14 
Google and Amazon got a bit of a tongue-lashing yesterday over their suspiciously low tax bills in the UK. As part of a public corporate tax witch-hunt, various bigwigs from the companies got dragged up in front of a committee and subjected to some fairly justified and scathing abuse.
Amazon and Google combined have annual UK turnovers somewhere in the region of £5 billion; despite this, only Google paid UK corporation tax last year, and even then only a paltry £6 million. Amazon made things worse by being “deliberately evasive” during the talks, refusing to disclose its UK revenue even when asked really, really nicely.
Both companies use “creative” corporate structures to funnel profits out of the UK; Google is based in Ireland (not that it pays much tax there either), and Amazon similarly moves its profit out through Luxembourg. All of this is strictly legal, but as the Chair of the Britain’s Public Accounts Committee Margaret Hodge said, “We’re not accusing you of being illegal, we are accusing you of being immoral”.
Morality in tax is a fairly fine and dangerous line to tread, and it’s wise to remember that Google and Amazon do pay pesky things like National Insurance and other indirect taxes. Still, I’m not really sure that quite excuses dodging corporation tax to which the UK government is most likely entitled. Whether or not this public humiliation manages to shame them into coughing up remains to be seen, but I reckon this little dose of accountability is a step in the right direction. [Guardian and Reuters via Techradar]
Image credit: Teacher from Shutterstock
The Censorship Towel Blurs Out Your Naughty Bits
Caption This: Bootleg Chinese Apple Store is a Bit, Er, Naughty
TalkTalk Wants Nanny Ofcom to Put BT on the Naughty Step
If the UK Government wants to collect the Tax it should close the loopholes that these and other companies exploit. Of course since Governments of all colours in this country have rich corporate backers they won’t do this, they will just hope the media and public response will force the companies to pay up.
One of the many drawbacks of being in the EU.
Today’s Abu Qatada’s verdict doesn’t help it’s case either.
What does that have to do with being in the EU? Taxes are up to individual nations. Just look at France.
Read the article again. The problem here is not tax rates, rather its the free movement of money across borders within the EU. Even France’s tax can be avoided, if you move your money to Ireland.
And of course politicians will want cushy jobs on their boards eventually.
I don’t think it’s possible to close these loopholes on our own. We don’t operate independently like the United States or China.
1/3 of tax havens in British Territories, we are the problem. The EU’s new banking laws could actually force us to mend our ways.
“Google is based in Ireland (not that it pays much tax there either), and Amazon similarly moves its profit out through Luxembourg” – Staying in context, I don’t think any of the companies we’re talking about, are using British Territories as tax havens.
Google is not based in Ireland, thats just how it setup up its accounts.
The Cayman Islands are British Overseas Territory, clue is in their flag. Google, Apple and many other companies put their money there. Ireland is just a intermediately middle man.
I copied that from the article above
Nothing like taking the word of Gizmodo as in-depth professional journalism.
Google, giving evidence yesterday, said the Caymans and the guy from Amazon was not sure. A simple search would also show that.
Also do you think anyone in their right mind would bank money in Ireland. Their banks are bust.
To clear this up – being precise, Google has a unit in Dublin called Google Irish Holdings; Google Irish Holdings owns the right to Google’s search and advertising technology (among other things) for Europe, the Middle East and Africa. Because of this, all profits derived from the use of this technology are attributed to the offshore unit (in this case Google Irish Holdings). From there, as I understand it, Google uses another tax loophole to shift this profit to Bermuda, thus escaping even Ireland’s low 12.5% corporate tax rate.
And it is actually a base there, they have around 2,000 employees in Dublin, who sell advertising globally – they were credited with 88% of all non-US profits in 2009, somewhere in the region of $10bn. Not just a middle man
Your anti british sentiment seems quite profound.
Well there you go, proved your point by accusing my of being unpatriotic.
Its obvious you don’t know what you are talking about. Being British I would like my fellow Britons and the companies who operate here to pay their share of tax like the vast % of the population do through their PAYE and NI.
I don’t think its unpatriotic to want my country to collect the revenues it can so we can afford to educate our young, care for our old, build roads and maintain a defence force.
That’s exactly right. The politicians are just bitter that they can’t do anything about it.
I don’t think the government has a leg to stand on herre. It could be argues that they are equally immoral.
Closing the loopholes wouldn’t neccesarily be a good thing. If the companies move away then you lose tax revenue from employee wages and spending which is pretty significant. You also lose any economic value from investments the companies make in infrastructure and technology along with all the other little things that come with having a nationally based company.
Indeed and this is the line that governments always use when the public tell them to take action against corporate tax dodgers. So the government needs to decide which they are, a benefit or a liability, and not try to play it both ways.
The banner makes it look like they’re being rewarded
Yep, I wouldn’t mind seeing her after class, if you know what I mean.
