.

      Come the revolution, I'd like to see a spot of parliamentary privilege to sic the NAO on AWS in the guise of a deep, forensic audit on those government contracts.. Which would ensure taxpayer's are getting best value (rather than shafted) and highlight the tricks used to avoid tax.

      On which point, not sure moving profits is entirely legal. Moving costs, debt and expenses around the world is a standard way to convert profits into costs, losses and of course cash in a favourable tax regime. That kind of contrivance would seem like something politicians could address, but then politicians may just be thinking of a rewarding career post-politics.

    3. DougS Silver badge

      Re: Corporation tax should be abolished

      So because it is too hard to tax corporations properly they shouldn't be taxed? I guess you could say the same thing about billionaires, since all the same applies. Let's just tax the average person because it is easy to tax wage slaves and leave the 1% alone, amiright?

      I think abolishing corporate taxes would be fine so long as you tax stock buybacks, dividends, transfers of stock to employees (i.e. stock grants / options) and compensation over a certain amount. That way corporations would pay taxes when they transfer wealth out, which is the easy place to tax it. That leaves the problem of corporations that will just sit on a giant cash pile (like many US companies were doing of late) hoping for the laws to change - something would need to be done to address that.

      This isn't going to satisfy people where corporations in other countries are concerned though - a company making use of resources in a country (like Amazon using roads in the UK to help deliver its products) wouldn't be paying anything for their upkeep. You're basically transferring that onto the residents of the country, whether or not they use Amazon personally.

      1. James Anderson Bronze badge

        Re: Corporation tax should be abolished

        I am not saying they should not be taxed, just that corporation tax on profits puts an unfair burden on smaller locally owned businesses. It's just too easy for large multi-nationals to avoid.

        A tax on turnover would be more efficient and harder to avoid though rather painful for companies that were genuinely loss making.

        As for just taxing individuals. Sounds grossly unfair, but, this was the core of the Eire's tax policy. They sold a deal to the voters "we can bring jobs, but you will pay high taxes", and it worked, at least in Dublin.

        1. DougS Silver badge

          A tax on turnover is a terrible idea

          That disadvantages businesses with low margins and high cost of goods and labor like retail or restaurants, and greatly reduces the tax burden on high margin businesses that don't sell physical products - you know like software or advertising. A locally owned restaurant might do $1 million a year in sales and earn $50,000 for its owner if they're lucky. Add a 5% tax on turnover and they're out of business.

          A tax on turnover is a dumb idea borne out of the "look at all the money Facebook and Google make at high margins since they don't sell anything physical, here's how we can get money out of them" without considering the little guys.

          If you want to tax their business model, do it directly by instituting a sales tax on advertising.

        2. LucreLout Silver badge

          Re: Corporation tax should be abolished

          A tax on turnover would be more efficient and harder to avoid though rather painful for companies that were genuinely loss making.

          It would effectively lock almost all start-ups out of any market entry. You'd literally be handing the keys to the economy to pre-existing corporations. As far as ideas go, this one is terrible I'm afraid.

          The UK would become global prey for companies started elsewhere that could finance a market takeover in the UK. It'd kill the economy almost as quickly as socialism.

          1. Jellied Eel Silver badge

            Re: Corporation tax should be abolished

            The UK would become global prey for companies started elsewhere that could finance a market takeover in the UK. It'd kill the economy almost as quickly as socialism.

            You could argue that's already happened when the UK welcomed a book slinger that's since turned into a decimator of high streets. Reasons are simple, ie the cost of being a physical retailer paying rent, rates etc vs being a virtual retailer stuffing virtual money into a cloud rather than tills. Which also demonstrates one of the issues with traditional retail, ie landlords already use retail revenues as part of lease agreements. So rent a store for X per square meter, and pay Y as a percentage of your sales. See large sections of say, NYC's 5th Avenue shopper's paradise for what happens next.

            And then of course you can always buy up those distressed assets for peanuts, purely to book loses or tax credits, thus minimising your own tax liability, boosting 'profits' and removing competition into the bargain.

