They're not paying "just" 2% in their entire structure. Those profits flow back through various entities, to the US (where they will pay additional tax), to the shareholders (either ultimately through dividends or buybacks, which is subject to tax again).
Police protect people, by and large. Corporations don't benefit much from services of the state. Fire services would be a better example but they are often funded out of local rates rather than national corporation tax.
As a Brit I wish my country would give up on these boring and routine "outrage" stories. Amazon pays corporation tax in America because it's an American company. End of story. If my fellow Brits want a world beating firm like Amazon that brings profits back to the UK locally, they need to get cracking and make one.
Don't corporations benefit from having a base of consumers protected by the state? And employees educated by the state. And able to travel to your business on roads paid for by the state, etc etc.
I know, right? The only reason I realised that was because I am from a country that legally has all of that but none of it properly works. Large corporations don’t work very well in these countries (or they work really well, depending on how illegal they would like to be).
They're creating jobs in the UK, on which those employees pay income tax, which contribute directly to the UK treasury.
Those jobs wouldn't be there without the US company that is Amazon. Having Amazon invest in the UK is a net win for the country. In addition to corporate tax, they likely also pay indirect taxes, such as business rates on property, stamp duty, and (some) VAT.
If you were to flip this, I take it you prefer a company such as BP pays all of their tax in the country they operate in, and very little in the UK? Most assets are not UK based, after all. That's the same reasoning.
Never did I say they were creating amazing jobs. Most lower end jobs suck. But they do bring in tax (or end up reducing the amount of social security payments that need to be paid otherwise) -- both are net positives.
A job you don't want but have no other choice, is a job that occupies the space of the other jobs, that potentially could be better. Amazon is an entity that is concerned with growth, but not with creating the society that works for an another century.
Corporation tax is based on profits. But what Amazon does is it directs all of it’s profits to growth and obviously to the raise of it’s power.
I don’t see any difference between earning more money or power. Except we have not yet invented any way of taxing power.
I wouldn’t go too much about Amazon only if Amazon actually created jobs that implied better societal cohesion, but what they do is they take advantage of the poor and uneducated in order to bring even more power to their own table that they share with nobody else.
I prefer that in a globalised world, companies pay taxes based on how much they have earn and employ in the country they operate in. No tax heavens - the only reason they exist is because other countries subsidise their military/safety nets and education.
At some point we do have to realise more rules aren't helping.
Yes, the tax avoidance strategy Amazon uses is unique and interesting in that they keep growing massively, investors value them as a massively profitable company, yet they declare almost no taxable profit. But do we fix this, and if so, how? Maybe monopoly or monopsony laws need to be strengthened..
There will always be ways to avoid tax for those unwilling to pay (tax avoidance is as old as taxation itself), and past a certain point it gets a bit ridiculous to try and create more rules and laws.
profit made in the UK should be taxed by the UK. I don't care what the US does.
And this amazon, a seller/reseller of goods. If they disappear then people would just shop in another place. It's not like they are researching and building unique and non-replaceble products like apple or google.
So if you own a British company, and do few jobs in France, where do you think you will be paying tax? In general, tax is paid where you declare the tax residence, not where you work. I know at least several people who live in Denmark but commute daily to Sweden for work, and of course they pay tax in Denmark, because that's where their tax residency is - it's the same with companies in general.
The USA isn’t in the EU, though of course there’s quite a few treaties and agreements in place. But frankly, the worldwide dominance of US companies coupled with their comparative lack of tax burden in other countries starts to grate on us over here (Australia in my case), rightly or wrongly. It’s not felt that they’re paying their fair share.
Amazon is Amazon UK Ltd in UK. A company registered in UK. Facebook is Facebook UK Ltd. Another company registered in the UK. They both pay taxes here. But not what it should because of accounting artifacts and weak laws.
If a company have contract in another country there are definitely taxes to be paid in that country. It doesn't mean that some of those taxes can not be claimed back, but the work is effectively done abroad (as opposed to tax domiciliation) and therefore the tax is due in that country according to its laws.
In the EU all member countries have laws against double taxation - so you only pay the tax where the company is registered. If VAT is due, you have to collect rate that applies in the country where the trade/contract was executed, but you still pay it in your home country.
I can't see corporation tax lasting in the long term, the obvious solution to these problems is to tax capital gains and dividends as if they were income.
This could work if unrealised capital gains are taxed too. This is however too difficult, and susceptible to other kinds of fraud, if applied to non-quoted companies.
It’s criminal, but the tax system is designed to let them get away with it. Tax needs to be radically overhauled. If any US company complains that they can’t afford to pay their taxes and make a profit at the same time, fine. Let them leave, then indigenous corporations can take their place, with state support to get them going if necessary.
