Google UK coughs up £130m back taxes. Is it enough? Google is to pay £130m to settle a tax dispute with the British Government over how it account for revenues booked in the UK. More importantly for Treasury coffers Google will now "pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our U.K. business,” a Google spokesman wrote in an email …
No it isn't, ot is an end to being able to get the correct amount of tax against 10 years of mega profits.
These non tax paying corps distort the would commercial world, not paying tax means they have 20% free money to buy smaller businesses to their advantgae, apply pressures in others and make more oligopolies.
And you are one of many falling falling for their shite.
"And you are one of many falling falling for their shite."
Do you Daily Mail readers that scream about all of the "tax avoidance" really think that they could continue operating in the country for a decade without the government stamping on them?
The behaviour doesn't seem to be moral, but it is following the laws. The problem is not the likes of Google, it is deficiencies in the tax laws that Google (etc) is showing up.
The problem with it being a deficiency in the tax laws is that makes it the government and the MPs fault and they can't admit to this.
The international tax system is simply no longer fit for purpose.
Now if I work in India I have to pay an Indian withholding tax. That is I have to pay Indian tax on the work I do there, they will then give me a certificate that says I've paid this tax and I can then claim this back against any tax the UK authorities might want to charge me on the same piece of work. If Indian tax is higher than UK tax, I lose out.
Now this strikes me a much more sensible way to work in an international environment. If Google (and all the others, it ain't just Google) had to pay UK corporation tax on work done in the UK and were then given a certificate to hand to the Irish authorities that says they've already coughed up this much. Then the UK would get the tax due on the UK bit of business. So instead of paying the lower rate of tax between the 2 countries, they have to pay the higher one.
Of course there are still a million and 1 tricks played by accountants.
So for example Starbucks claim that Starbucks UK makes no profit on any coffee sold in the UK because for every £1 worth of coffee they sell they have to pay £1.01 to Starbucks Logo Inc of some tax haven somewhere. This sort of thing is just pure bollocks and should be outlawed. Money spent of real R&D should be recoverable or there will be no new products, but money spent on other spurious bits of IP shouldn't.
"So for example Starbucks claim that Starbucks UK makes no profit on any coffee sold in the UK because for every £1 worth of coffee they sell they have to pay £1.01 to Starbucks Logo Inc of some tax haven somewhere. This sort of thing is just pure bollocks"
Pure bollocks indeed, since that's just fiction. Starbucks didn't make a profit in the UK because they paid too much for their leases, end of story. They paid the market rate for their coffee (which we know because they also sold coffee to others, at the same price), as the law requires them to do - and if they hadn't, then they'd be moving profits _from_ Switzerland _to_ the UK, since their coffee purchasing and processing does actually happen in Switzerland (along with most of Europe's).
This really is all just some not very well-disguised antisemitic propaganda, and it's a crying shame that so many gullible dupes like you have fallen for it.
Maybe they should have fought against the 20million euro EU fine which found they did exactly that (along with other such scams). The only reason coffee trading is done in Switzerland, is the same reason metals and other goods are traded there - THE TAX ADVANTAGE.
So rather than your ridiculous conspiracy claims how about writing some actual facts...
"Starbucks Manufacturing, based in the Netherlands, is the brand’s coffee roastery in Europe. It sells and distributes roasted coffee and ancillaries Starbucks outlets in Europe, the Middle East and Africa. The investigators reported that Starbucks Manufacturing has paid a ‘very substantial’ royalty to a UK-based group company for ‘coffee-roasting know-how’, and was also found to pay an inflated price for its green coffee beans, bought from a Swiss-based group company.
They said that the royalty for ‘know-how’ could not be justified, and that the unrealistically high price the roaster was expected to pay to buy its green beans from another group company meant that the roaster could not actually generate sufficient profits to pay the ‘know-how’ royalty.
This is illegal under EU law and the European Commission has ordered the Netherlands to recover the unpaid tax from Starbucks, and to cease the tax benefits the group previously enjoyed."
also see here ... http://www.theguardian.com/business/2015/oct/21/starbucks-and-fiat-tax-deals-with-eu-nations-ruled-unlawful
There was nothing about Jews or Nazis in the article at all, you must have reading between the lines down to an art form.
[To the sane people: yes I know he's a mindless troll, but I'm curious to see how he can stretch logic to such a breaking point]
DaveDaveDave - be civil, thank-you.
On the anti-semitic propaganda accusation - I can detect no proxy here for "Jews control the Federal Reserve / world financial system" madness.
You have done your fellow commentard a disservice - to the point of trolling.
If I were to hazard a guess it could be that there are large sections of Mein Kampf that read like the anticorporate conspiracy bollocks you can find depressingly easily on the Internet. Just replace 'World Jewery' with 'New World Order' or 'bankers'. We all love a boogeyman on which to blame all of society's ills, especially if they're rich.
That said, Google need to pay some damn tax.
