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Amazon Pays No UK Income Tax, Under Investigation

Unknown Lamer posted more than 2 years ago | from the taxes-are-for-little-people dept.

Businesses 175

New submitter artciousc writes with news that Amazon is dodging taxes in the UK. From the article: "Regulatory filings by parent company Amazon.com with the U.S. securities and exchange commission show the tax inquiry into the UK operation, which sells nearly one in four books sold in Britain, focuses on a period when ownership of the British business was transferred to a Luxembourg company." Clever trick there: "The UK operation avoids tax as the ownership of the main Amazon.co.uk business was transferred to a Luxembourg company in 2006. The UK business is now owned by Amazon EU Sarl and the UK operation is classed only as an 'order fulfilment' business." The HMRC is investigating the legality.

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175 comments

Taxes and trade are complicated (5, Insightful)

explosivejared (1186049) | more than 2 years ago | (#39600681)

It would be really difficult to structure a tax with the incidence falling solely on setups like the one Amazon has here, especially since the UK is part of the single market. This is most likely an issue that would have to be solved in the European Courts rather than by the UK government. I doubt that a few hundred million pounds in lost tax revenue would persuade the courts to force a major restructuring of trade. I am not expert on European jurisprudence though.

This is a legitimately complex issue of tax avoidance. Most of the time when people howl about corporations paying low effective tax rates it's because they don't realize all of the exemptions for favored industries (green and bio tech, aerospace, etc.) and absorbing losses create that outcome. Here we have a government stretched thin on revenues up against the framework of European economic integration.

Re:Taxes and trade are complicated (4, Insightful)

cayenne8 (626475) | more than 2 years ago | (#39600739)

Well, if indeed it is legal, then there's nothing wrong with it.

I see nothing wrong with playing within the rules to try to benefit yourself as much as possible.

I do it on my personal and business taxes. Nothing even close to underhanded or sneaky, but I have no qualms about trying to use every legal means to reduce my tax burden any way I can.

If they would cut all the deductions, loopholes, etc...and just do simple, flat type taxes...everyone would pay less over all...it would make some that don't pay taxes (people and companies) pay at least a little. And I don't have a problem with that either...everyone should have some skin in the game, even if it is just $1US or 1 Euro if over there.

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39600843)

I see nothing wrong with playing within the rules to try to benefit yourself as much as possible.

I agree. But I choose my own rules - I certainly don't see any need to respect this corrupt government.

Re:Taxes and trade are complicated (3, Insightful)

wonkey_monkey (2592601) | more than 2 years ago | (#39600875)

Well, if indeed it is legal, then there's nothing illegal with it.

FTFY.

Re:Taxes and trade are complicated (-1)

Anonymous Coward | more than 2 years ago | (#39601411)

Uh, "FTFY" changes don't really work that way.

Re:Taxes and trade are complicated (2, Insightful)

mcgrew (92797) | more than 2 years ago | (#39600883)

Well, if indeed it is legal, then there's nothing wrong with it.

What's more wrong, adultery or smoking marijuana? I say adultery is wrong even if it is legal, and there's nothing whatever wrong with smoking the illegal herb.

Legal != right, illegal != wrong. Right and wrong have nothing to do with legal and illegal.

I have no qualms about trying to use every legal means to reduce my tax burden any way I can.

Nothing wrong with that, unless you're a Christian.

If they would cut all the deductions, loopholes, etc...and just do simple, flat type taxes

The poll tax is the most regressive of all. Read Asimov's Forward the Foundation for his take on complicated vs simple taxes. Both are bad. I'd agree that getting rid of deductions is a good thing, but since the rich get far more benefit from government than the poor do, they should pay a higher percentage.

it would make some that don't pay taxes (people and companies) pay at least a little.

Since you're probably European this probably doesn't apply to you, but the "conservatives" in the US are saying the same thing, despite the fact that in my grandfather's day only the rich paid federal income tax. It's hypocticy for them but it wouldn't be, in Europe.

Re:Taxes and trade are complicated (1)

explosivejared (1186049) | more than 2 years ago | (#39601079)

... despite the fact that in my grandfather's day only the rich paid federal income tax.

Your grandfather must have lived in the roaring twenties then. Through most of the middle of the 20th century that wasn't the case, but, surprisingly, income taxes are more generous to the bottom quintile. The income tax rate [taxpolicycenter.org] in America has gotten more and more progressive over the last few decades with the introduction of the EITC, as the bottom quintile receives more and more money

Re:Taxes and trade are complicated (2)

foobsr (693224) | more than 2 years ago | (#39601273)

... as the bottom quintile

... as those below the bottom quintile FTFY

Sigh, once upon a time, this was a geek site..

CC.

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39601083)

What's more wrong, adultery or smoking marijuana? I say adultery is wrong even if it is legal, and there's nothing whatever wrong with smoking the illegal herb.

Actually, in some US states, adultery IS illegal:

http://www.usatoday.com/news/opinion/forum/2010-04-26-column26_ST_N.htm [usatoday.com]

Don't have to wear a scarlet letter though!

Re:Taxes and trade are complicated (1)

RobertLTux (260313) | more than 2 years ago | (#39601143)

"I have no qualms about trying to use every legal means to reduce my tax burden any way I can.
Nothing wrong with that, unless you're a Christian."

depends on exactly how far he is going.
"20And he saith unto them, Whose is this image and superscription?
  21They say unto him, Caesar's. Then saith he unto them, Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's. " Matthew 22: 20-21

if he uses every legit means (charity/church write-offs ect) then he is in the clear but if he gets into dodgy but legal tax shelters or plays office shell games then no.

Re:Taxes and trade are complicated (4, Interesting)

cpu6502 (1960974) | more than 2 years ago | (#39601299)

What if Caesar demands 100%? Or if caesar orders us into a concentration camp, because we're asian? What then Jesus?

BTW most of Jesus' words are not his words. They were written decades after his death by church members who had never met the man. (Just like the story about George Washington chopping-down a cherry tree.) (Or the story about King Arthur.)

Re:Taxes and trade are complicated (4, Insightful)

PraiseBob (1923958) | more than 2 years ago | (#39600899)

Well, if indeed it is legal, then there's nothing wrong with it.

Legally ok may still be morally wrong. Personally I think making over $3 billion, and doging all taxes falls into the morally wrong category.

Legally speaking, companies only have an obligation to their shareholders. Morally speaking, companies have an obligation to their communities.

Re:Taxes and trade are complicated (4, Insightful)

mcgrew (92797) | more than 2 years ago | (#39601123)

Morally speaking, companies have an obligation to their communities.

Saying an amoral entity should exhibit morals is like saying an atheist should respect God. Ain't gonna happen. Atheists don't believe in God, and have no reason for rspect, and it would be stupid to expect it. Amoral corporations don't believe in right and wrong, only in legal and illegal, and to expect them to have compassion or any sense of social responsibility is equally stupid.

Re:Taxes and trade are complicated (2)

PraiseBob (1923958) | more than 2 years ago | (#39601335)

I'm fortunate that my company (a privately held corporation) is led by executives and a board of directors who aren't evil or shortsighted. As a company, it donates hundreds of thousands of dollars to various charities every year, with an emphasis on the communities it does business in. We don't do it for tax breaks. We do it because its the right thing to do, and it brings genuine happiness to the employees to help sick children smile, and help those that are less fortunate. Employees are freely allowed and even encouraged to donate their time to charity while on company time, which happens at least weekly, and we host charity events a few times a year. Surely my company isn't the only one where participation in the community helps our bottom line.

