If the UK has no benefit, how do these companies survive? I guess the UK is receiving some other benefit which isn’t from corporate tax. I think you are better informed in this than me.

What dividends do amazon and google pay? Is it too much to guess that if they’re listed, that they are probably paying to the institutional investors, it is, afterall, one of the ways that institutional investors make their money.

Why do multinational exist, if no one needs them? Because we’ve let them? There was a time when multinationals had a place, then greed took over and here we are.

As an insider, how would you resolve this problem?

It’s worth remember that these companies provide services billions of people use everyday so the lot at the top are going to be minted. Problem is with taxing companies that are highly mobile and with such global reach, the world has seen nothing like it before.

Note that Amazon Web services are used by the Guardian for the iPhone and data analytics, so they moan on one hand and give them business on the other!

Corporation tax on turnover?

What an utterly ridiculous idea,

Consideration would only be undertaken by true idiots

What dividends do amazon and google pay? Is it too much to guess that if they’re listed, that they are probably paying to the institutional investors, it is, afterall, one of the ways that institutional investors make their money.

Which is why it always make sense to do a bit of research, both are reknowned for not paying dividends, this is why THM asked the question.

Which is why it always make sense to do a bit of research, both are reknowned for not paying dividends, this is why THM asked the question.

Aaah, it was a trap then. Very clever. I’ll try and be impressed. 🙄
So, why do people invest in them then? The corporate tax or lack of it argument is still the same for these companies.

Not a trap, merely wondering why you were arguing about shareholders pushing for greater dividends? You are making this an issue.

The first question was also a simple one – provide goods and services for which there appears to be strong demand, employment (ditto – unless they are using chain gangs)?

Very simple research indicates the impact that corporation tax has on labour – as always people,should be careful what they ask for.

At least we only have one left-of-centre party’s arguing in favour of competing strongly on corp tax levels, but they could have been simply dreaming.

Not a trap, merely wondering why you were arguing about shareholders pushing for greater dividends? You are making this an issue.

Simple thought process tells me that the investors want a return and an organization is still going to maximize profits for reinvestment. And ultimately the shareholders still was to see an increase on the investment, so no change there. A couple of exceptions to what is otherwise widespread doesn’t demonstrate anything.

The first question was also a simple one – provide goods and services for which there appears to be strong demand, employment (ditto – unless they are using chain gangs)?

But few provide products and services that cannot be served at a local level, Amazon, Starbucks.

Very simple research indicates the impact that corporation tax has on labour – as always people,should be careful what they ask for.

Very simple research says that the guys at the top won’t suffer, but the little guy always will. It’s that greed thing.
As you say that there is a demand, so do I give my coffee money to Starbucks or the local coffee shop? No loss of labour or earnings there, in fact it’s probably beneficial.

One point that hasn’t been addressed. All those in favour of penalising shareholders, you don’t have pensions do you? Do you?

A couple of exceptions? They are at the centre of this whole debate….

Odd that people patronise Amazon and Starbucks instead when they could be served at the local level instead. Why would that be?

Interestingly Google is a company that does restrict its shareholders, by issuing shares with much lower voting powers than those retained by the founders. According to them, and to Will Hutton, who is one of the main voices calling for regulations on shareholding/ownership, this allows them to remain more innovative, take a longer term approach, and take more risks on investment.

However, it clearly doesn’t solve the corporation tax issue, which is quite separate.

I presume you must be referring to some companies other than Google and Amazon the rest of us are discussing?

Odd that people patronise Amazon and Starbucks instead when they could be served at the local level instead. Why would that be?

Perhaps because they don’t pay corporation tax so their prices can be set lower and still make a profit for their shareholders?

… And pay their staff

oldnpastit – Member

Perhaps because they don’t pay corporation tax so their prices can be set lower

Starbucks prices aren’t lower, though. They’re a fairly expensive place to buy a fairly ordinary coffee.

(except the caramel macchiato, I assume they’re doing it wrong because everyone else’s is different, but I love it. MMMM tax avoidey)

Starbucks prices aren’t lower, though. They’re a fairly expensive place to buy a fairly ordinary coffee

So if it’s not the coffee that gets people through the door of Starbucks, what is it?

konabunny – Member
Starbucks prices aren’t lower, though. They’re a fairly expensive place to buy a fairly ordinary coffee

So if it’s not the coffee that gets people through the door of Starbucks, what is it?