“Morality in tax is a fairly fine and dangerous line to tread, and it’s wise to remember that Google and Amazon do pay pesky things like National Insurance and other indirect taxes.”
How wonderful for them, and we are so grateful so lets throw £5billion their way rather than put it into companies that pay tax properly, or not.
I’m really surprised there hasn’t been more of a public backlash over this, after hearing about Starbucks I’ve stopped getting coffee from them. The internet stuff is harder though because you don’t know that the others aren’t doing the same thing.
because morons say ‘good on them’ then wonder why we have to pay more for everything as a consequence.
i for one am trying to not use any of these companies now.
I still get the feeling that I’m only seeing half the picture. I could use play.com rather than Amazon but is Play.com not doing the same thing? At the moment I’m just not spending much. It’s going to suck if I have to Christmas shop in an actual store!
This is the main reason I’m uncertain on what to do over Amazon. If I shop online using one of the other larger retailers, there’s every chance that they’re doing precisely the same thing but haven’t been caught out yet.
I am virtually unable to go to actual shops on the high street due to anger management issues with the general public in such situations, so I’ve resorted to buying items directly from the manufacturers – but then who’s to say they’re not pulling the same stunt?
When we set up a newco, we were advised by a reputable firm to structure from Lux and license out, as they believed this is what VCs & investors were more interested in. We ignored that advice as felt uncomfortable with the structure – plus I’m English, appreciate the system and don’t want to be part of the problem.
Really hope they do close up loopholes, or at the very least have companies publicly show their tax schemes (in simple terms) so consumers have the choice between a) full British contribution product or b) manipulative corporate scumbag product.
richo. whats your company? so we know who we should buy from. i salute you sir!
its a tough one. on one hand save some £££ to buy from big business or spend extra to help the country out. all amazon and google etc are doing is haemorrhaging money from the country!
“I am virtually unable to go to actual shops on the high street due to anger management issues with the general public in such situations” – you win today’s quote prize, I shall arrange for it to be delivered to your home.
Why thankyou! I look forward to receiving my prize. Is it a real Bantha hide?
Lol actual store. Do they even make those anymore? Assuming you’d boycott Starbucks, I think your choices are now limited to Wilko’s or a Tesco Metro…
Not aimed at anyone in particular – Rant warning!!!
So you give up on Amazon and stop buying from the market sellers on there who do pay tax? Play.com are based in Jersey for one simple reason.
How about giving up Google? Are you really going to go over and use bing, bed rid of that Android phone and buy IOS or Blackberry (who both do the same)?
Or how about buying coffee from Costa Coffee, another company who may pay more tax, but still not the correct amount.
Things will never change because those in charge that make the rules are in bed with those that want them a certain way. If business drops for them, is not themselves who will feel the effects but those that are put out of work, and then end up claiming benefits instead of paying tax.
I do not in any way support the dodging of tax, but until we get morally correct politicans who will close the loopholes (and this would mean pulling out of the common market), its going to continue. And the chances of coming across a moral politician are the same as hell freezing over.
I think we can all agree that Apple is the bigest tax avoider out of anything.
Nope Amazon payed a smaller percentage.
You’d be surprised how much apple merchandise is sold through retail chains physically, rather than online, but Apple stores and other tech suppliers. Plus with the expense of apple goods, the amount of VAT on them is ludicrous, so the government is still getting a fair bit from them.
I don’t understand. We vote for people, they setup a tax system with loopholes for their mates to exploit and then we moan about it
The best fairest way is you have simple 1 for all tax system, every company pays the same tax, no loopholes, no get out of jail cards – and then we can just watch all the tax go to the european free market – nothing we can do in reality. A small percent of something is better than 30% of nothing. We need more corporate terrorists, that will sort it.
reminds me of the TV series Continuum.
This whole thing is ridiculous and teh reason the government/people have their feathers ruffled is becasue they don’t have the resources to do what is LEGAL themselves.
Everybody does or at least should try to minimise their taxes. Why this should be any different for a company is anyones guess.
Got to love Adwords…. The advertising banner that comes up for me on this page!
“WHY PAY MORE TAX! TAKE HOME 90% of your PAY!”
Well you can trust Google on this one token, looks like they know what they are talking about when it comes to tax avoidance.
Every corporate/medium business and everyone else that wants to turn a profit does it. If you have the option to LEGALLY save your business money. Why would you not want to do it? Tis the nature of man. If there is a hole. He will take advantage of it
Bit more than that tokes, if you are a plc with shareholders you are legally bound to do the best job for them (since they own you). This makes such loophole exploitation mandatory unless there has been a vote by the shareholders not to do so.
Not a tech company, but I love the fact that Starbucks tried to convince the MPs they’ve suffered 15 years of constant loss in the UK. What perseverance in the face of diversity! Stiff upper lip and all that, old chap!
Adversity I think, not diversity.
That too