Facebook paid £4,327 corporation tax in the UK in 2014 • Hacker News Board

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

#311

Post by justincormack » Mon, Oct 12, 2015, 3:20 PM UTC

Karunamon wrote: post #286

tobltobs wrote: post #265

Earlier quoted context omitted.

There are currently investigations in the EU if FB did fullfil the requirements to use the tax loopholes they are using. If not, FB did not pay the taxes they are obligated to pay.

And if they didn't, they'll be fined and be forced to pay whatever they didn't, which will probably not happen again in the future as a way to avoid being fined. If they did? You seem to be dancing around the central point, which is, these numbers, while absurd, are generally completely above board and legal. Nobody is going to pay more tax than they're obligated to, and it's absurd to expect otherwise.

Thats actually not the case. Starbucks voluntarily paid tax in the UK, even though it was apparently not obliged to as it has never managed to make any money(!).

The problem about prosecuting these cases is that transfer pricing and IP "costs" are difficult to demonstrate as faked, and some of the loopholes may be legal, although Apple is now dismantling its double Irish Dutch sandwich, one of the tax avoidance strategies it invented.

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

#312

Post by kuschku » Mon, Oct 12, 2015, 3:20 PM UTC

caskance wrote: post #284

tobltobs wrote: post #265

Earlier quoted context omitted.

There are currently investigations in the EU if FB did fullfil the requirements to use the tax loopholes they are using. If not, FB did not pay the taxes they are obligated to pay.

"Investigations in the EU" means jack shit. There have also been "investigations in the EU" about whether Google is an illegal monopoly and whether Facebook needs to segregate all its data on European entities into separate European data centers.

And one of those led to Facebook being charged billions, and the others will lead to the same outcome.

"Investigations in the EU" means you’re fucked.

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

#313

Post by oliwarner » Mon, Oct 12, 2015, 3:21 PM UTC

It's a good headline but in this case, HMRC made somewhere between two and five times as much money through Facebook's accounting choice here than had they kept the money as corporate profit.

That's because the Facebook paid out those profits to employees as bonuses. That wiped out the corporate profit but the employees have paid income taxes which are much, much higher than corporation tax.

This is significantly different from the corporate tax dodging companies like Amazon EU do by bribing EU states into letting them have a super-low corporate rate if they put all the EU books through that country. Not saying that Facebook aren't also doing that, that's just not what this is about.

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

#314

Post by rootlocus » Mon, Oct 12, 2015, 3:24 PM UTC

jos3000 wrote: post #287

phlo wrote: post #273

Earlier quoted context omitted.

Stories like this make me question if corporate tax even makes sense. However well designed, a tax code with today's complexities is going to have holes. If a savings of even one per mill may mean millions, corporations are going to spend insane amounts of money to hire the best experts to use every last loophole. Why don't we cut down everything to a couple of manageable groups that can be tightened down? I think th…

The big problem with this is that, under a simple tax system, if a government wants to increase it's tax revenue it is extremely easy for voters to understand what is happening. Governments prefer to make complicated tax laws because they are easier to spin.

Security through obscurity? xD

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

#315

Post by phlo » Mon, Oct 12, 2015, 3:24 PM UTC

kuschku wrote: post #303

phlo wrote: post #273

Earlier quoted context omitted.

Stories like this make me question if corporate tax even makes sense. However well designed, a tax code with today's complexities is going to have holes. If a savings of even one per mill may mean millions, corporations are going to spend insane amounts of money to hire the best experts to use every last loophole. Why don't we cut down everything to a couple of manageable groups that can be tightened down? I think th…

So, in your system, how would a corporations profits be taxed? You have shown nothing like that, really. And a direct property tax is also not a good idea, as then you tax people for having property, not for using their property.

Sorry, I might not have made that point clear: they wouldn't be taxed at all. Not at the corporate level, that is.

As far as I can tell, money will exit corporations in three ways: 1) salary, 2) shares and 3) payments for goods/services, mostly to other corporations. Income and capital gains taxes will take care of 1 and 2. The company won't owe taxes, but whichever natural person receives the money will. As for 3, my proposed system would be captive: because it doesn't charge corporate taxes, corporations won't have any motivation to try and move their earnings to other corporations (as they couldn't be taxed any lower).

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

#316

Post by marknutter » Mon, Oct 12, 2015, 3:29 PM UTC

netfire wrote: post #245

marknutter wrote: post #204

Earlier quoted context omitted.