Re:Taxes and trade are complicated (1, Insightful)

characterZer0 (138196) | more than 2 years ago | (#39601501)

There is a huge difference between donating to charities who do valuable work in your community and giving to the government.

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39602493)

Well, someone could undercut you, with same quality of service/product (Since they dont donate to charity). Not to sound like a dick, but it eventually will happen. That is exactly why amazon, should in any possible way try to save on taxes; so that Barnes and Nobles or some other book store doesnt undercut them.

Re:Taxes and trade are complicated (4, Insightful)

arkhan_jg (618674) | more than 2 years ago | (#39602563)

Amoral corporations don't believe in right and wrong, only in legal and illegal, and to expect them to have compassion or any sense of social responsibility is equally stupid.

And it's this kind of thinking that is destroying capitalist nations like the US and the UK (I'm british, btw). You know, it's within living memory that large corporations switched to focusing solely upon short term shareholder 'value', back in the 70's and 80's. Before that, many big companies recognised they were only part of a giant collection of people, and that shitting in their own front yard was of short-term value only. Where they paid their workers sufficiently so that they could buy the very products they made. Where training, looking after your workers and ensuring a good work-life balance rewarded you with happier and thus better performing and more loyal employees. Where they recognised the social value of investing, via taxes and direct contributions, into the social lifeblood of their communities - schools, roads, hospitals. Where CEO's were stewards of their companies, not just there to strip much as much personal compensation as possible then get the hell out before anyone asked awkward questions.

Of course, not all companies were like that. But now, virtually none of them are. the 'Greed is Good' mantra has won.

In 1953 - "When he was asked during the hearings before the Senate Armed Services Committee if as secretary of defense he could make a decision adverse to the interests of General Motors, Wilson answered affirmatively but added that he could not conceive of such a situation "because for years I thought what was good for the country was good for General Motors and vice versa". Can you imagine a CEO of a current multinational - or one of the big casino banks - saying that with a straight face now?

We should expect more than 'I can get away with it because it's within the letter of the law'. No, we should damn well DEMAND it.

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39601247)

Sure, but if the moral obligations aren't codified by law then they must take a back seat to their legal obligations. Publicly traded companies are essentially required to be amoral under current U.S. law, which means they're just as likely to act immorally as morally if profit -- or perceived potential profit -- is at stake. This is even more clear when you look at the way American corporations cut corners on safety and environmental practices in foreign operations where it's allowed (and if they believe the PR risks are small enough).

Re:Taxes and trade are complicated (3, Informative)

roman_mir (125474) | more than 2 years ago | (#39601921)

Morally speaking, companies have an obligation to their communities.

- that's a load of crap. Companies have an obligation to make money for themselves, that's all, they have no obligation whatsoever to anybody to provide anything, and they only provide something because they want to make money, and that's the best way to have this done.

Anything that companies do is either approved by the market, which buys into it, or it's rejected by the market, and the company fails.

No consumer has an 'obligation' to a company to buy its product, no company has an 'obligation' to any consumer beyond what it clearly states in contract.

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39602131)

Clearly, you didn't consider the fact that Amazon holds a monopole over a vast amount of online shopping all over the world. The people who work in their freight centres once went to school, maybe enjoyed a happy childhood (although I doubt it) and just *lived* - and everything necessary for them to grow up there was 100% funded by taxes. Who do you think paid for the fucking train tracks and roads and schools and the whole fucking infrastructure that Amazon needs to do its business? Amazon is a vulture, just like so many other companies, and if the Governments of this world won't step up and bite them in their ass, they *will* destroy us. (I'm not saying we shouldn't change the corrupted way that governments spend our money). Or, if we wait long enough, they will have not paid their workers for long enough and nobody won't be able to buy from them anymore. Tough love.

Re:Taxes and trade are complicated (2)

roman_mir (125474) | more than 2 years ago | (#39602215)

The people who work in their freight centres once went to school, maybe enjoyed a happy childhood (although I doubt it) and just *lived* - and everything necessary for them to grow up there was 100% funded by taxes.

- nonsense. Everything that people enjoy was CREATED by somebody, and if government comes in and steals money from some people to give it to others, it doesn't mean government CREATED any of that wealth, it only means government is a legalised robbery mechanism.

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39602351)

Morally speaking, no one is a slave to another. Your fellow men are human beings, not means for your own ends. Any arbitrary selection of who is obligated to whom is just that; arbitrary. It is like picking incidental variables in rocks(like color) and saying some will be subject to gravity, except for pink ones. It is an absurd contradiction that opposes the very definition of morality, of ethical rules. To propose arbitrary exceptions is to propose an anti-morality.

Re:Taxes and trade are complicated (1)

geekoid (135745) | more than 2 years ago | (#39600931)

Yes, there is somethign wrong with, the legality is a separate issue.

Re:Taxes and trade are complicated (1)

explosivejared (1186049) | more than 2 years ago | (#39600997)

Would you care to share your theory of what constitutes a taxable event when trade occurs across the borders of nations that have banded together to form a free trade zone?

Re:Taxes and trade are complicated (1)

explosivejared (1186049) | more than 2 years ago | (#39600949)

Well, if indeed it is legal, then there's nothing wrong with it.

The article says that the UK government is investigating, but if Amazon is found to owe these taxes, it would be a matter for the European courts to decide. I have a feeling this is sort of a novel issue. Obviously I'd have to defer to someone that had the relevant case law or EU regulation handy. Either way, this is not something the UK just gets to declare legal or not.

Re:Taxes and trade are complicated (1)

jonbryce (703250) | more than 2 years ago | (#39602421)

It is not a novel issue at all. It is a pretty straightforward transfer pricing issue - how much Amazon Luxembourg should pay Amazon UK for fulfilling the orders. Amazon employs 2256 people in the UK, and 134 people in Luxembourg, so you would expect most of the profit to be made in the UK, not Luxembourg, because that's where the people who work to make the profit are actually based.

The other issue, selling e-books from Luxembourg where the sales tax is 3% rather than from the UK where it is 20% is probably not something the government can do anything about.

Re:Taxes and trade are complicated (1)

cpu6502 (1960974) | more than 2 years ago | (#39601073)

I'm curious how this will all work out. In our American union (US), Amazon only has to pay income taxes to its home state (California?) and none of the other states (unless they have a warehouse located there). Does the same principle apply to the European Union? Is Amazon only required to pay income tax to Luxembourg and no other state?

Re:Taxes and trade are complicated (1)

jonbryce (703250) | more than 2 years ago | (#39602439)

They file a tax return in the UK because they have warehouses there. However the UK operation is structured so that sales money from customers goes to Luxembourg, and Amazon Luxembourg pays Amazon UK a fee to send the item out to the customer on their behalf. After deducting all the warehouse, staff costs, payments to couriers and so on, there is no profit left to pay tax on.

Re:Taxes and trade are complicated (2)

gurps_npc (621217) | more than 2 years ago | (#39601303)

I totally agree - they should cut those nasty complex taxes and just apply a straight 5% flat asset tax. Pay a nice flat five percent of everything you own. Oh, at 5%, it lets the government exclude IRA's and your personal home from that tax, without reducing the amount the government gets.

What, you conservatives don't like my flat tax? Why Not?

