EBay 'pays £1.2m in UK tax' on sales of £800m(bbc.co.uk)
bbc.co.uk
EBay 'pays £1.2m in UK tax' on sales of £800m
http://www.bbc.co.uk/news/business-20022365
16 comments
I am aware of how this is done in large companies, and usually they set up their financial headquarters in countries with low corporate tax rates, such as Switzerland in Europe, or Singapore in Asia, then build up connections with their operations in surrounding countries using "commissionaries" (not sure if the english term is correct) status, meaning that most revenues are transferred to the financial headquarter and then the headquarters pays back for the costs of doing business (salaries, rents, material expenses) to each country operations. This saves litteraly billions of tax dollars and it is perfectly legal where it is practiced. Where do you think politicians put their money, by the way?
It's very natural for private companies to reduce costs where possible, and reducing taxes is certainly a clever way to do so. This is, I believe, very positive, as it shows to the countries with high tax rates that they are missing out on tax dollars simply because they are making it way to expensive for large corporations to operate that way. This means any tax increase (like the ones suggested recently in France) will more likely hit the small and mid-sized players who do not benefit for the same know-how and scale to manage their tax cuts efficiently -> therefore reducing the actual benefit of further raising taxes. The fact that these practices remain legal puts a stop on inflating taxes gaps between countries as well.
By the way, avoiding taxes LEGALLY does not mean it is "ethically" corrupt to do so. I, for one, consider that taxation has very little ground when you see how much of the money the State collects is wasted in so many ways, through poor management, bad investments, poor efficiency, making war (that only a minority approves of), and seen how much power you have to change anything about it. On the contrary, limiting the growth of the amount of cash controlled by the State should be considered a good thing, in absolute terms.
It's very natural for private companies to reduce costs where possible, and reducing taxes is certainly a clever way to do so. This is, I believe, very positive, as it shows to the countries with high tax rates that they are missing out on tax dollars simply because they are making it way to expensive for large corporations to operate that way. This means any tax increase (like the ones suggested recently in France) will more likely hit the small and mid-sized players who do not benefit for the same know-how and scale to manage their tax cuts efficiently -> therefore reducing the actual benefit of further raising taxes. The fact that these practices remain legal puts a stop on inflating taxes gaps between countries as well.
By the way, avoiding taxes LEGALLY does not mean it is "ethically" corrupt to do so. I, for one, consider that taxation has very little ground when you see how much of the money the State collects is wasted in so many ways, through poor management, bad investments, poor efficiency, making war (that only a minority approves of), and seen how much power you have to change anything about it. On the contrary, limiting the growth of the amount of cash controlled by the State should be considered a good thing, in absolute terms.
What annoys me about articles like this is that people tend to get angry at the corporations.
What do you seriously expect them to do? They are entities that exist to maximize profit. The only time we should be angry at corporations is when they actually break the law.
When corporations are paying low taxes and doing so legally; it's politicians we should be angry at.
What do you seriously expect them to do? They are entities that exist to maximize profit. The only time we should be angry at corporations is when they actually break the law.
When corporations are paying low taxes and doing so legally; it's politicians we should be angry at.
It's legally fine, but ethically corrupt, and ultimately means the country you are doing business in will decline.
Pay your taxes. And governments - fix these issues, which are only going to increase as we shift to more and more virtual services.
Pay your taxes. And governments - fix these issues, which are only going to increase as we shift to more and more virtual services.
> ethically corrupt
There is nothing ethically corrupt over paying the taxes you legally owe. There is no ethical or moral duty to pay more than what you owe.
Do you hire somebody to do your taxes? I do. Am I ethically corrupt because I take measures to make sure I don't pay more than I have to?
There is nothing ethically corrupt over paying the taxes you legally owe. There is no ethical or moral duty to pay more than what you owe.
Do you hire somebody to do your taxes? I do. Am I ethically corrupt because I take measures to make sure I don't pay more than I have to?
Sigh, another story of "outrage" about how a company is legitimately avoiding taxation.
Guess what, if you are an international company you can take advantage of the rules that the local politicians put in place.
I ask people though what do they really want? Do they want Ebay to pay 45% in tax to the UK so 350M pounds of tax revenue from Ebay? Then the next complaint will be "Gee nobody does business in our country!" and you have to take the train over to France or something to buy stuff from Ebay.
So the actual choices are "access to ebay" or "no access to ebay" which do you want?
