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Facebook paid £4,327 corporation tax in the UK in 2014

bbc.co.uk

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Re: Facebook paid £4,327 corporation tax in the UK in 2014

#61

Post by dgoldstein0 »

kuyfiuyg wrote: post #19

I'm asking someone who is more knowledgeable than me on this topic. What would happen if you replace all (most) tax with VAT? That would mean everywhere there is a real transaction, that generates greater value, that is where the tax is. It would also make it impossible for big companies to do tax evasion - since you limit the effects to the 'leaves' of the tree that is the economic system, you can catch the money be…

Part of the problem though is that most businesses pass VAT tax on to consumers. Meaning that VAT tax essentially allows businesses to get their customers to foot the tax bill, and that everyone pays taxes corresponding to their consumption instead of their income. Usually you want the lowest earners not to have to pay much (if anything) in taxes, and VAT taxes don't allow for that.

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#62

Post by grp »

kybernetyk wrote: post #24
kauffj wrote: post #13

Earlier quoted context omitted.

I'm a citizen and I think that. Perhaps you describe most citizens, but certainly not all.

I run my own business here in Germany and I'm all for getting every penny out of every tax loophole possible. But then in my peer group I'm the only one who thinks that way. Most people would rather want everyone else to be as highly taxed as themselves than lower taxes overall it seems.

Tax as money needs to move otherwise it has no value.

If you want to pay the least possible taxes, don't be surprised if your government will do its best to not support you, to not help you, to not listen to you...

"The less you pay, the less you'll get paid.

The more you pay, the more you'll get paid."

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#63

Post by TomGullen »

jkahn wrote: post #56
TomGullen wrote: post #17

TIL we pay 10-20x more corp tax than Facebook. Sometimes I feel like a fool, but we've always said from day 1 try to do things as honestly as possible which I'm quite proud of, but there really doesn't seem to be much practical upside apart from not being outed and shamed. First world problem I guess, at least we're turning a profit. It is starting to make me a bit bitter though. For example, we've spent a LOT of tim…

You're not a fool, you're just not a multi-national with the ability to legally avoid/minimize tax.

Along the way we've been offered ways to get around this and that which we've politely declined. Most obvious one being put your HQ in some country you've never been to in your life, we'd save buckets.

Also, if you get down to the metal with VAT there's a lot of ambiguity (opportunity).

My experience is that scale is not a prerequisite for it being economically beneficial.

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#64

Post by exDM69 »

radu_floricica wrote: post #5

Tech companies don't show profits as long as there's place for development. They're still paying tax on everything else, including renting offices, paying salaries and bonuses etc.

> They're still paying tax on everything else, including renting offices, paying salaries

So is every other company operating in Europe, and they have to pay their corporate taxes. But the multinational corporations evade their corporate taxes and get an unfair competitive advantage.

A practical example: a hamburger and fries from a local franchise costs 2 eur (about 20%) more than one from McDonalds, because the latter doesn't pay their taxes to this country, using the same "license fee" trick as Facebook, channeling all of their profits through Netherlands, Luxembourg and/or Ireland.

These tricks are known with names such as "double Irish with a Dutch sandwich".

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#65

Post by [deleted] »

kybernetyk wrote: post #24
kauffj wrote: post #13

Earlier quoted context omitted.

I'm a citizen and I think that. Perhaps you describe most citizens, but certainly not all.

I run my own business here in Germany and I'm all for getting every penny out of every tax loophole possible. But then in my peer group I'm the only one who thinks that way. Most people would rather want everyone else to be as highly taxed as themselves than lower taxes overall it seems.

[deleted]

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#66

Post by lagadu »

vidarh wrote: post #30
kuyfiuyg wrote: post #19

I'm asking someone who is more knowledgeable than me on this topic. What would happen if you replace all (most) tax with VAT? That would mean everywhere there is a real transaction, that generates greater value, that is where the tax is. It would also make it impossible for big companies to do tax evasion - since you limit the effects to the 'leaves' of the tree that is the economic system, you can catch the money be…

The issue with VAT is that as usually applied it is an extremely regressive tax. Poorer people spend a far higher proportion on their income on purchases that have VAT applied. If more categories of basic goods were zero-rated or exempt, or if other mechanisms were used to make the VAT burden less regressive, then it might be viable.