Because my version puts almost all the tax burden on the rich, as opposed to the vile conservative version that puts almost all the tax burden on the poor.

Why is the conservative version evil? Because a flat income tax is NOT fair - among other things it ignores the other taxes US citizens pay, almost all of which mainly affect the poor. From sales tax, property tax, to social security tax, they all have massive prejudices against the poor. The poor pay almost everything, while the wealthy pay a tiny portion of their income on these taxes.

Income tax does not exist in a vacuum - you need to look at the OTHER kinds of tax before blindingly trying to make only the income tax 'fair' for all.

No, you CAN'T separate these taxes out then say the poor pay no 'income taxes', because you don't count the taxes they do pay.

If you are want to read more, check out my blog entry about the flat tax at:

http://conservativelyliberal.blogspot.com/2011/04/new-flat-tax-idea.html/ [blogspot.com]

Re:Taxes and trade are complicated (1)

Obfuscant (592200) | more than 2 years ago | (#39602733)

Oh, at 5%, it lets the government exclude IRA's and your personal home from that tax, without reducing the amount the government gets.

Every version of a flat tax I've seen has said they need to be at 17% to be revenue neutral. This [google.com] analysis talks about 19%. Perry's proposal is 20%. You've managed to come up with a tax rate that is one quarter of what everyone else is proposing and still get the same revenue?

And then to claim that you can exclude things from taxation and not reduce the revenue? How do you apply a 5% to a smaller number and get the same result?

Because my version puts almost all the tax burden on the rich, as opposed to the vile conservative version that puts almost all the tax burden on the poor.

The latter part of your statement is patently wrong. The "poor" pay almost nothing in taxes, at least in the income tax system that you are proposing to replace. The rich pay the most. But let's ignore that class bias and talk about the first part of your statement...

It, too, is wrong. Conservatives will oppose it because it is patently unfair to anyone who owns anything, not because of who owns it.

But wait, you've suggested an ASSET tax. So, if you've managed to save money out of your salary this year, you will be taxed on those savings every year for the rest of your life. Once, twice, thrice, four times, five times, taxed on the same money over and over again. Yes, I can see how someone who has no money would call this "fair".

If you buy a car, you'll be taxed at some estimated value for that car every year until you get rid of it.

If you are a business owner, or a farmer, you'll be paying 5% of the value of your property every year. If a farmer has a million dollar farm that's managing to break even now, tomorrow you want $50,000 from him in taxes. And again the next year. And again the next year. And again the next year. Yes, I can see how someone who owns nothing would think this is "fair".

In just 14 years you will have taken from every person in the country half of what he owns. If someone can't make the tax payment on his business, he'll have to sell. It won't matter if the farm lost money, or the business employes 100 people. Yes, I can see how someone who has nothing would call this "fair".

Oh, wait. They can BORROW the money to pay the tax. Put the farm up as collateral. Pay interest on the borrowed money, and deduct the loan amount from the asset value. Eventually the property will be fully mortgaged and the tax you get will be zero, and the costs to the property owner astronomical. Banks will own everything, and when the owner defaults we'll have a great time in the recession that causes.

No, you CAN'T separate these taxes out then say the poor pay no 'income taxes', because you don't count the taxes they do pay.

And you don't count the massive amounts of income tax the rich pay when claiming that they don't pay their fair share.

The multiple taxation aspect of your plan is unfair from the start. Fixing that, and creating exemptions, will create a system that is just as complicated, eventually, as the one we have now. By requiring everyone to keep track of all their assets, you will create a paperwork nightmare for the individual that far exceeds what we have today. Kiss the short form goodby, you'll need to inventory everything you have every year. It will also mean that the rate will have to go up to be revenue neutral, and go up anytime the government wants more money. Add on the points that the states and local governments will want, and you'll be taking half of what everyone owns in a lot less than 14 years.

By taxing savings, you'll destroy the reason to save for anything.

You will create a huge underground economy that is highly biased towards helping the rich. What the IRS cannot prove you own you can't be taxed on. Cash under the counter means untracked assets.

Those flaws are all reasons to oppose what you suggest -- and have nothing to do with who is paying the tax, but the fairness of the tax itself and the destruction to the economy it would cause.

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39601493)

This is a god as definition of amorality as you're likely to see. As long as an economic activity is legal then t must be moral. Sadly discussing morality with corporations is likely to be met with sniggers. I don't understand those who believe economic behavior is outside typical normal human ethical and moral considerations. In other word morality applies just as much to economic activities as well as to sexual activities

Re:Taxes and trade are complicated (0)

Anonymous Coward | more than 2 years ago | (#39601911)

"Well, if indeed it is legal, then there's nothing wrong with it."

Appeal to legality is absurd, for many reasons. Among them is that which may be legal one day can easily be illegal(and the other way) the next. Arbitrary rules made up by a group of men are not objective, consistent nor universal. If legality makes something right, then you have a number of circles to square, where right changes over time, geography, and other variables. It just doesn't work.

That said, I don't mean to say avoiding greater taxation is wrong. But any claim about that cannot validly come from whether or not it is or isn't legal.

Re:Taxes and trade are complicated (0)

noh8rz3 (2593935) | more than 2 years ago | (#39600831)

amazon should go to jail, i think. they get a competitive advantage over brick and mortar stores by dodging taxes (in an industry with razor thin margins, avoiding 10%+ in tax is a huge advantage). Then they put brick and mortar out of business, and people must use amazon to save some pennies because they dont have jobs.

Re:Taxes and trade are complicated (1)

Teun (17872) | more than 2 years ago | (#39601401)

Amazon is not dodging taxes, Amazon UK defers them to Amazon Luxembourg, both are EU companies and by that token operating in the same market.

You can be 100% sure these Luxembourg taxes are of a lower percentile than they would be in the UK.

But they are EU taxes none the less.

Re:Taxes and trade are complicated (2)

noh8rz3 (2593935) | more than 2 years ago | (#39601891)

taxes should be paid by where the customer is at, not where the business is at. It's the only way to put businesses on the same playing field level.

Re:Taxes and trade are complicated (2)

SimonTheSoundMan (1012395) | more than 2 years ago | (#39602739)

That's called VAT. VAT is 20% of the price in the UK. Not everything is classed as VATable , dead tree books are not for example.

The UK has 'Low Value Consignment Relief'. Anything that is imported that is priced less than £15 is VAT exempt. This is slowly being abolished in the UK. It was £18 and stores like Amazon got around not charging VAT by making products such as DVDs priced at £17.99. As soon as LVCR was reduced to £15, Amazon reduced their prices to £14.99. Amazon at £14.99 can make a profit, brick and mortar stores cannot at that price as they have to charge 20% VAT.

Amazon, Play.com, HMV online are laughing.

Re:Taxes and trade are complicated (1)

willpb (1168125) | more than 2 years ago | (#39602197)

Brick and mortar stores going out of business is progress. Now we can put that real estate to better use. As long as Amazon passes on their tax savings to the user and there's competition out there to keep their prices low the consumer wins.

Re:Taxes and trade are complicated (4, Informative)

greg1104 (461138) | more than 2 years ago | (#39601981)

This has nothing to do with things like offets for favored industries. Large companies now move the various parts of their business to whatever location gives the best net tax situation. Multinationals construct structures like the Double Irish and Dutch Sandwich [wikipedia.org] to place sub-companies for minimal tax. Techniques like Transfer pricing [wikipedia.org] are aggressively used to move the profit to the right place to tax it minimally. Games are played with repatriation [forbes.com] too.