Guess what, if you are an international company you can take advantage of the rules that the local politicians put in place.
I ask people though what do they really want? Do they want Ebay to pay 45% in tax to the UK so 350M pounds of tax revenue from Ebay? Then the next complaint will be "Gee nobody does business in our country!" and you have to take the train over to France or something to buy stuff from Ebay.
So the actual choices are "access to ebay" or "no access to ebay" which do you want?
Do you really believe that if eBay had to pay higher taxes in the UK they would simply pull out, or that another company wouldn't fill the niche?
Oh. Right. I guess we're "punishing success" (or some other horseshit terms) by expecting companies to pay their fair share in taxes. And even though corporate tax laws are written in large part by these very same companies, I'm sure we should regard them as completely legitimate, as well.
What an absurd argument.
What an absurd argument.
I hear you, but to make your argument you have to define the term 'fair share'. If you take the working definition that 'fair share' is 'all legally owed taxes' then guess what, all these people are paying their 'fair share.' So do you see the problem? You have an internal definition of 'fair share' which is inconsistent with what the folks who govern the UK have codified as 'fair share.' Is that Ebay's problem? Or is it yours?
To say that a 'fair share' is the taxes prescribed by the current laws is ridiculously circular. Of course it's the _intention_ of laws to be fair, but no one can claim with a straight face that the current loopholes are actually fair. It's quite obviously unfair because larger companies with more money get away with paying less.
The problem with these loopholes is an international one; countries screw each other over with it, and it's difficult to pressure them into closing them.
The problem with these loopholes is an international one; countries screw each other over with it, and it's difficult to pressure them into closing them.
My claim is that the definition of 'fair share' is codified by the laws on taxation. If the people don't agree with that code they should change it. An example that was local to me was California changing their laws on taxation such that citizens buying from Amazon would not be able to avoid paying local sales tax. Amazon did however threaten to not sell to anyone in California (which is kind of a hollow threat since California is huge market). Californians now pay sales tax on their Amazon purchases.
I'm pretty sure "corporations writing their own tax laws" is society's problem, and is indicative of a much bigger problem with capitalism in general.
That would be a problem, and it may be the case in the UK, I'm not familiar with their legal institutions, in the US the only people empowered to 'write' laws are elected legislators.
Now some will say "Corporations elect legislators" except that isn't true at all, at least not in California. The only thing corporations and so called 'super pacs' can do is throw money at getting someone elected, and Meg Whitman proved that no matter how much money you throw at it you can't buy an election (at least not yet). The thing that gets bad politicians elected in California is voter apathy, you see most of our election races are decided by a few percent of the counted vote, and the counted vote is nearly always less than 60% of the registered voters, and sometimes less than 50%. In a number of races each year the incumbent runs unopposed or against an opponent who has no interest in actually being elected. If a small fraction of those apathetic voters actually voted, they could remove any and all of the incumbent politicians. But they don't. And they often don't because they have been told that their votes don't count, and that all of the elections are rigged by who has the most money. And that is something the corporations who like it this way, are very good at doing. Getting 'news' stories out to the voters about just how ineffective and worthless their votes are so don't bother getting out of bed, just stay home, it won't matter anyway.
The 99% could effect instant regime change in the US by actually voting. And they don't. And yes that is society's problem as you so aptly point out. But it has absolutely nothing to do with capitalism.
Now some will say "Corporations elect legislators" except that isn't true at all, at least not in California. The only thing corporations and so called 'super pacs' can do is throw money at getting someone elected, and Meg Whitman proved that no matter how much money you throw at it you can't buy an election (at least not yet). The thing that gets bad politicians elected in California is voter apathy, you see most of our election races are decided by a few percent of the counted vote, and the counted vote is nearly always less than 60% of the registered voters, and sometimes less than 50%. In a number of races each year the incumbent runs unopposed or against an opponent who has no interest in actually being elected. If a small fraction of those apathetic voters actually voted, they could remove any and all of the incumbent politicians. But they don't. And they often don't because they have been told that their votes don't count, and that all of the elections are rigged by who has the most money. And that is something the corporations who like it this way, are very good at doing. Getting 'news' stories out to the voters about just how ineffective and worthless their votes are so don't bother getting out of bed, just stay home, it won't matter anyway.
The 99% could effect instant regime change in the US by actually voting. And they don't. And yes that is society's problem as you so aptly point out. But it has absolutely nothing to do with capitalism.
