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EBay 'pays £1.2m in UK tax' on sales of £800m

bbc.co.uk

31–40 of 58 posts

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#31

Why can't they change the tax law to tax these companies? I know it would be difficult, but it can't be impossible. These companies will always want to operate here.

Why can't they change the tax law to tax these companies?

They're working on it:

http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#33

Corporations, small businesses and even people will rationally pay only the minimum tax that they can get away with under the law. The law favours big international corporations so this is what you get. If you find this inequitable then laws need to be changed. On the other hand big corporations as well as wealthy people usually have more leverage in terms of being able to move and operate or reside in more tax-frien…

On the other hand big corporations as well as wealthy people usually have more leverage in terms of being able to move and operate or reside in more tax-friendly or hospitable regimes.

That's often claimed, but I'm not convinced. Some people/businesses might move away because of being forced to pay tax at the same rate as everyone else. Most people/businesses won't, because most people don't choose where to live only by tax rate and most businesses aren't going to give up a market of 60+ million people. And frankly, if they're only paying a million or so in taxes at that size, good riddance to those who think they can do better elsewhere anyway.

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#34

Why can't they change the tax law to tax these companies? I know it would be difficult, but it can't be impossible. These companies will always want to operate here.

Because the UK can't arbitrarily change laws easily in the majority of cases any more due to being a member of the European Union. What would they be taxing anyway? If they're like many of the other companies similar stories have risen up about, they're paying a subsidiary in another EU country for rights to the brand. So we'd either need to outlaw free trade between EU states (which the EU won't allow) or somehow ta…

No, there is a third option that is looking increasingly credible: the UK could leave the EU altogether. Whatever the arguments for being in or out more generally, in financial terms that is almost certainly a win as things stand today, and it looks like any realistic outcome of the Euro problems will only strengthen the case.

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#35

I know this seems outrageous on the face of it, but I suspect the truth may be quite a bit more nuanced. There's not nearly enough detail here to know what's going on. Some possibilities that spring to mind: 1. They may have taken advantage of special tax credits offered by the government for activities that it was deemed to be in the best interest of society at large. 2. Ebay UK may have carry-forward losses from a…

I am aware of how this is done in large companies, and usually they set up their financial headquarters in countries with low corporate tax rates, such as Switzerland in Europe, or Singapore in Asia, then build up connections with their operations in surrounding countries using "commissionaries" (not sure if the english term is correct) status, meaning that most revenues are transferred to the financial headquarter and then the headquarters pays back for the costs of doing business (salaries, rents, material expenses) to each country operations. This saves litteraly billions of tax dollars and it is perfectly legal where it is practiced. Where do you think politicians put their money, by the way?

It's very natural for private companies to reduce costs where possible, and reducing taxes is certainly a clever way to do so. This is, I believe, very positive, as it shows to the countries with high tax rates that they are missing out on tax dollars simply because they are making it way to expensive for large corporations to operate that way. This means any tax increase (like the ones suggested recently in France) will more likely hit the small and mid-sized players who do not benefit for the same know-how and scale to manage their tax cuts efficiently -> therefore reducing the actual benefit of further raising taxes. The fact that these practices remain legal puts a stop on inflating taxes gaps between countries as well.

By the way, avoiding taxes LEGALLY does not mean it is "ethically" corrupt to do so. I, for one, consider that taxation has very little ground when you see how much of the money the State collects is wasted in so many ways, through poor management, bad investments, poor efficiency, making war (that only a minority approves of), and seen how much power you have to change anything about it. On the contrary, limiting the growth of the amount of cash controlled by the State should be considered a good thing, in absolute terms.

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#36
post #32

Ebay is based in Luxemburg, if it were in an offshore fiscal paradise I would have understood, but hey this is Europe. If something is broken in Europe don't blame companies, they're not the ones sitting in parliament.