If none of the options are good, they lobby for the specific incentives they need. US companies operate in Delaware because the state legislature there passes whatever the companies ask for in return for the business. Been that way since the 80's. The Cayman Islands and the Bailiwick of Jersey are popular offshore locations because they bend laws to whatever companies ask them to. Even a low rate on a lot of money is still a lot of money relative to a small country or state.

Yes, this is all legal, but it's only legal because the companies have gotten the laws they lobbied and or bullied for. The result is that we're in a race to the bottom on taxation, where business flows to whoever is running the lowest margin government--which unsurprisingly is usually with the most favorable legislative kickbacks too.

Treasure Islands: Tax Havens and the Men Who Stole The World [amazon.com] takes 350 pages to outline just how that happened over the last hundred years, it's a great read for those interested what I'd call "financial tech". The minute you allow companies to influence lawmakers by things like lobbyists and campaign contributions, the inevitable result is making what those companies want legal. The corporate side is unsurprising given that corporations are by definition immoral. The fact that voters are ignorant to how they are being conned is really the problem here. The lawmakers who are complicit and benefitting in all of these schemes shouldn't just be voted out, they should be prosecuted as traitors for hire.

No income taxes were paid? Good. (1, Troll)

roman_mir (125474) | more than 2 years ago | (#39600731)

It's a good start that Amazon didn't pay income taxes in UK, now it's just the rest of the companies and people that need to stop paying them. It's a step in the right direction.

Of-course politicians are livid, they want to spend other people's money.

Re:No income taxes were paid? Good. (2)

Intrepid imaginaut (1970940) | more than 2 years ago | (#39600845)

I like paying taxes, with them I buy civilisation. However I am increasingly disgusted and angered by the wanton waste and inefficiency of government and public sector expenditure, especially at a time when new and higher taxes and rates are being levied against me. I have the right to demand value for money. I'm not sure how I can claim that right in the absence of political representation that's not invested to the back teeth in the public sector, so here we are I guess.

Re:No income taxes were paid? Good. (2, Insightful)

roman_mir (125474) | more than 2 years ago | (#39600941)

You certainly are not buying civilisation with taxes, if that were even remotely correct, we would have had 'civilisation' much earlier, and when I say: "civilisation", I am talking about the rapid progress that we have enjoyed since the beginning of the free market capitalist movement and industrialisation.

You could pay all the taxes you wished forever and ever, and you have, since before the pharaohs and on and on, but the only "civilisation" that you got was on par with those pyramids - the tombs for the Kings.

The real civilisation cannot be bought with taxes.

The real civilisation is created in the free market with people making everyday voluntary decisions on what to buy, making everyday voluntary decisions on what to work on, what to produce, how much to save, where to invest, etc.

None of what you believe to be 'civilisation' is actually that.

Re:No income taxes were paid? Good. (4, Insightful)

thoth (7907) | more than 2 years ago | (#39601575)

The real civilisation cannot be bought with taxes.

The real civilisation is created in the free market with people making everyday voluntary decisions on what to buy, making everyday voluntary decisions on what to work on, what to produce, how much to save, where to invest, etc.

So where does public infrastructure fit into this scheme, especially the funding of it? How are the following funded: roads, sanitation systems, legal and judicial system, police, etc? Is that funding to be entirely voluntary as well?

Re:No income taxes were paid? Good. (0)

roman_mir (125474) | more than 2 years ago | (#39601731)

Since I have a comment on the topic of taxes and infrastructure, I'll link to it [slashdot.org] , that's what hypertext is for.

It's a huge misunderstanding that there is a need for government controlled and built/maintained infrastructure. People build infrastructure without any government when there is a need for it, especially if they have enough savings capital, which is accrued without income, payroll, corporate taxes.

There are private roads, electrical grid was done privately in the early days, before government was used to ensure a monopoly in that area, same with rail, same with air travel, same with everything.

Of-course I wouldn't actually care that much if the ONLY reason government taxed was to do some research and build some infrastructure, but it never actually STOPS there. It always degenerates into a government controlled society, the freedoms are destroyed.

I rather have freedom from government intervention and completely private infrastructure than government controlled infrastructure and no freedoms at all, and those are our choices - you give them a finger, they bite off the entire hand.

Re:No income taxes were paid? Good. (0)

Anonymous Coward | more than 2 years ago | (#39602647)

You're not making any kind of logical sense about infrastructure being created by a free market. You can have only one single direct road between points A and B, so building multiple roads to allow a free competitive market to operate (and may the best road win) is an obvious nonsense.

And different companies creating different roads does not constitute competition, because different roads are different products, and they cannot be chosen by road users on the basis of which is best because, at every point, there is only one direct road linking A and B.

The same applies to water, gas, sewers, buildings, and everything else that has a fixed location, because a fixed location implies that no competing object can be in the same location at the same time, so direct competition is not possible. When the product is fixed in space, alternative suppliers can't be chosen and discarded rapidly in a way that keeps market competition operating healthily.

This is just one reason why a free market cannot provide infrastructure, but there is a huge raft of others, such as cartels always forming in the absence of regulation (corporations absolutely loathe competition) so any theoretical benefits of competition are lost, and loss of infrastructure uniformity when there are many cooks each creating their own solutions "for competitive advantage", which again requires regulation to solve.

The free market is simply the wrong tool for this, and it's very easy to see that except when you're a priori biased to see free markets as the answer to everything.

Re:No income taxes were paid? Good. (1)

misexistentialist (1537887) | more than 2 years ago | (#39601923)

Most of those things already require users to pay a fee! You can say the fees would be too high if those services were self-funded, but if people can't afford them maybe they're not necessary or possible. As it is fees + taxes + cutbacks + borrowing + printing money aren't enough either!

Re:No income taxes were paid? Good. (0)

Anonymous Coward | more than 2 years ago | (#39602477)

You can say the fees would be too high if those services were self-funded, but if people can't afford them maybe they're not necessary or possible.

Like, only the mega-rich being able to go to court without bankrupting themselves.

Re:No income taxes were paid? Good. (2)

jrroche (1937546) | more than 2 years ago | (#39601585)

Since you want to bring up pharoahs and kings, we might as well bring Romans into it. http://www.youtube.com/watch?v=ExWfh6sGyso [youtube.com] Pretty much all of the things listed in this clip are things your government provides, not your free market, and they are paid for with tax money. The free market did not give you roads, sanitation, regulated utilities, education, the order of law, etc. It gave you wine though, you've got that at least. Although it'd be hard to produce or purchase the wine without the roads, sanitation, regulated utilities, education, order of law, etc.

Re:No income taxes were paid? Good. (1)

roman_mir (125474) | more than 2 years ago | (#39601769)

All that taxes came from the fact that Rome was a Republic, thus allowing plenty of actual private enterprise, which in fact created all that wealth that the government could then steal in form of taxes. They had some of that, and how did it end? It ended with the Republic degenerating into Democracy, once Republic allowed all that wealth to accumulate and the mob then demanded that wealth be stolen from producers and redistributed among people 'fairly'. Bread and circuses. Does it not remind you of something that's happening now?

Re:No income taxes were paid? Good. (0)

Anonymous Coward | more than 2 years ago | (#39601809)

The free market did not give you roads, sanitation, regulated utilities, education, the order of law, etc.

Nor did the British government. They refuse to build new roads because they're not 'green', they sold off water supply to foreigners, the schools are a joke, and the courts are even worse.