The tickling of the genitals by the elves under the counter.

Have you not seen how mrsfry shivers at the first mouthful?

A couple of exceptions? They are at the centre of this whole debate….
But it isn’t just restricted to two campanies, is it? If you look at the tax havens, the number of registered companies is counted in the tens of thousands, Google and Amazon is just the tip of the iceberg, I don’t know why the focus is on these two organizations. The level of tax revenue that this country is losing must be enormous.

Odd that people patronise Amazon and Starbucks instead when they could be served at the local level instead. Why would that be?
Starbucks have an intersting history, they participated in something that was labelled brand bombing (highlighting the importance of brand) where they would open so many branches that they would squeeze out the competition, when the competition folded, they closed the unprofitable branches leaving one or two to take up all the custom. This is not a cheap strategy to undertake, but ultimately a profitable one. And I think we can see that they were an already high profile when they arrived in UK, they were entering a new market as in we weren’t a coffee house culture ( we had pubs). People didn’t have as much choice as you claim (people are stupid and marketers know this) The higher prices that we now see are possiblty a consequence of having a cornered market, good marketing team and gullible customers. I don’t buy coffee in Starbucks and have only been there twice in my life due to their brand bombing. There is competition in the form of Cafe Nero and Costa and independants for this new expensive coffee experience, but following the Starbucks model.
As far as Amazon is concerned, their customers are there for price and in order to reduce price they have to have reduced costs and not paying tax is part of this equation. And yes, that means that we, the customers, are guilty of promoting and allowing the business to flourish. It also means that we’re as guilty as the corporations for the whole problem.
I am an advocate of the Crickhowll project and sincerely hope that small businesses can get enough momentum in order to level the playing field and then see where we are. At the moment it isn’t a level playing field and this allows companies like Amazon, Google and Starbucks to dominate and close out the competition. This is not good, ultimately, for the customer and we’re supporting it blindly. Good on us.

So if it’s not the coffee that gets people through the door of Starbucks, what is it?

I don’t know whether this is the thread for it, but:
Consistency of experience.
People go to Starbucks because…
a) Wherever you are, there will be a branch. i.e. No thinking required. All my Starbucks visits have been business meetings where the client knows there’s one just outside a train station/car park/etc.

b) If you liked it before, you will like it again. i.e. No risk of being disappointed.

c) Service will be consistent. i.e. No risk of it taking too long.

d) Unlikely to offend. This is probably less true these days, but for a long while Starbucks was the inoffensive middle ground. i.e. No risk of looking like a fool for arranging to meet there.

The motivations are similar for Amazon.
i.e. It’s the less risky option

If people stopped using them then they’d be in trouble, and they’d have to change their ways. I do admit that it is pretty easy to do that in the case of Starbucks and their god awful coffee, not necessarily so easy with Amazon and Google who provide a quality specialist services.

NB: I don’t think people fully understand what Amazon do, it is far more than just delivering books etc. their cloud based computing side Amazon Web Services (AWS) is now a big chunk of the company, from Oct 2015:

AWS made up only 8% of Amazon’s revenue last quarter, but it made up 52% of its operating profit. The cloud business’ profit was bigger than the rest of the company combined.

And yes, that means that we, the customers, are guilty of promoting and allowing the business to flourish. It also means that we’re as guilty as the corporations for the whole problem.

Indeed. should be remembered among all the huffing and puffing 😉

The ranges on tax loss vary but approx. 10% of current corp tax take

For all the hammering of big companies – something like 1% of companies pay 80%+ of corporation tax. Not a justification for aggressive avoidance* per se, just a point

* that has a cost too which is another inefficiency in the market

As I wrote in a letter to my MP on Friday, the UK arm of Google recorded profits in it’s first quarter of 2014 in the region of $10bn and represented 10% of Google’s worldwide revenue.

If we’re supposed to be so skint, then why aren’t we taxing appropriately? What about Amazon, Starbucks and Apple to name but three?

Surely, if multinationals want to do business here and reap the profits from here then they should pay a reasonable amount of tax?