Edit: For our US readers, describing something as ‘criminal’ is a fairly common British turn of phrase to describe something grave, not a literal implication of criminality. I’m sure the players involved are literally playing by the rules. Those rules just happen to be broken.
The point is that they could be paying zero corporation tax, and yet Amazon would be responsible for a stupid amount of tax being paid in the UK. But of course the corporation tax seems very low in comparison to their earnings, so it's an easy target to complain about.
I’m kind of blown away by the comments this is getting. Do people actually not realise that every other company also pays their employees and also happen to pay corporation tax? Meaning that comparatively Amazon is paying massively less? How is that point not getting across?
People realise. People either 1) don't care, or 2) like more competition in a market, generally leading to lower prices. Not having to make profits means Amazon entering a market often lead to lower prices in the shorter term.
Also, wealthy people (or those moderately well off) can avoid tax with a decent understand of tax law. So they might not care. Plenty of people only care about optimising their own returns on capital and effort invested. If I can sell a business for £10m and somehow pay no tax legally, vs selling and paying 20% capital gains tax -- I would always prefer to pay absolutely nothing. Shocker.
Last, I have a good understanding of local and international tax law, and while the system is somewhat broken, it's not massively broken -- steps are being taken internationally to fix major issues.
Amazon makes it so easy to buy stuff that I might buy some things that I would never have bought otherwise, but for the most part, money spent on Amazon is money that would have otherwise been spent in another retailer, who probably pays wages, rent and corporate tax as well.
If Amazon left the UK, people would still buy nearly as much as they do now.
And all the VAT they collect on the products they sell which is surely into the billions. I certainly spend a lot more money than I might otherwise thanks to Amazon, so their impact on the tax base is a lot more nuanced than corporation tax alone.
You would have spent just as much on amazon if it paid it’s fair share of tax. I fail to see how their shareholders taking less profit would decrease your desire to consume.
Out of curiosity, what motivates you to defend a multinational company enriching itself at the direct expense of you? Of it being able to funnel billions of pounds away from your social services, your schools, your hospitals, your roads, your education system?
I'm not really defending Amazon, but I'm certainly playing down the importance of corporation tax. I think CT is a timid and outdated tax (for many of the reasons leading to this thread) and should be replaced by something else that keeps the taxes closer to the point of consumption. Tax large corporations in ways they can't avoid, not on profits they can manipulate with cross-border transactions.
It’s a figure of speech you may not have encountered before, relatively common in British English.
But quite apart from that figure of speech, the CEOs and senior management of megacorps that don’t pay tax in such an outrageous way ought to be criminalised.
If Amazon pays its employees income, and those employees pay income tax, how is that different to Amazon paying tax? The government gets its money from Amazon either way.
> If Amazon pays its employees income, and those employees pay income tax, how is that different to Amazon paying tax? The government gets its money from Amazon either way.
You mean, from consumers, who pay Amazon.
Or, maybe from those consumer’s employers, who pay them wages. Or...
Once you start posting
posting that game, it never ends.
Because the tax system isn’t designed to be based solely around income tax. In order to make up the missing funds where corporation tax ought to be, personal taxation would have to be considerably higher, which would also mean that employee wages would have to be higher to compensate. The overall perctange of revenue paid into the tax system by the corporation would be the same via higher employee wages.
However, we do not live in a personal taxation only system. Corporations are therefore able to radically reduce their tax spend by avoiding corporation tax and not increasing spend on wages. The total amount of tax paid by the corporation goes down. This is obviously true, otherwise there would exist no motive for companies to pursue strategies of paying such low corporation tax.
If the CEO wants to buy a new Ferrari, they need to take money out of the company - either as income or dividends (both of which are taxed). If the company buys him his car then it's a taxable benefit too. If the company increases the value of the CEOs shares by doing share buybacks, then the CEO just pays more capital gains taxes. Avoiding corporation tax means the tax paid directly by the company goes down, but it's not at all obvious that the net amount the government receives goes down. Only direct taxes are reflected on their balance sheet, though, which is a good enough incentive.
Fine, re-structure the tax system around income tax. But at the moment it means your local book shop pays corporation tax whereas Amazon doesn't.
In the UK it's double broken, because shops have high rates of business rates (which don't go away if you're not profitable), whereas giant warehouses attract very low business rates.
But you don't explain why? I'm outraged at all sorts of things but it behooves me to offer an explanation of my reasoning should I wish to convince others.
We’re into territory of ‘why should companies pay tax’ here. This is a longer conversation than I care to have, I believe it is self evident that they should, and that large ones shouldn’t be able to get away with paying none simply because they are so large.