Britain has big problems, but they're due to having far too much government, not too little. Before I fled I worked out that for every extra pound my employer paid me, I got about 38 pence after the government stole the rest (or less than 20 pence if I used the money to buy petrol). Fuck that.

Re:No income taxes were paid? Good. (0)

Anonymous Coward | more than 2 years ago | (#39601737)

Praises to the free market god are modded +4 insightful? What a fucking joke.

Re:No income taxes were paid? Good. (0)

Anonymous Coward | more than 2 years ago | (#39601811)

better than praises to the gods of government power.

But don't worry, that won't last, your government pals are on the way. We just talked about it, didn't we? Same thing will happen here over and over. [slashdot.org]

Re:No income taxes were paid? Good. (0)

Anonymous Coward | more than 2 years ago | (#39602427)

Yeah, you know what?

Regardless of my or anyone else's bias, your statement wasn't insightful. It didn't exhibit any sort of clear and deep perception. You blindly said that a free market will fix everything with no proof or other evidence to back up your claim.

Re:No income taxes were paid? Good. (0)

Anonymous Coward | more than 2 years ago | (#39602505)

Every bit of evidence is in your face - just over 200 years ago capitalism really started and worked miracles in mostly government free environment and up until 1917 it was nearly miraculous speed of development and innovation, which gave people steam engines, factory floors, steel structures, electric power for motion, energy and data transfer, rail roads, cars, airplanes, airships, huge steel ships, very tall buildings, cheap food, refrigeration, sewing machines, cinema, telegraph, phones, radio, light bulb, huge scale manufacturing, huge scale production of clothes and all sorts of other items. Medical advances, advances in biology, physiology and most sciences.

There was tons more than that and most of it was started, created, innovated during the years when the government was ridiculously irrelevant compared to ALL OTHER TIMES IN HISTORY OF THIS WORLD.

Yeah, no proof, no evidence.

Even if you kill yourself, you'll most likely be doing it with something that was invented and/or created during that time period.

Order fulfilment business? (3, Insightful)

Picass0 (147474) | more than 2 years ago | (#39600755)

That's a very broad and legally vague concept.

If Amazon succeeds I expect many other international businesses to incorporate in the UK and attempt the same. In fact, they would be fools not to.

Re:Order fulfilment business? (1)

Eightbitgnosis (1571875) | more than 2 years ago | (#39601011)

I'm confused as to how a business could not be an "order fulfillment business"?

If you aren't fufilling orders, then you really aren't doing any business

Re:Order fulfilment business? (1)

Sir_Sri (199544) | more than 2 years ago | (#39601089)

Probably a specific classification of business. Rather than a seller, manufacturer etc. "order fulfillment" is a distributor, that is contracted on behalf of someone else (amazon.com?) to bundle up orders and ship them to people. They are proclaiming themselves middlemen I think. MS is in this issue in germany, that they have some european distributor who handles warehousing and shipping of Xbox products around europe.

Re:Order fulfilment business? (1)

muon-catalyzed (2483394) | more than 2 years ago | (#39601419)

a specific classification

They simply lied and miss-classified their business operation. Amazon will be fined, CEO and CFO might get jailed, they funneled billions £ out of UK, cheated on Her Majesty Revenue Cohorts (a Scotland Yard backed operation), it's no joke not paying to the UK taxman.

/sarcasm

Re:Order fulfilment business? (1)

Karl Cocknozzle (514413) | more than 2 years ago | (#39601121)

You're not the only one confused by this quirk of UK tax-law... At a fundamental level, EVERY business is really just an "order fulfillment" business. If you can just apply that label and not pay taxes, what stops every company from organizing a Luxembourg shell-company to "own" the business, then self-applying the same label and never paying another nickel in corporate income tax?

Even though the cynic in me knows better, I desperately hope the answer isn't "nothing whatsoever."

Follow this train (1)

RobertLTux (260313) | more than 2 years ago | (#39601201)

i setup BAD WOLF SHOPPES selling torches, screwdrivers and cabinets (most of which happen to be oh Blue) and other things and payoff the government to allow me to operate without taxes.

i then setup TANGO FULLFILMENT inc in a buncha countries (paying no taxes in these).

BWS is a retail/wholesale outfit

TF is a fullfilment company (anything sold by BWS is delivered by TF)

And Amazon EU Sarl is probably just a PO Box... (3, Informative)

Tasha26 (1613349) | more than 2 years ago | (#39600809)

They learnt from the best: Topshop, Boots, HSBC (UK)... [guardian.co.uk]

Re:And Amazon EU Sarl is probably just a PO Box... (1)

tripleevenfall (1990004) | more than 2 years ago | (#39601179)

I'm confused, because when it comes to piracy/file sharing/etc., the prevailing opinion on /. is that where your servers are located should get you out of following the law someplace else. But when it's Amazon and taxes, this logic doesn't seem to apply.

Can someone explain this in terms of Libraries of Congress?

Re:And Amazon EU Sarl is probably just a PO Box... (1)

b4dc0d3r (1268512) | more than 2 years ago | (#39601429)

A Library of Congress is a unit of measure, and each LOC is an exact copy of the previous one.

A Slashdot poster, on the other hand, is actually an individual. Kinda like the individual items that the LOC contains. Each one has different opinions, and each discussion is a result of self-selected individuals who feel strongly enough about a discussion to make some sort of contribution. So Slashdot is essentially a Library of Congress for the purposes of this explanation, the collection of individuals.

Just as not every book in the LOC comes to the same conclusion, not every Slashdot poster has the same opinion. It is entirely possible that the same people who share the former opinion do not care to post on the latter discussion. IF you do find a specific individual, maybe you can ask that person to explain their view.

Also, if you read the comments, a lot are arguably neutral, commenting on similarities to other companies like the post to which you replied. Or discussing how UK and EU laws and enforcement overlap, or fail to.

And of course you can bring up the red herring of all Slashdot posters expecting evil finance and oil companies to pay their taxes but giving Amazon a break because we happen to enjoy paying money to Amazon. Feel free to use that equally flawed observation for your next troll. Personally, I like giving Amazon tax breaks because it allows me to pay less for direct delivery. Oil companies can suck a kite because only a small portion of what I pay at the pump comes from their tax bills. Oil speculators seem to be the biggest cost, and they seem to be in the area of capital gains, not sales taxes. So yes, double standards can have rational explanations.

Re:And Amazon EU Sarl is probably just a PO Box... (1)

tripleevenfall (1990004) | more than 2 years ago | (#39602067)

Damn it, I knew I should have asked for cars.

The failure of public companies (2)

DogDude (805747) | more than 2 years ago | (#39600849)

Of course, this is a glaring example of the failure of public companies: a lack of ethics. The root of all of our current economic and political problems is that public corporations have one interest: to make money in any way possible. There's no accountability in a public company, so running a public company ethically is out of the question. Of course, private companies can be run unethically as well, but there are a much smaller percentage of cutthroat, skating-on-the-edge-of-legal private companies, because in the case of private companies, there are repercussions to acting unethically or illegally.

Re:The failure of public companies (2)

greap (1925302) | more than 2 years ago | (#39600975)

You presume there is something automatically unethical about following the law to minimize your tax liability. If HMRC/IRS said you could choose between paying $1000 or $800 in taxes which would you choose to pay? Why do you presume to hold other people to a higher standard?