Theres another side to the voter apathy story though, which you haven't fairly covered.
The choice a voter makes can't just be arbituary (i.e., flip a coin to vote). If they are to make an informed decision, it will require investment in effort and time. The voters that are most apathetic are more likely to be poor, and won't have time to invest in such endeavours. Obviously, this perpetuates the problem, but the cause is that, in the mind of the apathetic voter, their time is better spent making money, or making the most of their spare time to have fun, instead of the chore of working out who to vote for.
There is no answer to this problem, as it is a problem with the mindset - they do consider their other activities more important, but they do so because they just don't have the resources to invest in civic activities.
The choice a voter makes can't just be arbituary (i.e., flip a coin to vote). If they are to make an informed decision, it will require investment in effort and time. The voters that are most apathetic are more likely to be poor, and won't have time to invest in such endeavours. Obviously, this perpetuates the problem, but the cause is that, in the mind of the apathetic voter, their time is better spent making money, or making the most of their spare time to have fun, instead of the chore of working out who to vote for.
There is no answer to this problem, as it is a problem with the mindset - they do consider their other activities more important, but they do so because they just don't have the resources to invest in civic activities.
Perhaps, allow me to offer a counter argument. I claim that if the only criteria a voter uses in voting is "I like how your part of the government is working", vote the incumbent. If they don't like how its going, vote someone else. Very simple, no research, no time wasted at all. And absolutely effective.
The reason its effective is because elections in the US are very bias sensitive, the very small margins of victory for one candidate or another means that a small change in voter sympathy can change the outcome of the election. Further, by creating a selection criteria of 'like' / 'don't like' in the voter input, you set up a genetic algorithm for evolving government.
There a probably a couple of dozen 'evolution simulators' available on the web. They all work in the same way, they take a population of organisms, they exist for a while in an environment, and then they 'reproduce' with a selection bias. Over a few generations the selection bias results in a population that demonstrates the characteristic that the selection bias is targeted toward. The basic mechanism is that organisms that align with the selection bias 'win' (and thus reproduce) and those that don't align 'die.'
That algorithm doesn't care what the 'lifeform' is, and it always works. That is part of the reason it annoys folks who favor an intelligent design theory of evolution.
Elections are the 'reproduction' cycle of politicians. Their 'survival' depends on them managing the bias in their favor which they have a limited amount of power to do. If the current non-voting block of citizens jumped into the game and voted 'like'/'do not like' it would force government to 'evolve' a set of politicians that were doing a good job as defined by the people who vote.
Clearly this doesn't work when the government is rigging the elections (as Russia was accused of doing to counter unexpected voter turnout) but it certainly does in a fair election.
The reason its effective is because elections in the US are very bias sensitive, the very small margins of victory for one candidate or another means that a small change in voter sympathy can change the outcome of the election. Further, by creating a selection criteria of 'like' / 'don't like' in the voter input, you set up a genetic algorithm for evolving government.
There a probably a couple of dozen 'evolution simulators' available on the web. They all work in the same way, they take a population of organisms, they exist for a while in an environment, and then they 'reproduce' with a selection bias. Over a few generations the selection bias results in a population that demonstrates the characteristic that the selection bias is targeted toward. The basic mechanism is that organisms that align with the selection bias 'win' (and thus reproduce) and those that don't align 'die.'
That algorithm doesn't care what the 'lifeform' is, and it always works. That is part of the reason it annoys folks who favor an intelligent design theory of evolution.
Elections are the 'reproduction' cycle of politicians. Their 'survival' depends on them managing the bias in their favor which they have a limited amount of power to do. If the current non-voting block of citizens jumped into the game and voted 'like'/'do not like' it would force government to 'evolve' a set of politicians that were doing a good job as defined by the people who vote.
Clearly this doesn't work when the government is rigging the elections (as Russia was accused of doing to counter unexpected voter turnout) but it certainly does in a fair election.
I need to save this and use it the next time an article comes out like this.
Vodafone, Starbucks, Google, Amazon, eBay.. As a person with a few companies in the UK that pay tax, it seems that the big companies can get away with whatever, where as last week I had someone from HRMC actually turn up at my house demanding payment because there had been a mixup with a £4k PAYE payment.. It beggers belief
Your companies probably aren't international, so don't get to enjoy a double Irish with a Dutch sandwich: http://www.nytimes.com/interactive/2012/04/28/business/Doubl...