            For me, there's a lot of legal fiction and bizarre market behaviour. Amazon's the world's most valuable retailer and turned it's founder into the world's richest man, yet manages to turn billions in revenues into little to no profit, especially from operations in some of the world's largest markets. Why do shareholders and other investors allow it to pour money into the UK, when it's barely profitable?

            Answer of course is that's bollocks, but large multi-nationals are strangely reluctant to show territorial P&L in their consolidated accounts because that would show places like the UK are likely very profitable.. Yet thanks to the magic of financial engineering, those profits are easily disappeared. Put R&D in the UK for the tax breaks, and that's a cost centre. Build warehouses packed with low-cost biobots and that's another cost centre. Put your sales ledger somewhere where CT is low, and that's a cost. So's the tin in UK datacentres. So hardly suprising the UK makes very little profit under that kind of arrangement, and then there are all the other tricks, like intercompany loans, trading, IP licencing etc etc.

            Those are the kinds of tricks that allow coffee shops to survive, despite buying the world's most expensive coffee beans.. Unless you're a smaller coffee shop that can't afford to buy those ultra-premium Swiss roasts. And if you try that kind of trick, you'll likely face the wrath of HMRC for operating a contrived structure, or have the cash for tax specialists to defend yourself. But such is globalisation. Nothing will change quickly because it's not something national goverments can really fix, ie international tax treaties and accounting standards that permit this kind of global piss-taking.

            1. LucreLout Silver badge

              Re: Corporation tax should be abolished

              Why do shareholders and other investors allow it to pour money into the UK, when it's barely profitable?

              Why? Capital gains. The annual earnings that could have been profit are instead ploghed back into growth, allowing the firm to make even more money later down the line.

              Thanks to the foolery with the UK tax system, it's actually way better from a tax perspective to make capital gains over dividends.

              large multi-nationals are strangely reluctant to show territorial P&L in their consolidated accounts because that would show places like the UK are likely very profitable

              No, they aren't. See my earlier post on Lout UK vs Lout Cook Islands etc for why. They do raise a lot of revenue here, but revenue is not profit. You seem to grasp this further down your own post:

              "So hardly suprising the UK makes very little profit under that kind of arrangement, and then there are all the other tricks, like intercompany loans, trading, IP licencing etc etc."

              Those are the kinds of tricks that allow coffee shops to survive, despite buying the world's most expensive coffee beans.. Unless you're a smaller coffee shop that can't afford to buy those ultra-premium Swiss roasts.

              My local independent coffee shop does exactly this. They pull the same basic tricks as Starbucks et al do. The bigger multinational chains make damn sure that nobody using the same loopholes as they do loses a case in court - That's how the RIAA managed to kill Napster etc, by allegedly stooging a case which the defendant then lost, thus setting a precedent.

              Nothing will change quickly because it's not something national goverments can really fix, ie international tax treaties and accounting standards that permit this kind of global piss-taking.

              Absent a global flat tax for both people and corporates, which ain't ever going to happen, it's impossible to "fix". Should the company in Holland really not be paid for it's creative IP? Should the importer in Denmark not be paid for their work? And the bean roaster in Italy, should they not be paid? Why should the UK coffee shop be made to fund the operational costs of the entire supply chain? Obviously, if the same multinational "owns" all of the entities, it encourages price elasticity in the supply line, but that can be very hard to prove.

        3. Doctor Syntax Silver badge

          Re: Corporation tax should be abolished

          "A tax on turnover would be more efficient and harder to avoid though rather painful for companies that were genuinely loss making."

          Genuinely loss making businesses are in trouble any way. A turnover tax would push a lot of genuinely profitable-but-only-just businesses into loss. That puts their employees out of work. That then increases costs for the country supporting the unemployed. That pushes up taxes so the turnover tax has to go up and make more businesses unprofitable.

          Nothing's easy when positive feedback loops are involved.