Is it the same reason that Starbucks started coughing up, despite the fact that they hadn't broken any laws as they are written, the bad reputation they got was costing them business and that lost business was worth more than they would have paid tax. When they paid they made a public fuss about it so everyone knew.
So, stop buying Apple, stop using google, stop using any of these companies that are taking the piss.
We don't hear much about Microsoft? What's with them all these years and licence fees?
I now understand!
Davedavedave is a marmotte ( see YouTube)
Marmottes live in Les Deux Alpes in France
Every Summer Jews go on a pilgrimage to Les Deux Alpes to wander on the downhill mountain bike trails and to test there faith in god that they won't get flattened by someone doing 50mph down the track.
If you don't believe me you can Google it which is why criticising Google for being tax dodging scum is anti semitic.
At least that's how Davedavedave tells it to his therapist. ..
Perpetuating the VAT myth. "businesses now have to pay VAT in the country of the consumer buying the goods not the business."
This is incorrect. Companies DO NOT PAY VAT.
The new rules mean that VAT they COLLECT from CONSUMERS has to be returned to the country in which the consumer paid the VAT. I.E. they can't collect VAT from the UK and pay it back to Luxemburg. The question is of course did they collect 20% from the UK and pay Luxemburg 3-17% depending on product/service.
What problem? this is quibbling over semantics.
Companies charge VAT on their products and services and they pay VAT for the products and services they buy. When there is a surplus - and in Amazon's case this will be vast - they pay the difference to the relevant authority.
The change of VAT rules could mean that retail customers end up paying a bit more for their geegaws. But enough to suppress demand? Amazon would be unaffected in such a scenario - or more likely would as it is so dominant in Europe that benefit at the expense of weaker competitors.
Corporate tax is the now big battleground. I don't see Amazon ever paying much here - it will just build some more data centres, or buy some more businesses, or invest in warehouse robots. All good things, of course.
Again you proagate the myth. It's not semantics as you get the line "They don't pay much corporation tax, but at least they pay VAT" which makes them appear less avaricious.
"Corporate tax is the now big battleground." It might be, but you put VAT in the mix and VAT is not a corporate tax, they do not pay it. < That's a FULL STOP.
They collect it on behalf of Govt's, you talk as if it's a tax on companies, or in the same breath as company taxes and people will think it is a company tax when it is not. It is the same when companies talk about the NI they pay when that is not a company tax either, for good or not, it's an employment tax.
Don't know where the demand supression came from.
You don't see Amazon ever paying much tax here, OK, so what happens when NO company pays tax here?
Do I assume people with such views are paid enough to have private health insurance, pay for private schools. Who builds the roads, private companies and we have tolls everywhere. Who stops your twat neihbour buliding a 3 storey extension to block your light has a kennel compond with 500 howling dogs and starts drug dealing filling your street with people who might not agree with you living there?
I guess the haves move out and leave the rest living in Detroit?
They do pay their employees though, and their employees pay income tax. In fact in most cases the employers pay the income tax on their employees salaries "as they earn".
The problem for the government is that if google decided that they didn't need that humungus new place near St. Pancras then there would be no income tax.
If Amazon decided to deliver all their sales from the continent, then there would be another stack of people who need benefits, and another load of income tax that wouldn't come into the exchequer.
It's a ransom.
'They do pay their employees though, and their employees pay income tax. In fact in most cases the employers pay the income tax on their employees salaries "as they earn".'
First sentence correct, second sentence incorrect. It's much the same as VAT; they're tax collectors, at their own expense, on behalf of HMG. They're also tax collectors on behalf of HMG in respect of employees' NI contributions. But they do pay employer's NI.
However it's fair to say that they are responsible for generating income tax and VAT by providing employment and selling stuff. They will also be spending money on goods and services which will also result in income and corporation taxes (they'll also be charged VAT but this will be offset against the VAT they collect).
They do pay their employees though, and their employees pay income tax. In fact in most cases the employers pay the income tax on their employees salaries "as they earn".'
No - they largely pay the minimum wage so their employees pay no tax and are almost certainly in receipt of some government subsidy like housing benefit. The number of companies that are subsidised to rip us off is rising by the hour!
"This is incorrect. Companies DO NOT PAY VAT."
I am almost 100% this is not technically correct either. It varies with the company size and the country.
Companies:
- do not have to pay VAT on some purchase (if both side have a VAT number and can sell VAT free for the good concerned). This gets even more complicated for purchase across countries
- have to pay VAT on certain purchase, but can claim it back on their VAT balance with the tax man.
- cannot claim back VAT on all expenses (e.g. it used to be the case to not be able to claim back VAT on French motorway tickets and I think, still to date, you can only recover a part of VAT on petrol in travel expenses)
- in the UK, on small companies, you cannot claim back VAT on many expenses (I am just thinking of some expenses where we cannot claim VAT back with building free-holding company I belong )
I am not a qualified accountant but I think what is being said here is that VAT does not appear on a company's Accounts, other than in the Balance Sheet as an amount that has been collected by the company which is to be passed on to HMRC. VAT Registered Companies are nothing more than collecting agents for HMRC.