That's how most of Europe does VAT: food, cultural and other essential products enjoy a very reduced VAT rate in many (but not all) countries here[1].

[1] https://en.wikipedia.org/wiki/Value-added_tax#Tax_rates

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#67

Post by ajnin »

kuyfiuyg wrote: post #19

I'm asking someone who is more knowledgeable than me on this topic. What would happen if you replace all (most) tax with VAT? That would mean everywhere there is a real transaction, that generates greater value, that is where the tax is. It would also make it impossible for big companies to do tax evasion - since you limit the effects to the 'leaves' of the tree that is the economic system, you can catch the money be…

VAT is the most unjust tax there is. People with low income spend it on things like food, clothing, housing, entertainment, that are all subjected to VAT, whereas richer people have access to the stock market, investment, and tax lawyers, and pay relatively less VAT. VAT is effectively a degressive tax, if you leave only VAT then you accept a system where the poor pay for the rich.

However this is already the case in Europe because the VAT rate is so high. For example for France, tax revenue in 2014 was 74B€ of income tax, 39B€ of corporate tax, and 139B€ of VAT. I'm guessing this is a political game where you have to keep income tax high enough so that the inequalities are not too obvious.

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#68

Post by stegosaurus »

Re-posting my comment from the Guardian thread that came up earlier ( https://news.ycombinator.com/item?id=10371728 )

Corporation tax in the UK is payable on 'profits subject to corporation tax'. In laymen's terms this is roughly equivalent to to accounting profit.

Employee salaries, bonuses, etc are generally deductible; if you pay me 50K, that's 50K out of your bottom line.

The employees in question likely pay a variety of taxes including but not limited to the standard income tax. In an extreme scenario (recent graduate + highest tax band) that could be 61% rate.

(For comparison, the 2015 rate for Corporation Tax is 20%; so as far as the Exchequer is concerned, a salary payment is preferable, at least in immediate terms).

In summary, I think there's a discussion to be had here about abuse of taxation frameworks but the headline here is bait; the bonuses are irrelevant, any oddities regarding transfer payments etc. are what should be focused on.

edit: My position on taxation in general is that we should be focusing on Capital Gains Tax (taxes the gain on appreciation of assets such as shares) and Income Tax (taxes income from sources such as employment, share dividends).

Taxing corporations seems like it can only ever be arbitrary at some level, because they don't.... 'exist', for lack of a better term. They can be ephemeral, relocate, etc.

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#69

Post by blowski »

smt88 wrote: post #34
jkahn wrote: post #12

Global companies offshoring profits and not paying enough tax (in the eyes of many countries) was a hot topic at the last G20 summit in Brisbane. This isn't limited to Facebook, as the article explains. The issue and background here is that when large companies operate globally, each country has its own local subsidiary, owned by the global entity. Money is made in each country by selling goods or services. How are t…

> provide the same level (or greater) services I don't agree with that in all cases, and I particularly don't agree related to Uber. When I lived in NYC, I often called "311" to complain about taxi-driver misconduct. This was the only outlet, and you really only did it because you wanted to feel better. There were never any direct consequences that you knew of. If you consider the decreased cost of operating the 311…

Uber can only exist in a society with a detailed and rigorously applied legal code, decent transport infrastructure, and wealthy citizens. I'm sure there are more requirements.

As Uber benefits from public spending on these things, they should also contribute to their upkeep.

Re: Facebook paid £4,327 corporation tax in the UK in 2014

#70

Post by krotton »

jkahn wrote: post #12

Global companies offshoring profits and not paying enough tax (in the eyes of many countries) was a hot topic at the last G20 summit in Brisbane. This isn't limited to Facebook, as the article explains. The issue and background here is that when large companies operate globally, each country has its own local subsidiary, owned by the global entity. Money is made in each country by selling goods or services. How are t…

Well, in hypothetical laissez-faire capitalism taxes would not be needed to provide infrastructure - Uber would just have to pay its fees for driving on private roads (etc.). This would drive prices up, but fairly divide the costs between the roads' users. Although I must admit I have no idea how things could look with purely digital companies like Facebook. I can think of local ISP-s charging the company for allowing access to the website, but that would probably become just an additional earning opportunity for them, without any noticeable positive influence on the local population.
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