      2. Anonymous Coward
        Anonymous Coward

        Re: Corporation tax should be abolished

        "That leaves the problem of corporations that will just sit on a giant cash pile (like many US companies were doing of late) hoping for the laws to change - something would need to be done to address that."

        Even with corporation taxes, this is the real issue with the current system for multinationals and billionaires. If you make the most tax efficient option to be sitting on a pile of money rather than investment/expansion, you hurt all parts of the current pseudo-capitalist system.

        We need money to be moving rather than sitting in bank accounts accruing minimal interest - whether the movement is returning to corporate HQ's for tax to be paid or into new investments that have greater risk/returns, I don't mind, but if multinationals/billionaires settle for returns of 1%, the wider economy will begin to grow at a similar rate and that will result in significant consequences for larger economies. See Japan and possibly the Eurozone over the coming years for more details.

        1. DougS Silver badge

          Re: Corporation tax should be abolished

          I agree but the best way to do that is to incentivize companies to distribute their earnings via dividends, which can then be taxed. Perhaps the best way to do that is to eliminate preferential capital gains treatment for passive investments like owning stock in a company you aren't on the board of, and allow deducting dividend distributions from the sales price to reduce capital gains taxes to make it dumb to

          retain earnings beyond what is needed for the operation of the business.

          The only investments that should get a preferential capital gains rate are those that you are actively involved in managing like a business you own/operate and a home you live in. Buying art, owning stock, buying an apartment building and paying someone else to manage it should not get preferential rates for capital gains.

    4. werdsmith Silver badge

      Re: Corporation tax should be abolished

      On a slightly different tack the "but we pay lots of VAT" defence does not hold as its the consumer who forks out the 21%.

      That applies to all the tax a company pays. Where do you imagine they get the cash to pay corporation tax? They pay more tax, they increase prices to cover that tax. Consumer pays.

  14. Arthur the cat Silver badge

    Taxpayers taken for 'mugs'

    I have absolutely no objections to being full of tea.

    [ElReg: We need a mug icon.]

    1. hplasm Silver badge
      Happy

      Re: Taxpayers taken for 'mugs'

      [ElReg: We need a mug icon.]

      ElReg we need an El reg Mug. Whatevere happened to them?

  15. FozzyBear Silver badge
    Unhappy

    Same thing happened in Australia a few years ago. The likes of Microsoft, Google and Oracle Paying a pittance in Corporate tax. Simple fact is, the larger corporations have the means (accountants & lawyers) of hiding the money so that they can "legitimately" avoid those taxes.

  16. Missing Semicolon Silver badge

    selling below cost.

    If the profit margin is so low, couldn't AWS be had for buying the business?

  17. Anonymous Coward
    Anonymous Coward

    Amazon are taking us for mugs

    Amazon are not taking us for anything, they don't care about "us", the mugs here are those who award such contacts (and they do take us for the mugs)

  18. Doctor Syntax Silver badge

    "Our procurement decisions, including contracts with Amazon Web Services, are based on value for the taxpayer, capability, security and reliability of service."

    No mention of data sovereignty there. Why not?

  19. Anonymous Coward
    Anonymous Coward

    It's OK, we know where the 11 million went

    "Pretax profits at the main Irish arm of online giant Amazon last year increased by 30.5 per cent to €39.46 million as revenues soared."

    "The company paid corporation tax of €11 million on its profits, leaving a post-tax profit of €27.6 million."

    The money stayed in the EU so all's well that ends well.

  20. Anonymous Coward
    Anonymous Coward

    A Good FoI question at this point would be...

    ... of that £11M, how much is on services that are live to citizens and/or civil servants vs. still in development/testing or just straight proof of concepts only?

    I think the reality of that would be much more concerning and scary given what the guy from Amazon said about saving tax payers money. It's only money well spent if the move to cloud was actually in any way successful!

    (anon for pretty obvious reasons)

  21. JoMe

    And will continue to be like this

    Because nobody wants to make a fuss. Idiots.

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