It may not be strictly criminal, but the influence that these multinationals have to subvert and corrupt governments is monumental and that is highly unethical. Nobody should be defending multinationals in this situation, their profits are for them alone. E.g. a mining company moves in, sucks the land dry, doesnt pay any substantial tax and then leaves, often with the people of that country worse off than before. This sort of unethical behavior is cancerous and enables modern day economic slavery.
Would you please edit the personal swipes out of your comments here? Leading with those (like you did here and https://news.ycombinator.com/item?id=17679652) sets discussion in a poisonous key, and we're trying for better than that here.
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[ 52.9 ms ] story [ 123 ms ] threadGod, if I was a corporation too, instead I pay 40% taxes on my salary.
As a Brit I wish my country would give up on these boring and routine "outrage" stories. Amazon pays corporation tax in America because it's an American company. End of story. If my fellow Brits want a world beating firm like Amazon that brings profits back to the UK locally, they need to get cracking and make one.
They certainly benefit from investments in education, the road network, telecoms, etc.
It's amazing how little people value all that stuff until they actually need it.
Those jobs wouldn't be there without the US company that is Amazon. Having Amazon invest in the UK is a net win for the country. In addition to corporate tax, they likely also pay indirect taxes, such as business rates on property, stamp duty, and (some) VAT.
If you were to flip this, I take it you prefer a company such as BP pays all of their tax in the country they operate in, and very little in the UK? Most assets are not UK based, after all. That's the same reasoning.
Not exactly the best.
I don’t see any difference between earning more money or power. Except we have not yet invented any way of taxing power.
I wouldn’t go too much about Amazon only if Amazon actually created jobs that implied better societal cohesion, but what they do is they take advantage of the poor and uneducated in order to bring even more power to their own table that they share with nobody else.
I prefer that in a globalised world, companies pay taxes based on how much they have earn and employ in the country they operate in. No tax heavens - the only reason they exist is because other countries subsidise their military/safety nets and education.
Yes, the tax avoidance strategy Amazon uses is unique and interesting in that they keep growing massively, investors value them as a massively profitable company, yet they declare almost no taxable profit. But do we fix this, and if so, how? Maybe monopoly or monopsony laws need to be strengthened..
There will always be ways to avoid tax for those unwilling to pay (tax avoidance is as old as taxation itself), and past a certain point it gets a bit ridiculous to try and create more rules and laws.
I'm not sure I agree with the implication here that Amazon's services to the UK would not be filled by some other entity in its absence.
And this amazon, a seller/reseller of goods. If they disappear then people would just shop in another place. It's not like they are researching and building unique and non-replaceble products like apple or google.
Edit: For our US readers, describing something as ‘criminal’ is a fairly common British turn of phrase to describe something grave, not a literal implication of criminality. I’m sure the players involved are literally playing by the rules. Those rules just happen to be broken.
It also excludes the payroll tax which they must pay, which is monumental. These types of articles are just outrage-generating clickbait.
Also, wealthy people (or those moderately well off) can avoid tax with a decent understand of tax law. So they might not care. Plenty of people only care about optimising their own returns on capital and effort invested. If I can sell a business for £10m and somehow pay no tax legally, vs selling and paying 20% capital gains tax -- I would always prefer to pay absolutely nothing. Shocker.
Last, I have a good understanding of local and international tax law, and while the system is somewhat broken, it's not massively broken -- steps are being taken internationally to fix major issues.
If Amazon left the UK, people would still buy nearly as much as they do now.
Out of curiosity, what motivates you to defend a multinational company enriching itself at the direct expense of you? Of it being able to funnel billions of pounds away from your social services, your schools, your hospitals, your roads, your education system?
Could you elaborate?
But quite apart from that figure of speech, the CEOs and senior management of megacorps that don’t pay tax in such an outrageous way ought to be criminalised.
You mean, from consumers, who pay Amazon.
Or, maybe from those consumer’s employers, who pay them wages. Or...
Once you start posting posting that game, it never ends.
However, we do not live in a personal taxation only system. Corporations are therefore able to radically reduce their tax spend by avoiding corporation tax and not increasing spend on wages. The total amount of tax paid by the corporation goes down. This is obviously true, otherwise there would exist no motive for companies to pursue strategies of paying such low corporation tax.
Of course they don’t, and that’s why there are corporate taxes.
And as stated before, if you don’t like the rules don’t play the game.
(And ok, Amazon follows actual rules. That’s the main point : changing the rules to avoid tax escape)
In the UK it's double broken, because shops have high rates of business rates (which don't go away if you're not profitable), whereas giant warehouses attract very low business rates.
https://news.ycombinator.com/newsguidelines.html