Who pays corporation taxes on sales? I thought that's what VAT was for. Isn't corporation tax based on profit? If the cost of goods sold and expenses were £795m, then £1.2m on £5m in profit would seem pretty reasonable.
Correct, but you may be assuming the BBC is writing for a financially literate audience. They are not. They want to perk up a non-story by conjoining two disconnected facts.
Assuming their profit margin in the UK is comparable to their profit margin elsewhere, they would have had about £180m profit in the UK.
I don't understand why British news outlets have started to try and "shame" certain corporations over their tax returns. The practice has been known and used for many years, yet it's suddenly deemed newsworthy. I'm really surprised the BBC felt the need to report on this.
I'm of the opinion this is always newsworthy. Its completely outrageous how huge multinationals earning hundred of millions in profit can get away with paying less tax than mom and pop businesses. I don't see how "the practice has been known and used for many years" means that that means its case closed. Maybe there is a minority of people who want to discuss whether this makes sense in the current context and in the constantly changing fabric of business ethics. If this is not interesting to you, then fine, ignore it. But please be assured that some people do find it interesting.
News has fashion, and tax avoidance is fashionable at the moment. Partly that's because government has made announcements about it, and partly because we're in austerity measures.
It's also very interesting to note that we have a cabinet who have themselves been involved in fiddling with their tax returns. The very same who have proposed and implemented big austerity measures.
I think it's good the public are aware what is happening with tax from corporations to cabinet ministers to the people. I know a few who wouldn't have any idea this is a standard thing and probably outraged that the public are being hammered for tax and large corporations pay relatively little in comparison (and if they don't, they may have it waivered).
There is another one about how Vodafone owed around £6 billion in tax and it was let waiver whilst big crackdowns on tax cheats were in progress. I might have my facts wrong here but most people I speak to about say the same thing: "it's unfair". This also may be terribly biased though, most people I speak to are working class and support Labour.
On the flipside, I can imagine some kind of rebound effect if any sort of big policy was made against it, where big companies are simply less inclined to do business here, with our economy suffering as a result since we're £100m out of pocket rather than £6bn up per co.
I don't know much about politics or economics, I merely reiterate what the majority of people say about it all and my own perspective. Please correct me if I'm wrong.
I think it's good the public are aware what is happening with tax from corporations to cabinet ministers to the people. I know a few who wouldn't have any idea this is a standard thing and probably outraged that the public are being hammered for tax and large corporations pay relatively little in comparison (and if they don't, they may have it waivered).
There is another one about how Vodafone owed around £6 billion in tax and it was let waiver whilst big crackdowns on tax cheats were in progress. I might have my facts wrong here but most people I speak to about say the same thing: "it's unfair". This also may be terribly biased though, most people I speak to are working class and support Labour.
On the flipside, I can imagine some kind of rebound effect if any sort of big policy was made against it, where big companies are simply less inclined to do business here, with our economy suffering as a result since we're £100m out of pocket rather than £6bn up per co.
I don't know much about politics or economics, I merely reiterate what the majority of people say about it all and my own perspective. Please correct me if I'm wrong.
Subsidiary companies often reduce their profitability by licensing or purchasing materials from a parent company located overseas in a low-tax region. While this is usually a relatively legal way of transferring some profitability abroad, most countries also have regulations which specify that the relative contributions of various entities in complex corporate structures have to be reasonable and reflect the location where value is created. So while things are murky with IP licenses, increased news coverage and public pressure can succeed in calling attention to particularly egregious situations.
Corporations, small businesses and even people will rationally pay only the minimum tax that they can get away with under the law. The law favours big international corporations so this is what you get. If you find this inequitable then laws need to be changed. On the other hand big corporations as well as wealthy people usually have more leverage in terms of being able to move and operate or reside in more tax-friendly or hospitable regimes.
On the other hand big corporations as well as wealthy people usually have more leverage in terms of being able to move and operate or reside in more tax-friendly or hospitable regimes.
That's often claimed, but I'm not convinced. Some people/businesses might move away because of being forced to pay tax at the same rate as everyone else. Most people/businesses won't, because most people don't choose where to live only by tax rate and most businesses aren't going to give up a market of 60+ million people. And frankly, if they're only paying a million or so in taxes at that size, good riddance to those who think they can do better elsewhere anyway.