If you've ever purchased Apple apps through the app store in Europe, you'll notice the developer is listed as "iTunes S.a.r.l". It's similar for web-services purchased through "Amazon Services Europe S.a r.l" and transactions through PayPal and Skype. All are registered as companies in Luxembourg[0], to take advantage of more attractive tax structures and legal codes while still being within the EU trading zone. Skype seems to be a bit of an exception in that most of its engineering is done there too, not just the financial transactions. Apple purportedly is not much more than a small office[1].

[0] http://www.investinluxembourg.lu/ict

[1] http://treasureislands.org/this-is-what-apple-itunes-europe-...

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#37
post #19

Earlier quoted context omitted.

Oh. Right. I guess we're "punishing success" (or some other horseshit terms) by expecting companies to pay their fair share in taxes. And even though corporate tax laws are written in large part by these very same companies, I'm sure we should regard them as completely legitimate, as well. What an absurd argument.

I hear you, but to make your argument you have to define the term 'fair share'. If you take the working definition that 'fair share' is 'all legally owed taxes' then guess what, all these people are paying their 'fair share.' So do you see the problem? You have an internal definition of 'fair share' which is inconsistent with what the folks who govern the UK have codified as 'fair share.' Is that Ebay's problem? Or i…

I need to save this and use it the next time an article comes out like this.

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#38
post #19

Earlier quoted context omitted.

Oh. Right. I guess we're "punishing success" (or some other horseshit terms) by expecting companies to pay their fair share in taxes. And even though corporate tax laws are written in large part by these very same companies, I'm sure we should regard them as completely legitimate, as well. What an absurd argument.

I hear you, but to make your argument you have to define the term 'fair share'. If you take the working definition that 'fair share' is 'all legally owed taxes' then guess what, all these people are paying their 'fair share.' So do you see the problem? You have an internal definition of 'fair share' which is inconsistent with what the folks who govern the UK have codified as 'fair share.' Is that Ebay's problem? Or i…

I'm pretty sure "corporations writing their own tax laws" is society's problem, and is indicative of a much bigger problem with capitalism in general.

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#39
post #38

Earlier quoted context omitted.

I hear you, but to make your argument you have to define the term 'fair share'. If you take the working definition that 'fair share' is 'all legally owed taxes' then guess what, all these people are paying their 'fair share.' So do you see the problem? You have an internal definition of 'fair share' which is inconsistent with what the folks who govern the UK have codified as 'fair share.' Is that Ebay's problem? Or i…

I'm pretty sure "corporations writing their own tax laws" is society's problem, and is indicative of a much bigger problem with capitalism in general.

That would be a problem, and it may be the case in the UK, I'm not familiar with their legal institutions, in the US the only people empowered to 'write' laws are elected legislators.

Now some will say "Corporations elect legislators" except that isn't true at all, at least not in California. The only thing corporations and so called 'super pacs' can do is throw money at getting someone elected, and Meg Whitman proved that no matter how much money you throw at it you can't buy an election (at least not yet). The thing that gets bad politicians elected in California is voter apathy, you see most of our election races are decided by a few percent of the counted vote, and the counted vote is nearly always less than 60% of the registered voters, and sometimes less than 50%. In a number of races each year the incumbent runs unopposed or against an opponent who has no interest in actually being elected. If a small fraction of those apathetic voters actually voted, they could remove any and all of the incumbent politicians. But they don't. And they often don't because they have been told that their votes don't count, and that all of the elections are rigged by who has the most money. And that is something the corporations who like it this way, are very good at doing. Getting 'news' stories out to the voters about just how ineffective and worthless their votes are so don't bother getting out of bed, just stay home, it won't matter anyway.

The 99% could effect instant regime change in the US by actually voting. And they don't. And yes that is society's problem as you so aptly point out. But it has absolutely nothing to do with capitalism.

Re: EBay 'pays £1.2m in UK tax' on sales of £800m

#40
This is why consumption taxes are good - you can't get away from them. On the £3B of sales from Starbucks, they would have contributed at least £600M in consumption taxes (known as the VAT in the UK and at a rate of 20%).

Getting rid of corporate taxes and increasing consumption taxes proportionately would be a good way around this, although as much as it makes sense, and it is a popular position amongst economist - I can't imagine it being a popular political platform.

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