Re:The failure of public companies (0)

Anonymous Coward | more than 2 years ago | (#39601053)

Companies don't generally have ethics. But in this case, they are doing the same thing a human would do. Look for ways to legally reduce their tax burden. Companies compete with other companies on profitability, growth, sales, etc. Just like people compete with other people for resources, the most toys, best education for their kids, etc. I'd have no problem with reducing my tax burden any way that was 100% legal. In the same way, I don't see any ethical issue with a company doing the same. The issue I see is one of tax law and any fixes will need to come from politicians changing the law to match what they believe should be happening. But a company has every right to do what is legal in competing.

Re:The failure of public companies (1)

gbjbaanb (229885) | more than 2 years ago | (#39602545)

or its a failing of the taxation regulation in countries. If the UK said you have to have a presence in the UK in order to do business here, and pay tax on all UK transactions regardless of where your HQ is based, you'll find these companies will return their HQs to London. (which, technically is where they are anyway, they only have a postal box in Luxembourg so they can claim they're based there).

Its no amoral as in News International Amoral, but there is a systematic un-ethical approach to fiddling the rules to get round your responsibilities as a player in our societies.

AMazon is yet again (1)

geekoid (135745) | more than 2 years ago | (#39600903)

avoiding taxes. One of these days, someone going to say enough and just not let them do business in the country. I would.

Re:AMazon is yet again (1)

Sir_Sri (199544) | more than 2 years ago | (#39601153)

Politicians write exemptions into the tax code for you to use them. That's the whole idea. I'm in canada, the government gives (/gave) me student tax credits for housing that can be carried forward. The fact that I can apply that to earnings long after I'm a student, and therefore pay no tax for potentially several years is exactly how they contructed the system to work.

The EU tradeblock is messy. But then the whole existence of and independent Luxembourg is based on the ability to act as a go between between belgium, germany and france. If you set up an agreement where companies only have to pay tax in the 'state' 'grand duchy' 'province' 'country' where they're based don't be surprised when they go to the one with the lowest tax rate for legal purposes. Switzerland and Luxembourg have benefited enormously from their position as havens between the major powers, politicians and their rich friends benefit from it by hiding money there, and so they write laws to make sure they don't get tossed in jail over it. This is the system working as intended. The UK knew full well what it was signing up for. Whether or not Amazon is actually playing by the rules, but it is perfectly legal to avoid tax by moving to switzerland and then working elsewhere no more than is allowed to retain swiss residency and tax privileges. Since corporations are merely pieces of paper this is even easier for them to stay in the right place.

Re:AMazon is yet again (1)

Teun (17872) | more than 2 years ago | (#39601483)

I don't know why you took Switzerland into your example, they are most certainly not a member of the EU!

The biggest profiteers of the single market 's option to choose the place for your headquarters is probably Microsoft in/and Ireland.

Re:AMazon is yet again (0)

Anonymous Coward | more than 2 years ago | (#39601773)

I'm in canada, the government gives (/gave) me student tax credits for housing that can be carried forward.

Ummm, no, not for housing.

Students in Canada can deduct tuition, education & textbooks, and in some cases moving expenses & child care. Details here:

http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/stdnts/ddctns-eng.html [cra-arc.gc.ca]

If you're in Ontario and you live in a university residence, the provincial govt caps your property tax deduction on provincial income tax at $25, but that's different.

Re:AMazon is yet again (1)

gbjbaanb (229885) | more than 2 years ago | (#39602597)

Ah, but you'll find that these companies exist in the tax-dodge countries with no more than a post-office box. No-one in their right mind would consider a PO box to be a company HQ.

the real problem is that tax laws are complicated, so these kinds of loopholes are always going to be discovered when they were not intentional.

The current UK government has a new trick: when you change your accounting practices to avoid a tax you have to tell the tax man, and if he decides that the loophole you've just discovered was not intended, they close it before you get to use it. Makes sense really,

Tricksy lil' hobbitses, ain't they? (1)

Cazekiel (1417893) | more than 2 years ago | (#39600917)

And then some poor schlub who owns a homegrown car repair shop gets one digit wrong, and the IRS is deep in their colon. That's fair!

no bezos? (1)

midgetmoe (2612259) | more than 2 years ago | (#39600951)

no pesos :) This guy is a master at avoiding taxes

Attempts to contact the head office were made (1)

crazyjj (2598719) | more than 2 years ago | (#39601009)

We attempting to contact the CEO at the head office for comment, but discovered that company HQ was located in a small post office box in the Cayman Islands.

Re:Attempts to contact the head office were made (1)

Karl Cocknozzle (514413) | more than 2 years ago | (#39601147)

We attempting to contact the CEO at the head office for comment, but discovered that company HQ was located in a small post office box in the Cayman Islands.

...a post-box that is currently filled with unread magazines, unpaid utility bills, and angry letters from disappointed shareholders, which might explain why notes to the CEO are also going unanswered...

No Incom Tax (1)

oldhack (1037484) | more than 2 years ago | (#39601093)

No income tax no VAT... these twins are adorable.

http://www.youtube.com/watch?v=SH9GuJROrck [youtube.com]

Re:No Incom Tax (0)

Anonymous Coward | more than 2 years ago | (#39601251)

Amazon charge VAT, it's built into the price you see on the co.uk site.

in america (1)

nimbius (983462) | more than 2 years ago | (#39601173)

we just call that 'working smarter.'
now make haste and begone ye wicked tax collector, tarry any further and we'll 'right-size' the 'human capital!'

muahahahaha,
Amazon, a beacon of american capitalism

P.S: The Kindle Fire is a 7-inch tablet that links seamlessly with Amazon's impressive collection of
digital music, video, magazine, and book services in one easy-to-use package! Prostrate yourself today!

The reason why Amazon should pay taxes is simple.. (4, Insightful)

danielrendall (521737) | more than 2 years ago | (#39601193)

...taxes pay for things from which enable Amazon to have a business at all. Amazon can sell books to us because we're a reasonably literate population. They can get stuff distributed because we have a good road / rail network which is maintained. We have mechanisms in place to dispose of the masses of card packaging that Amazon use. We have employees who are kept reasonably healthy by the NHS (I'll understand if American readers are confused on this point - we have a decent health care system, America doesn't). All of these are the result, essentially, of taxpayer-funded state investment. So, by not paying taxes, Amazon are benefiting directly from such investment without contributing to it which, I would argue, is unfair and parasitical. I saw a great suggestion recently which was that if all of these anti-tax companies really wanted to put their money where their mouths are, they would set up shop in some crummy backward little country that doesn't bother with taxes and consequently has very little in the way of infrastructure, health, literacy etc. That's what small (or no) government gets you. If they decide they'd rather do business somewhere more advanced, they can damn well pay their fair share for the upkeep of the place.

Re:The reason why Amazon should pay taxes is simpl (0)

Anonymous Coward | more than 2 years ago | (#39601649)

Corporations don't pay tax unless most of their customers are foreigners. What you're demanding is that Amazon raise prices, collect more money from their British customers, and give it to the British government.

Why do you think the world would be a better place if ordinary Britons had to pay even more tax than they currently do?

Re:The reason why Amazon should pay taxes is simpl (1)

jo_ham (604554) | more than 2 years ago | (#39602227)

Corporations don't pay tax unless most of their customers are foreigners. What you're demanding is that Amazon raise prices, collect more money from their British customers, and give it to the British government.

