[News] Facebook - doing their bit for UK plc

[beorhthelm]

No, you're being silly.
...The UK can tell Apple what we'd expect the costs of the phone to be, and if Apple think it should be higher they'll have to justify it.

do you see how im not being silly, just following through to the inevitable conclusion?

Why would a large multinational company have its headquarters here instead of a tax haven?

For many companies we are a tax haven, having a lower corporation tax than many others and other lower levies and taxes. why do you think Standard Chartered and HSBC are here when their business is predominantly in Asia; why the large multinational mining companies are here rather than in the US, Hong Kong or elsewhere? there are a significant number of companies that are based here for nothing more than their admin HQ, with little business in the country (though access to markets and legal system are reasons other than just tax).

It's up to the UK what it allows. We can make the rules that if you want your company on screens in the UK, you pay the tax.

you are proposing a Chinese style internet firewall, state censorship of the entire internet, albeit on commercial rather than political grounds. now that would be silly. we'd have to leave the EU too for this to work, so it's not without some merit.

 

[mikeyjh]

I dont get the 'foaming at the mouth' Daily Mail style anger about this.

Countries make tax rules. Countries choose to join trade agreements with other countries. Companies operate in those marketplaces and pay tax according to the rules. They will minimise their tax within the rules.

You and I do the same thing when we buy an ISA.

A comparison with an ISA is not a good one - An ISA is making use of specific regulations encouraging people to save for their futures, what these companies are doing is spending a lot of money on very knowledgeable people finding holes in legislation to pay the absolute minimum in taxes, so while not contrary to the law established by parliament, they are contrary to the intentions of the creating the law. They make use of transfer pricing and other mechanisms to achieve this and that's something that you, I and most smaller businesses are not able to do. So not only are they aggressively avoiding taxes, it's also anti competitive so I'm still not sure why people are championing the cause of these companies.

 

[Triggaaar]

do you see how im not being silly, just following through to the inevitable conclusion?

No. Apple can charge what they like for the device. If they want to pretend the cost is as high as the sale price, they have to prove it. We all know it doesn't cost them £500, so let's not pretend otherwise.

For many companies we are a tax haven, having a lower corporation tax than many others and other lower levies and taxes. why do you think Standard Chartered and HSBC are here when their business is predominantly in Asia; why the large multinational mining companies are here rather than in the US, Hong Kong or elsewhere? there are a significant number of companies that are based here for nothing more than their admin HQ, with little business in the country (though access to markets and legal system are reasons other than just tax).

How much tax are they all paying here? If they pay a high percentage, why don't they go to Luxembourg etc? If we're getting in more tax by being a tax haven, than we're losing from companies like Amazon, then we should be happy and keep quiet. But I somehow doubt that.

you are proposing a Chinese style internet firewall, state censorship of the entire internet, albeit on commercial rather than political grounds. now that would be silly.

There are already some pirate sights we can't access, as they're banned by our ISPs. If those were the rules, then companies like Google and Facebook would just pay the tax, they wouldn't let themselves be banned here.

we'd have to leave the EU too for this to work, so it's not without some merit.

I did say that at the start.

 

[Arthritic Toe]

A comparison with an ISA is not a good one - An ISA is making use of specific regulations encouraging people to save for their futures, what these companies are doing is spending a lot of money on very knowledgeable people finding holes in legislation to pay the absolute minimum in taxes, so while not contrary to the law established by parliament, they are contrary to the intentions of the creating the law. They make use of transfer pricing and other mechanisms to achieve this and that's something that you, I and most smaller businesses are not able to do. So not only are they aggressively avoiding taxes, it's also anti competitive so I'm still not sure why people are championing the cause of these companies.

My point though is that the laws have to be better. If a government establishes a law it needs to be defined in a clear and unambiguous way. At the moment they are drafted by imbeciles. You cant create a woolly piece of legislation and then expect people to interpret it in only the way you intended.

 

[mikeyjh]

My point though is that the laws have to be better. If a government establishes a law it needs to be defined in a clear and unambiguous way. At the moment they are drafted by imbeciles. You cant create a woolly piece of legislation and then expect people to interpret it in only the way you intended.

I understand and partially agree, the rules should be tighter, but you'll never be able to proactively imagine all the ways in which people may try to bend the rules. It also doesn't absolve corporations of any obligations to be 'good citizens' or to be an ethical organisation. It is a fact that some multinationals are far more aggressive in their pursuit of tax avoidance than others, likewise individuals. We have to acknowledge that to live in a modern civilised world, we have to pay our fair share of taxes, be we individuals or corporations.

If tax avoidance if seen as fair and above board, why are these organisations so secretive about it?