No one is disputing that fact.

But there is a wider problem of up-dating a tax framework that addresses the realities of modern commercial life. The current one fails miserably. Until this is sorted out, companies can legally carry on doing what they are doing.

For the sake of balance, that includes in Amazon’s case increasing their workforce by 50%, investing heavily in automation and providing two hour deliveries.

Doing this costs money too – their gross margins continue to fall, revenues and profits miss their stated targets etc….

As for shareholders, share price was mullered on Friday and you are still paying 900x earnings for the privilege of being a shareholder (source FT today) although they have performed strongly over the past year – so you decide, who the winners and losers are…

The whole business of taxing profit where it is made rather than where it ultimately ends up seems pretty complicated. And don’t forget that, compared to countries like the USA and UAE, the UK can be seen as a low tax jurisdiction. (so we could be accused of facilitating tax avoidance!)

I think there are a few fairly simple tweaks that would generate more tax from the larger corporates.

Stopping carry forward losses, or transferring losses within a group spring to mind.

But that would only happen if there was the political will, and the government could afford clever enough lawyers,

@PJM Apple is a very good example of a company absuing its position. It pays very little tax anywhere including the US. Its the target of a lot of critism there too. I am pretty certain Google UK did not make $10bn in profits in 2014

The UK cannot fix this problem whislt we remain in the EU, tax rates are low in Ireland and Luxembourg but even still the governments there arranged sweetheart deals (Triple-Irish and 100’s of deals personally sighed off under Junker)

@tmh, intellectual property and licensing fees should not be deductable against profits if the fee is not taxable at another UK entity. I’d create a 10-15% additional on-line sales tax too and find a way to efficiently tax on-line advertising revenues (facebook, google etc)

…and guarantee that no pensioners will vote for you in the next election. There’s no NI levied on pension income. So either:

1) Combine income tax & NI and make the basic rate 32%. No chance. That’s an direct raid on pensioners’ income and they’ll be a bit annoyed.
2) Scrap NI completely, keep the basic rate at 20% and magically find the other 12% from down the back of the sofa. Not happening.
3) Accept it’s a flawed system and let sleeping dogs lie.

You do realise that could easily be mitigated by taxing pensions at a different rate?

Accepting the status quo is just a cop out.

Butchering the tax system to try and stop abuse is counterproductive, makes us less efficient, and penalises the innocent. Disallowing losses brought forward would deter investment, introducing taxes on royalties would increase the cost of accessing new technology, etc etc.. You end up throwing out your baby triplets with the bath water.

As I constantly have to repeat on here leaving the European union old have limited effect as we would still be bound by our extensive network of double tax conventions which, inter alia, limited our ability to discriminate between amounts paid to foreign companies compared to UK companies.

The solutions the government are following will have an impact but I can still see ways round it and it will take time to implement.

So we would be free to renegotiate the way those work with countries which have such wildly different rates of tax that it is advantageous for companies to take advantage of them. I don’t think anybody could claim such renegotiation was in any way unreasonable or discriminatory – if another country wants to have fully open double tax conventions then it simply needs to apply similar rates of corporation tax (and not allow money to flow tax free through there to another tax free country aka Dutch Sandwich) so that the flow of money is not all one way.

I appreciate it’s not that simple, but at least it would be possible to enter negotiations on things like this if we were outside the EU – whilst in the EU it’s completely pointless and impossible.

I don’t think anybody could claim such renegotiation was in any way unreasonable or discriminatory

It doesn’t matter whether it is reasonable or not – if the other country doesn’t want to play ball you will not get a new treaty – Ireland is not going to increase their tax rate to keep the UK happy. That leaves you with the nuclear option of rescinding the treaty, which has only happened once between developed countries in my memory (Denmark/France), but as a trading nation that is contrary to the whole way our economy works.

To be fair, treaties can more rigorous about what is required for them to apply than EU stuff, but as I am out of date I am not sure to what extent the UK has been able to adopt the US approach in recent treaties.

Having said that, this is all a bit of a red herring, if Google were paying royalties to the US, people could see that is fair because it is where the intellectual property resides. In which case, it is really the US that is missing out rather than the UK, because royalties are reasonable they are just not going to the US and therefore avoiding tax there.