Why do you think the world would be a better place if ordinary Britons had to pay even more tax than they currently do?

Well, perhaps then their competitors - like brick and mortar bookstores and even other online retailers might actually *stay in business*, thus creating jobs, healthier economy, more money going back into the economy (instead of being siphoned away to a tax haven).

Amazon's prices are artificially low - they don't need to raise them, they need to be brought into line with where they would be if they were playing fairly.

Re:The reason why Amazon should pay taxes is simpl (0)

Anonymous Coward | more than 2 years ago | (#39602529)

Maybe you haven't been paying attention lately. The US government just finished printing/borrowing $7.2 Trillion to hand out to banks. They had a $900 Billion stimilus that only went to keep union employees in their jobs, and only for unions that automatically collect dues and give a percentage to the DNC. They spent $50 Billion on loans to solar companies that never had a chance to work out, but were owned by campaign bundlers.

On the flip side, an oil company wanted to build a pipeline, with no government handouts or subsidies, but were denied because they are owned by people who are not bundlers of donations for the DNC.

Now why would ANYONE want to contribute to this? The governments are literally stealing money from the middle class for their own use. It isn't going to infrastructure, or better services, it is going to the pockets of politicians and their friends.

Well, even if it is legal... (0)

Anonymous Coward | more than 2 years ago | (#39601195)

I'm sure they [the UK government] will invent some kind of law making it illegal.

(They're good at that.)

Re:Well, even if it is legal... (1)

Captain Hook (923766) | more than 2 years ago | (#39601883)

We've got a Conservative government at the moment, I wouldn't be surprised if they were looking for ways to help Amazon even more.

Solution: Don't spend or tax so much .... (0)

Anonymous Coward | more than 2 years ago | (#39601219)

Quite frankly, it is a pain for companies to structure their businesses as Amazon.co.uk has. Smaller companies have it even more rough as they don't have a team of lawyers and accountants to keep it all strait. Even so, the reason why companies (as well as individuals) do things like this is simply to avoid excessive amounts of taxes. If the tax rates weren't as high as they are, there would be much less incentive to jump through arcane hoops just to save a bit of money. (Conversely, if higher taxes can be avoided simply by not spending so much.)

It is important to realize that taxes on business income are hidden taxes to the consumer. Businesses always look at the bottom line and the bottom line for a business is different than that of a taxing authority. The taxing authorities look at profit being after the cost of your goods and services, rent, overhead, etc. In reality, your profit is all the above AND your after tax income. Businesses look at how much they need to make at the end of the day, figure in the cost of their taxes, raw materials, labor and overheads then make sales projections and then price accordingly. The price to the consumer reflects the taxes on the business as the money to pay those taxes do not come from out of nowhere.

Business "income" is a ripe target for politicians as businesses are unable to vote to defend themselves and are often afraid to speak out as the same politicians that tax them can also regulate them out of existence. Meanwhile, it gives the politicians a source of income for which they are unaccountable and with which they can buy votes for their next term in office. Unfortunately, the consumer is unaware of how much of their final price is composed of government imposed taxes and fees. If they did, they would likely be very very upset.

Re:Solution: Don't spend or tax so much .... (1)

Captain Hook (923766) | more than 2 years ago | (#39601903)

Even so, the reason why companies (as well as individuals) do things like this is simply to avoid excessive amounts of taxes.

Or if there were just simple flat rates of tax for income and/or wealth there would be no advantage to create these shells.

Corporations wonder why people download movies... (2)

Overzeetop (214511) | more than 2 years ago | (#39601287)

If you don't _have_ to pay for something, why would you? Same with taxes - they know darned well they _should_ pay taxes, but with a little corporate slight of hand, they don't have to.

Globalization? (2)

s.petry (762400) | more than 2 years ago | (#39601323)

The US has the same issues as the UK, which has the same issues as Europe. In the US, there was a report last year about how many companies moved their HQ to a PO box overseas, I believe mostly to Ireland. This was reportedly done to avoid paying US taxes. Of course even though this was shown to be true, the media later stated that it was anti-business hype and not a real problem. As of course the US goes further and further in to debt, public services are cut more and more, and the top 1% earners increase their wealth by incredible amounts each year.

Now we see similar stories from the UK, and right in the article it's seemingly excusing the businesses and vilify the protestors. (Sound like OWS?)

HSBC has joined the least desirable club in the business world. The bank yesterday became the latest target of a sudden surge in public fury over tax avoidance, as a guerrilla group of demonstrators under the elusive banner UK Uncut planned to occupy branches in London and Liverpool.

Baker says he is worried that the kind of street protests led by UK Uncut could "morph" into a more serious anti-business movement, though he admits some firms give the corporate world a bad name by over-exploiting loopholes.

So if you complain, you have to be anti-business.. you can't be right.

So the UK is as messed up as the US.. I'm not sure that makes me feel any better. Used to be, we were kind of the check and balance for each others corruption. The more of this kind of stuff I read about, the more I have to think that many of those conspiracy theories may be true.

So What? (1)

John Hasler (414242) | more than 2 years ago | (#39601363)

Everyone arranges their affairs so as to minimize tax liabililty as long as doing so does not cost more than it is worth. The financial affairs of large organizations such as Amazon are complex and tax law is not a cut and dried objective subject and billions of pounds are at stake. Thus the tax returns of big corporations are always "under investigation". There is no news here.

Know what I mean? (2)

Overzeetop (214511) | more than 2 years ago | (#39601389)

  HMRC: 'Evening, Executive!

          Executive: (stiffly) Good evening.

          HMRC: Is, uh,...Is your corporation a goer, eh? Know whatahmean, know whatahmean, nudge nudge, know whatahmean, say no more?

          Executive: I, uh, I beg your pardon?

          HMRC: Your, uh, your corporation, does it go, eh, does it go, eh?

          Executive: (flustered) Well, it sometimes "goes", yes.

          HMRC: Aaaaaaaah bet it does, I bet it does, say no more, say no more, knowwhatahmean, nudge nudge?

          Executive: (confused) I'm afraid I don't quite follow you.

          HMRC: Follow me. Follow me. That's good, that's good! A nod's as good as a wink to a blind bat!

          Executive: Are you, uh,...are you selling something?

          HMRC: SELLING! Very good, very good! Ay? Ay? Ay? (pause) Oooh! Ya wicked Ay! Wicked Ay! Oooh hooh! Say No MORE!

          Executive: Well, I, uh....

          HMRC: Is, your uh, is your company a sport, ay?

          Executive: Um, it's profitable, yes!

          HMRC: I bet it is, I bet it is!

          Executive: As a matter of fact it's very profitable.

          HMRC: 'Oo isn't? Likes profits, eh? Knew it would. Likes profits, eh? It's been around a bit, been around?

          Executive: We have offshore accounts, yes. We moved the books to Luxembourg. (pause)

          HMRC: SAY NO MORE!!

          HMRC: Luxembourg, saynomore, saynomore, saynomore, Executive!

          Executive: I wasn't going to!

          HMRC: Oh! Well, never mind. Dib dib? Is your uh, is your corporation interested in....taxes, ay? "Taxes, ay", he asked him knowlingly?

          Executive: Taxes?

          HMRC: Snap snap, grin grin, wink wink, nudge nudge, say no more?

          Executive: Corporate taxes, eh?

          HMRC: They could be, they could be corporate. Domestic, you know, DOMESTIC corporate taxes?