 

[beorhthelm]

No. Apple can charge what they like for the device. If they want to pretend the cost is as high as the sale price, they have to prove it. We all know it doesn't cost them £500, so let's not pretend otherwise.

and they will present a set of accounts that say it does, showing all the other costs etc. back to square one, the illustration i was trying to make. we know the manufacture cost is x, but we also know the costs to get something to being manufactured is x+y, then marketing and other overheads is x+y+z. this is why we tax companies on their profits after all the costs recorded, not on the individual units sold.

 

[Herr Tubthumper]

and they will present a set of accounts that say it does, showing all the other costs etc.

Are you suggesting they'd just invent them? If you can prove your costs are x then fine. If you can't you're in trouble. You can't just go inventing costs...it's called fraud.

 

[beorhthelm]

...what these companies are doing is spending a lot of money on very knowledgeable people finding holes in legislation to pay the absolute minimum in taxes, so while not contrary to the law established by parliament, they are contrary to the intentions of the creating the law.

as i understand it, a lot of the rules utilised are those to avoid double taxation, others to encourage investment or commercial activity somewhere. they aren't secrets that experts pour through the tax law to uncover, they are stated policy or procedures in the accountancy standards. (not all of course.) a small business with sales in a couple of overseas countries can take advantage as well as the multinationals, obviously to engage in transfer pricing you have to have businesses to transfer between so does favour the larger companies.

 

[beorhthelm]

Are you suggesting they'd just invent them? If you can prove your costs are x then fine. If you can't you're in trouble. You can't just go inventing costs...it's called fraud

or research and development or investment. as long as you spent the money somewhere, its not fraud. there's a lot of loss making companies and subsidiaries out there soaking up money that would otherwise be "profits".

 

[Arthritic Toe]

you'll never be able to proactively imagine all the ways in which people may try to bend the rules.

You would though if the rules were simple and unambiguous. The problem is that the rules have got so ridiculously obscure and complicated they are impossible to manage now.

It also doesn't absolve corporations of any obligations to be 'good citizens' or to be an ethical organisation. It is a fact that some multinationals are far more aggressive in their pursuit of tax avoidance than others, likewise individuals. We have to acknowledge that to live in a modern civilised world, we have to pay our fair share of taxes, be we individuals or corporations.

Agreed - but all some of these corporations have done is establish their HQ's in countries in the EU with low tax regimes. We can't (i) charge high corporation tax in the UK (ii) sign up to a free trade agreement through the EU
- and then moan about companies that establish themselves in Luxembourg or wherever, paying no Corporation tax here.

 

[Herr Tubthumper]

or research and development or investment. as long as you spent the money somewhere, its not fraud. there's a lot of loss making companies and subsidiaries out there soaking up money that would otherwise be "profits".

I'm not disputing legitimate expenses. You seem to be suggesting a company can just invent expenditure figures to match any loss the decide they want in their accounts.

 

[beorhthelm]

I'm not disputing legitimate expenses. You seem to be suggesting a company can just invent expenditure figures to match any loss the decide they want in their accounts.

i'm saying there are an awful lot of costs incured that are not obvious from outside a company. whether they can make the amounts to match a targeted loss, i couldn't possibly comment.

 

[Triggaaar]

and they will present a set of accounts that say it does

And we say that's not reasonable:

it could be up to the UK courts whether those costs are reasonable or not.

 

[French Seagull]

Indeed. I don't know why it seems impossible to change the laws so that we can tax these companies. I'm not wanting to turn this into an EU debate, but we might be more capable of doing something about it if we were independent.

Isn't just down to the chancellor Osbourne having the will to change it, they did say they were going to close these 'loop holes' so multinationals and internet companies would pay their fare share - not sure the EU debate has anything to do with it?

 

[French Seagull]

i'm saying there are an awful lot of costs incured that are not obvious from outside a company. whether they can make the amounts to match a targeted loss, i couldn't possibly comment.

unfortunately they sometimes just pay the 'parent' company in a different country (where they pay less tax) a large sum for using the name / goodwill

 

[Triggaaar]

Isn't just down to the chancellor Osbourne having the will to change it

It's nothing like that simple.

they did say they were going to close these 'loop holes' so multinationals and internet companies would pay their fare share

Neither party pretended it's an easy fix, which is why it's not being fixed. There's no way it will be fixed in this parliament, it's not even on the agenda.

not sure the EU debate has anything to do with it?

The UK doesn't make it's own trade rules, we can't. To fix it we'd need the EU to fix it, or leave and do it ourselves.

 

[Igzilla]

From The Guardian today:

http://www.theguardian.com/commentisfree/2015/oct/13/tories-big-business-tax-loopholes?CMP=share_btn_tw

 

[Buzzer]

That'll be the Guardian who use Cayman Islands companies to avoid paying UK tax?

 

[Igzilla]

That'll be the Guardian who use Cayman Islands companies to avoid paying UK tax?

Though they haven't been asked by our Chancellor to write the tax laws.

 

[Buzzer]

But they're happy to criticise those who also aggressively avoid tax.