There are companies out there who produce zero-rated goods who receive regular payment of their Input Tax from HMRC because their Output Tax is zero. (Food companies for example).
so why don't we just annex the Caymans and Bahamas and make them subject to UK law? The Bahamas could presumably have their independence reversed by an Order in Council as the queen is head of state, while the Caymans are still a British overseas territory and Parliament could impose laws - or again an order in council could impose British law.
This post has been deleted by its author
The Cayman Islands was created as a tax haven by the UK govt, which still has ultimate jurisdiction.
This recent docu (still on iPlayer) put this point very nicely during the last 10 mins of the prog:
http://www.bbc.co.uk/iplayer/episode/b06wrt2d/britains-trillion-pound-island-inside-cayman
Conspiracy theorists might also like to imagine that keeping the Cayman population well fed and infrastructured is part of the US-UK axis defense policy.
"To put this in context, the company paid paid £20.4m in taxes in 2013 on sales of £3.8bn"
And what context is this?
Remember, corporation tax is paid on *PROFIT*, not *SALES*.
Why is it every time tax is discussed, two numbers that are completely irrelevant to each other are entered as some kind of evidence?
@Graham Triggs
And if they declared some profit in the countries where they extract the money, this wouldn't be an issue.
As I used your IP i.e "@Graham Triggs" in this post, which tax evading shell company will internally charge me 99.999% of the revenue generated by this commercial posting?
These are no loop holes, they are there by design. Tax havens were invented by the UK, but I'm not sure whether 'they' think they might be out of control with the exploitation by mega corps and the growing voices saying something needs to be done.
Still the new spying bills will let Govt's know who to silence if the shit starts hitting the fan and a big way.
So, 20.4million corp tax implies around 52million profit which is around 1.3% of the quoted 3.8billion turnover. Turnover sufficient to keep f#ckloads of people employed, profit enough to keep the shareholders happy, tax enough to keep the exchequer on side. Don't know what the fuss is about. Yeah thanks for the £130mil bunce, it'll come in handy right about now. Don't do it again though, otherwise keep up the good work.
Any accountant can make profits dance anywhere they like, for a multinational.
You can reduce profits in the UK by charging the UK firm a fee for use of IP, but ensure that said fee winds up in a place not taxed.
Google's global margins are around 27%.
Any sensible tax system would look at the UK sales, and if the company was declaring lower margins, simply tax the company as if it's UK margins reflected the global ones.
At a stroke this would remove any incentive for companies to structure in ways that focused on tax, but would have no effect on structure for logical business purposes. E.g. if Ireland has the best sales staff or L'burg the best IP lawyers, keep using them.
It's also something that every other country could implement as well.
Ok, I'll accept that a tax system along those lines could be fair - it would also have to say that if the UK company is seeing higher margins here, it also gets to pay tax as if it's UK margins reflected the global ones, and will not face any double taxation from anywhere else.
What if the costs are such that it's cheaper to pay an L'burg lawyer to do the UK company's UK legal work in Luxembourg? Costs will go down if the work is done there, so profits increase, taxes go up? I'm sure no-one will complain about any work that could be done here going overseas because it's good for the tax system ;-)
@anonymous coward
Your L'burg lawyer thing is irrelevent. In fact it's worse than that because right now they can, and do Uk co legal work for MORE than a Uk lawyer, but the tax advantage of funnelling millions/billions through L'burg makes it sensible to hire them.
The L'bourg lawyer is relevant - as you've pointed out, they can charge more (etc) , or less. Either way, if what you want is to stop the funnelling of millions / billions through those lawyers, then make the tax system here simpler. Remove the thousands of loopholes then, and more importantly, remove the anonymity shields for money moved through law firms. [The lawyer can charge more or less, I don't care - as long as the rules are consistent: if a company's margins are below their global average, then tax them less, if they're higher, tax them more. Both sides of that particular coin, or neither]
While we're making changes, can we please stop MPs grandstanding about who pays what, as if they are somehow better than anyone else, commenting from their duck ponds, their relatives' houses, and so on [and, to any MPs reading, yes, that's a while ago. I don't care - until you've all paid back all expenses that the rest of us don't get] /rant
This has all the hallmarks of what went on about 10-20 years ago with "big oil", "windfall profits", and "obscene profits" that were in the media at the time. The governments (and not just the US) reacted and started changing tax laws. Not all governments, and the tax laws were not done uniformly which allowed for loopholes and ways to weasel a bit with the numbers. The reason things are imbalanced has to with politics, elections, and sovereignty (along with national pride, etc. It took some time, but the accountants are sharper than the governments and have figured things out.
What is probably needed is for the governments to sit down together and sort it out. Not just a few, but, for example, the EU, many countries that run their own laws. They should be uniform laws one would think.
But, if they all worked to together (impossible dream) then came up with a uniform tax code, we wouldn't be seeing these things.
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