That's often claimed, but I'm not convinced. Some people/businesses might move away because of being forced to pay tax at the same rate as everyone else. Most people/businesses won't, because most people don't choose where to live only by tax rate and most businesses aren't going to give up a market of 60+ million people. And frankly, if they're only paying a million or so in taxes at that size, good riddance to those who think they can do better elsewhere anyway.
NPR Planet Money did an episode on the claim that rich people move states based on increasing tax rates:
http://www.npr.org/blogs/money/2011/04/22/135635574/the-frid...
They found, based on research, that the effect was negligible, and that other impacts of increasing taxes are much more noteworthy.
http://www.npr.org/blogs/money/2011/04/22/135635574/the-frid...
They found, based on research, that the effect was negligible, and that other impacts of increasing taxes are much more noteworthy.
Businesses might not be able to choose so much where their market is, but they surely have a choice in where they set up manufacturing, R&D, corporate HQ etc etc. Countries constantly compete for business investment.
Wealthy individuals are similar. They probably won't move their chosen country of residence for tax reasons, but I am pretty sure they will move their assets and investments to protect their value.
Most tax systems are inherently unfair with the middle-class and small business taking more than their fair share of the burden. The increasingly globalised and virtual nature of the economy only exacerbates this.
Wealthy individuals are similar. They probably won't move their chosen country of residence for tax reasons, but I am pretty sure they will move their assets and investments to protect their value.
Most tax systems are inherently unfair with the middle-class and small business taking more than their fair share of the burden. The increasingly globalised and virtual nature of the economy only exacerbates this.
I suspect that the equilibrium would be that there is no taxation, but also there is no social net and welfare.
The divide between the haves and the have nots will grow and grow.
The divide between the haves and the have nots will grow and grow.
Businesses might not be able to choose so much where their market is, but they surely have a choice in where they set up manufacturing, R&D, corporate HQ etc etc.
In which case surely the solution is to change the basis of taxation from profits to alternative sources such as sales or commercial property, which are inherently tied to the real location where things are happening, at least for bricks 'n' mortar businesses.
Taxing on-line transactions is trickier, but even in that case there are certain relatively broad international agreemeents covering things like VAT across Europe rather than in individual countries.
Most tax systems are inherently unfair with the middle-class and small business taking more than their fair share of the burden. The increasingly globalised and virtual nature of the economy only exacerbates this.
That is probably all true right now, but it doesn't mean we have to leave things that way. Speaking as someone who runs small businesses in the UK that pay their taxes at the normal rate, with those taxes ultimately reducing the money that reaches the owners, it really is galling to see reports of big international companies getting such favourable treatment.
In which case surely the solution is to change the basis of taxation from profits to alternative sources such as sales or commercial property, which are inherently tied to the real location where things are happening, at least for bricks 'n' mortar businesses.
Taxing on-line transactions is trickier, but even in that case there are certain relatively broad international agreemeents covering things like VAT across Europe rather than in individual countries.
Most tax systems are inherently unfair with the middle-class and small business taking more than their fair share of the burden. The increasingly globalised and virtual nature of the economy only exacerbates this.
That is probably all true right now, but it doesn't mean we have to leave things that way. Speaking as someone who runs small businesses in the UK that pay their taxes at the normal rate, with those taxes ultimately reducing the money that reaches the owners, it really is galling to see reports of big international companies getting such favourable treatment.
This is why consumption taxes are good - you can't get away from them. On the £3B of sales from Starbucks, they would have contributed at least £600M in consumption taxes (known as the VAT in the UK and at a rate of 20%).
Getting rid of corporate taxes and increasing consumption taxes proportionately would be a good way around this, although as much as it makes sense, and it is a popular position amongst economist - I can't imagine it being a popular political platform.
Getting rid of corporate taxes and increasing consumption taxes proportionately would be a good way around this, although as much as it makes sense, and it is a popular position amongst economist - I can't imagine it being a popular political platform.
consumption tax (like VAT, or GST in australia), unfairly taxes the poor as a percentage of their income.
The gov't tries to fix this by having some categories of goods that are _not_ taxed (at least this is true in australia), to alleviate this problem, but its not quite perfect.
I don't like consumption tax at all. However, i can't think of a way to levy that won't have loopeholes for the mega rich.
The gov't tries to fix this by having some categories of goods that are _not_ taxed (at least this is true in australia), to alleviate this problem, but its not quite perfect.
I don't like consumption tax at all. However, i can't think of a way to levy that won't have loopeholes for the mega rich.