          Executive: No, no I'm afraid we don't pay any domestic taxes.

          HMRC: Oh. (leeringly) Still, mooooooh, ay? Mwoohohohohoo, ay? Hohohohohoho, ay?

          Executive: Look... are you insinuating something?

          HMRC: Oh, no, no, no...yes.

          Executive: Well?

          HMRC: Well, you're a man of the world, Executive.

          Executive: Yes...

          HMRC: I mean, you've been around a bit, you know, like, you've, uh.... You've "done it"....

          Executive: What do you mean?

          HMRC: Well, I mean like,....you've SKIPPED on you taxes....

          Executive: Yes....

          HMRC: What's it like?

This is the root of our economy woes (1)

Okian Warrior (537106) | more than 2 years ago | (#39601437)

This is one of the biggest reasons for our economic situation.

Amazon pays no UK tax, General Electric pays no US federal tax [go.com] , and on and on.

By propping up existing companies. governments have been investing in stagnation for the last 20 years. It's reached the point where it's very difficult to start a new company.

Jobs aren't created by existing companies, jobs are created by starting new companies and by small companies growing large.

Yes, GE and Amazon have been job creators, but that was then. Once companies have enough employees to get their job done, hiring essentially stops. Workforce numbers among established companies is, to a large extent, static.

Jobs are created by starting new companies - but how can anyone compete? It's impossible to make a product that competes with a GE product. Even if the new product is better, GE has a lower margin because it pays no taxes.

IP laws (patent issues), intrusive useless regulations, intrusive tax accounting, ambiguous laws with discretionary enforcement set the barrier to entry for starting a business today very high.

A vibrant, healthy economy has lots of churn. Businesses need to adapt or die, and propping up businesses just because they are "established" runs counter to that goal.

It's no wonder that the economy hasn't recovered in 3 years - we don't allow it to change.

Reverse Engineering the Tax Analysis (4, Informative)

wol (10606) | more than 2 years ago | (#39601563)

OK. Reverse engineering a bit and filling in gaps in the media reporting, here is my educated analysis. If you, as a UK consumer, buy a book from amazon.co.uk, you are actually hitting servers in Luxembourg and buying the book from a Luxembourg company. Letâ(TM)s call it Amazon Lux. Current EU VAT rules mean that if you are downloading a e-book, Amazon Lux only charges the Luxembourg VAT rates on the sale and hands that VAT over to the Luxembourg government. (This rule is expected to change in two years.) If you are buying a dead tree version, then Amazon Lux has to charge UK VAT rates on the sale and hands that VAT over to the UK government.

There is a separate Amazon subsidiary in the UK, which operates a warehouse and shipping operation. Letâ(TM)s call it Amazon UK. Amazon Lux pays Amazon UK to operate the warehouse and perform the shipping. Typically this is done on a cost-plus basis, so Amazon UK is probably recovering its costs and getting a profit margin of 5-10%. Amazon UK will be paying UK income taxes on this small profit margin.

The tax treaty between the UK and Luxembourg states that if the only thing a Luxembourg company has in the UK is an agent that distributes stuff or stores stuff in a warehouse, then the UK government wonâ(TM)t treat that Luxembourg company as âoedoing business in the UKâ. Amazon Lux can take this position because they claim that the actual âoesaleâ event happened at the servers in Luxembourg when you made the final click on Amazon Luxâ(TM)s website. If this position is valid, then any profit on the sale above and beyond the cost-plus margin at Amazon UK is only taxable in Luxembourg. (And remember that the cost-plus margin is taxed at Amazon UK, not Amazon Lux â" the legal entity that actually entered into the transaction with the consumer.)

The complicating historical question is whether Amazon could move its historical business operation out of the UK to Luxembourg without paying an exit tax. EU law allows free movement of business and capital, but the issue of whether you can bail out of a country to a lower taxed country without any tax consequences is a bit of a muddle right now.

Re:Reverse Engineering the Tax Analysis (0)

Anonymous Coward | more than 2 years ago | (#39602449)

I'd say that a UK customer is likely hitting servers in London,not Luxembourg (although this really depends on how the tax department at Amazon has decided to deal with this). Luxembourg is just where the business operates. AbeBooks.co.uk is an Amazon company as well -- which is run on servers in Canada, but is owned by the subsidiary in Luxembourg. The same goes for AbeBooks.com, .de, .it, .fr etc. Their head office is in BC, Canada -- servers run in Alberta, and owned by Amazon Luxembourg to take advantage of the same tax sheltering.

When you work for Amazon, and decide to come up with some new plan/structure/app/deal/whatever -- you must get sign off from the business, sign off from legal, and finally, sign off from the tax team. The biggest desire from Amazon is to be certain whatever they do, does not create a tax nexus for fear of losing the farm.

Re:Reverse Engineering the Tax Analysis (0)

Anonymous Coward | more than 2 years ago | (#39602535)

They do their fulfillment on VAT items such as DVDs from the Channel Islands to avoid the VAT, books don't attract VAT at the moment.

The in country facilities ARE doing fulfillment. (0)

Anonymous Coward | more than 2 years ago | (#39601703)

The parts of Amazon in the UK is an 'order fulfilment' business. You can even buy things that are sold by other sellers and "fulfilled by Amazon". If a UK vendor uses Amazon to sell their products and makes a profit then they will pay their UK taxes. As a legitimate company, Amazon UK makes sure that everything going into the UK has had all the tariffs, VAT, etc...payed.

If Amazon makes a profit, it will be taxed at least once. With modern technology, there can really be a few people running the profitable parts of the whole show. If google was not trying to do a million news cool things just for the heck of it, how many people would it take to make a search engine 100?

At least in the US, along the highway there are periodic weigh stations where commercial shipping trucks must stop to be weighed and taxed to fund the road system etc...

Don't get it. (4, Insightful)

taxman_10m (41083) | more than 2 years ago | (#39601751)

About 50 people so far have given some variation of, "Well, if it's all legal then it must be ok." It's not troubling to anyone that they worked within the law to create a fiction, which is that they don't really operate or exist in the UK? It's wrong because it isn't true. Like in the USA we had Reagan redefine ketchup as a vegetable or something. I say this almost ever time this topic comes up, but it really seems to me that libertarians are nothing more than the useful idiots of big business. Sure, they like to think they support business in general, but it's always big business they rise to defend. As if Amazon needs defenders.

Re:Don't get it. (1)

ThatsMyNick (2004126) | more than 2 years ago | (#39602609)

Yeah attack the people the defend Amazon. Call them names (libertarians, useful idiots, defenders of Amazon). Would you care can to explain why you disagree with "If it's all legal, it is ok". (I am assuming this is happening in a first world country, with pretty well defined laws)

Income Tax? (0)

Anonymous Coward | more than 2 years ago | (#39602085)

Of course it's paying no income tax in the UK. Companies don't pay income tax in the UK. Individuals, unincorporated businesses, partnerships and LLPs pay income tax in the UK. Limited companies pay corporation tax on their profits.

Total UK tax burden? (0)

Anonymous Coward | more than 2 years ago | (#39602543)

So, if Amazon is paying 20% UK VAT on most purchases (besides e-books), then isn't the UK making about 5 times as much an Amazon's revenue as Amazon is making (if we assume 4% profit)? Doesn't the VAT being paid dwarf any corporate income tax loss? Also, why doesn't any "news" outlet reporting on this story mention Amazon's total UK tax burden?
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