> First of all, that's Facebook employees paying tax. Not Facebook. That's their money that they are taxed on and they pay it. Why is this distinction even relevant? Facebook then needs to pay its employees more to make up for the difference. No matter who the government taxes, everyone involved will shift their habits to compensate for it.

It's relevant because companies that are not multi-national can't afford to engage in these sort of tax reducing practices. If you want to get rid of corporate taxes altogether, that would be different, but suggesting that it's okay for Facebook to pay less than other companies because their employees pay income tax doesn't make sense. The tax code should provide a level playing field for all companies. You shouldn't…

If we got rid of corporate taxes altogether it would be different, and it would likely "provide a level playing field for all companies". And I'm not sure why companies that are not multi-national can't afford to do this too.. if their corporate taxes are absurdly high like they are here in the U.S., they are free to offshore their operations just like U.S. companies do, or lobby their government to reduce or eliminate corporate taxes altogether. In that respect, the playing field is level because the global economy is now the playing field.

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

#317

Post by kuschku » Mon, Oct 12, 2015, 3:29 PM UTC

yrro wrote: post #220

JupiterMoon wrote: post #107

Earlier quoted context omitted.

This argument is not valid. Yes they are paying VAT and income tax. So what? They should also be paying corporation tax. A start up competitor would have to pay VAT, income tax and corporation tax.

But they are playing Corporation Tax. To put it another way... what additional tax do you want them to pay that they are currently not paying?

The full corporation tax, on their share of their worldwide income generated in britain.

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

#318

Post by throwaway2048 » Mon, Oct 12, 2015, 3:29 PM UTC

ghiculescu wrote: post #118

JupiterMoon wrote: post #107

Earlier quoted context omitted.

This argument is not valid. Yes they are paying VAT and income tax. So what? They should also be paying corporation tax. A start up competitor would have to pay VAT, income tax and corporation tax.

Not if that competitor made a loss the way facebook has here.

these 'loses' are entirely due to bogus licensing fees paid to the mothership, and the 'loses' are made up with very generous term 'loans' from the same.

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

#319

Post by kuschku » Mon, Oct 12, 2015, 3:30 PM UTC

ahallock wrote: post #191

rmc wrote: post #87

Earlier quoted context omitted.

> What would happen if you replace all (most) tax with VAT? The poor would pay considerably more of their income as tax than the rich. And yes, there are ways to do tax evasion with VAT. There was a court case in the UK about whether Jaffa Cakes were a cake or a biscuit (because there are different VAT categories)

Then don't charge the poor for VAT.

Now you create an incentive for everyone to stay just below the limit of what counts as "poor" and have their actual assets in other countries and get it as loan from themselves.

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

#320

Post by newjersey » Mon, Oct 12, 2015, 3:30 PM UTC

crazy1van wrote: post #297

kmkemp wrote: post #202

Earlier quoted context omitted.

Except that the reason the loopholes exist is because of the lobbying of companies that take advantage of them.

How can this loophole get fixed? My (admittedly minimal) understanding is that these companies don't have to pay taxes on the money until they repatriate it. From the perspective of countries like the US or UK, Apple earns very little in "profits" because they have expenses in licensing fees between their own companies that effectively pushes the profit to countries with very low corporate tax rates. This all sounds…

a very heavy handed approach that will almost certainly fail in the real world would be to tax corporate revenue, not profit. This is VERY invasive and I would not recommend it at all but I don't see an approach that is simple enough like this that does not require international co-operation.

In my simple mind, the failure is in defining profits. How do we define profit? The devil is probably in the details. *

If Wally's world buys widgets for $6B and sells them for $10B but then turns around and spends $5B on long term infrastructure, did they make a profit? Do they owe any taxes?

Something closer to home: Once we get into the details, it is very easy to get lost in there. When they spend $100 per hour to hire a consultant (programmer), does that count as capital expenditure? How?

I am not a lawyer and I am definitely not an accountant. I would imagine loopholes can be closed but it requires technical expertise that I lack.

* Perhaps only allow cross-border expenses to countries that honor a certain level of agreement?

PS: I am not so sure about taxing income in other countries. None of what I say applies to expatriating money from overseas. It only applies to monies a company makes in our country and tries to ship overseas. If Apple sells $100B worth of iPhones in the UK, should they pay corporate income tax on it in the US? Why not pay corporate tax on that in the UK?