Consumption taxes are regressive, and arguably not so desirable for that reason. However, it's a lot easier to change the personal income tax system in one country to balance that effect for its own citizens than it is to change corporation taxes on profits that operate as a global market.
Having big players in that market win the game by bending the rules in ways most people can't, ultimately denying tax revenue to some nations so those nations have to increase taxes on smaller businesses and individuals, isn't exactly doing the poor in those nations any favours either.
Having big players in that market win the game by bending the rules in ways most people can't, ultimately denying tax revenue to some nations so those nations have to increase taxes on smaller businesses and individuals, isn't exactly doing the poor in those nations any favours either.
From the article:
> According to the Sunday Times, eBay had sales of £789m during 2010 in the UK at its four British subsidiaries. Using its worldwide profit margin of 23%, it would have made a profit in the UK of £181m, leading to corporation tax owed of £51m.
That's making a pretty big assumption, that Ebay's UK profit margin is the same as its worldwide profit margin.
> According to the Sunday Times, eBay had sales of £789m during 2010 in the UK at its four British subsidiaries. Using its worldwide profit margin of 23%, it would have made a profit in the UK of £181m, leading to corporation tax owed of £51m.
That's making a pretty big assumption, that Ebay's UK profit margin is the same as its worldwide profit margin.
Why? I doubt it's an order of magnitude out.
[deleted]
It's technically legal, but now it seems the Brits are getting a little jealous and want some of that pie for themselves.
Ebay is based in Luxemburg, if it were in an offshore fiscal paradise I would have understood, but hey this is Europe. If something is broken in Europe don't blame companies, they're not the ones sitting in parliament.
If you've ever purchased Apple apps through the app store in Europe, you'll notice the developer is listed as "iTunes S.a.r.l". It's similar for web-services purchased through "Amazon Services Europe S.a r.l" and transactions through PayPal and Skype. All are registered as companies in Luxembourg[0], to take advantage of more attractive tax structures and legal codes while still being within the EU trading zone. Skype seems to be a bit of an exception in that most of its engineering is done there too, not just the financial transactions. Apple purportedly is not much more than a small office[1].
[0] http://www.investinluxembourg.lu/ict
[1] http://treasureislands.org/this-is-what-apple-itunes-europe-...
[0] http://www.investinluxembourg.lu/ict
[1] http://treasureislands.org/this-is-what-apple-itunes-europe-...
That's what I meant with "something is broken in Europe". The concept of tax competition has been encouraged by the european commission. They've created this situation where each country competes against others. I won't blame the companies for playing by their rules.
This reminds me of the 'bottom of the harbour' tax scheme from the 70's in Australia (though that was properly criminal).
Something I liked about how they dealt with it was they changed the law retrospectively meaning companies/individuals had to pay back tax they had avoided from previous years. I would love to see this done more where there is blatant tax avoidance.
http://en.wikipedia.org/wiki/Bottom_of_the_harbour_tax_avoid...
Something I liked about how they dealt with it was they changed the law retrospectively meaning companies/individuals had to pay back tax they had avoided from previous years. I would love to see this done more where there is blatant tax avoidance.
http://en.wikipedia.org/wiki/Bottom_of_the_harbour_tax_avoid...
Applying new laws retrospectively makes me nervous. Why should anyone be compelled to follow laws that don't currently exist?
Why can't they change the tax law to tax these companies? I know it would be difficult, but it can't be impossible. These companies will always want to operate here.
Because the UK can't arbitrarily change laws easily in the majority of cases any more due to being a member of the European Union.
What would they be taxing anyway? If they're like many of the other companies similar stories have risen up about, they're paying a subsidiary in another EU country for rights to the brand. So we'd either need to outlaw free trade between EU states (which the EU won't allow) or somehow tax businesses not on profit but on turnover which would be grossly unfair.
What would they be taxing anyway? If they're like many of the other companies similar stories have risen up about, they're paying a subsidiary in another EU country for rights to the brand. So we'd either need to outlaw free trade between EU states (which the EU won't allow) or somehow tax businesses not on profit but on turnover which would be grossly unfair.
Do you think its possible to have each company disclose its structure and relationships with all other companies, and have those books and transactions audited for tax purposes?
This way, if you pay for a "brand" with $100m, it seems very sus when the subsituary is also owned by a related set of people.
This way, if you pay for a "brand" with $100m, it seems very sus when the subsituary is also owned by a related set of people.
No, there is a third option that is looking increasingly credible: the UK could leave the EU altogether. Whatever the arguments for being in or out more generally, in financial terms that is almost certainly a win as things stand today, and it looks like any realistic outcome of the Euro problems will only strengthen the case.
I'm not sure about that, if the UK wants to continue trading with the EU from outside then they will be forced to pay for that privilege some way or another.
But the "Europe project" originally was about free trade. It worked pretty well for the most part, too: we managed with multilateral free trade agreements for years without things like legislative policy and currency getting centralised as well, and there are still alternative platforms for cooperation like the EFTA and EEA, which for example include some Scandinavian nations that are not part of the EU.
Given the UK's disproportionate strength, I don't see why it couldn't move to a similar relationship to what those Scandinavian nations have with Europe, being outside of the main EU and the Eurozone but still sharing common ground elsewhere. So until someone wiser about economics tells me otherwise, I think I stand by my previous position: whatever the pros and cons of being in the EU more generally, financially it's almost certainly in the UK's interest to leave.
Given the UK's disproportionate strength, I don't see why it couldn't move to a similar relationship to what those Scandinavian nations have with Europe, being outside of the main EU and the Eurozone but still sharing common ground elsewhere. So until someone wiser about economics tells me otherwise, I think I stand by my previous position: whatever the pros and cons of being in the EU more generally, financially it's almost certainly in the UK's interest to leave.
Because that will probably impact certain politicians and other "important" stake holders who benefit from these tax laws as well.
In my opinion, every democratic country should make the following change to their laws: Politicians cannot own, or have a stake in, any commercial enterprise. Needs to be a bit refined but you get the idea.
In my opinion, every democratic country should make the following change to their laws: Politicians cannot own, or have a stake in, any commercial enterprise. Needs to be a bit refined but you get the idea.
or put it more broadly - you should be able to acquire the financials of public servants. All of it, and if they have significant others like spouse or children, their financials are also considered public. And any stakes in any company will cause that company's financials to become public (whether its a privately held company or not).
This way, there is a web of transparency so that any dodgy transactions will be definintely caught (probably by the opposing party).
It sucks that these days, its possible to "hide" the true owners of companies and stocks. Its not in the public interest to have this feature.
This way, there is a web of transparency so that any dodgy transactions will be definintely caught (probably by the opposing party).
It sucks that these days, its possible to "hide" the true owners of companies and stocks. Its not in the public interest to have this feature.
That may all be true, but it may also not be in the public interest to put off people who are smart enough to make a lot of money on their own and therefore independently wealthy enough not to be subject to unhealthy influences from entering public service.
Also, it would be blatantly illegal under our privacy laws to force that kind of disclosure for relations who aren't the ones making the choice but whose intimate financial details would suddenly become public, and rightly so IMHO.
Also, it would be blatantly illegal under our privacy laws to force that kind of disclosure for relations who aren't the ones making the choice but whose intimate financial details would suddenly become public, and rightly so IMHO.
Why can't they change the tax law to tax these companies?
They're working on it:
http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm
They're working on it:
http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm
It looks like the only tax regime that is stable in terms of revenue is one with low corporate income tax and relatively high personal income tax.
[deleted]
1. They may have taken advantage of special tax credits offered by the government for activities that it was deemed to be in the best interest of society at large.
2. Ebay UK may have carry-forward losses from a previous year that lowered their tax.
3. These "sales" may just be gross revenue, completely ignoring the issue of COGS, which means gross income might only be $50m or something much lower. I know the article cited Ebay's global profit margin as being 23%, but is that on gross revenue or gross income? That seems high to be on gross revenue...
4. This revenue may have been earned by subsidiaries owned by Ebay UK, but the money was never brought into the UK and has been reinvested into those subsidiaries. For example, Ebay UK owns Ebay Monaco, where there are no corp taxes. Ebay Monaco does $10m in profit. If they sent that money back to Ebay UK, they'd owe UK taxes on it. Instead, they reinvest it into hiring more staff and expanding the Monaco office. If and when the money goes back to the parent entity, it'll be taxed then.
Getting upset about corporate tax law based on newspaper articles is a fool's errand.
EDIT: More details:
http://www.forbes.com/sites/timworstall/2012/10/21/ebay-is-n...
Looks like they're just taking advantage of EU law to have payments from consumers go to a subsidiary in a lower tax jurisdiction. How is this different from running your company in Texas instead of New York for lower state taxes?