Amazon: £7bn sales, no UK corporation tax

I used to like Amazon!

http://www.guardian.co.uk/technology/2012/apr/04/amazon-british-operation-corporation-tax

I still do like Amazon. They aren't doing anything illegal - you want the law changed - lobby your MP.

Shame about the poor journalism - the implication from the title is that 7.7 billion sales is in the UK alone - it isn't.

Turnover is not a reliable guide to taxable profits.

I'm glad you still like them.

@DC: I seem to remember quite a lively thread back in April when this was first discussed here. Companies have a duty to maximise profits and minimise operational costs, including taxation. They also have a duty to remain within the law. Only a very few companies have declared a moral or ethical duty ~ and regrettably those which do seem to fare unfavourably compared to their less scrupulous competitors simply because the majority of consumers appear to hold such foibles as fair wages, fair raw material prices, etc. as luxuries.

Will you change your lifestyle to embrace ethical and moral trading or champion lowest cost option every time? ~ Chinese sweatshop Nike trainers come to mind.

I do not disagree with you ~ I just wonder why sometimes remarks are made that fail to occasion positive or negative changes by individuals, let alone companies and governments.

@DC: My post may have been a bit long. What are YOU going to do as a reaction to this bit of 6 month old news? I am not going to do anything. CW.

CW - Couldn't have put it better myself!

Do you act morally and ethically all the time? Do you always obey the law in every tiny aspect of your life? Amazon are doing nothing illegal. Whether they are acting morally/ethically is always going to be a matter of personal opinion. Should companies have morals/ethics?

Ultimately the only person's behaviour you can influence is your own so as CW has said what are you doing to ensure that you always buy goods not made in sweatshops for example?

It was only yesterday that Starbucks have bee reported as only paying £8.5 million in tax despite massive profits. The company inist that it is losing money but then bring in investors with the promise of profits. It's all legal too.

But don't worry! The British tax payer will happily donate £1.32 trillion to supporting a corrupt, bankrupt (morally and economically) and demonstrably failed banking system. No, no - let us worry about a few pennies lost in corporation tax and ignore the elephant in the lounge of a totally messed up financial institution along with its regulators and supporting legislation. Bah! Humbug!

It's like Nero fiddling while Rome burned really.

Or JS fiddling whilst Aunti Beeb watched!

@Damaskcat - Personally I do believe that big corporations should act morally and ethically.

To act morally though is generally a set of boundaries that an individual believes to be acceptable.

If the law states you can set up a tax saving scheme then some people would believe that it is also morally right to do so.

@DC dont like how they act then dont buy off them. Same goes for all companies and if you go for this approach you wouldnt buy much at all. Are you really that naive?

Dickie's Cat, most Companies can only act within the terms of their Articles of Association, a "User's Manual" if you like, that says how they must conduct their day to day business. Those can include a moral or ethical element, of course, but if they don't then the company is duty bound to work within it's own rules. Most businesses are simply set up to make money and have a duty to Share/Stockholders to maximise profits.

We see a constant stream of posts bemoaning the fact that some organisations (Publishers mostly) won't sell to countries other than the one in which they are based. Now we have the "other side of the coin." Amazon is a Luxembourg company that sells to (into) the UK and under EU law the UK can't impose any restrictions on their trade. Those staff employed in the UK will pay tax and Amazon will contribute towards their NI and Pension funds, and any tax on Amazon's purchases in the UK (Utilities, Fuel, packaging etc.) goes to the UK Government, so Amazon aren't operating totally tax free here.

Now, that sounds as if I'm appologising for Amazon but as long as they're operating within the law and within the their own rules I don't see that there's much we can do.

I suspect most of us have purchased cars and household equipment that has put money into the hands of overseas companies. My Vauxhall car was built in Spain and modified to my specification in Germany. My TV (now quite old) was assembled in the UK from parts imported from the far East, and my BluRay player was imported as is. Much of the fruit and veg I eat comes from overseas. Some of the gas I use in my Central Heating comes from Russia and the company that supplies me is French.

Fine - I believe if they act within the law that is all that we can ask of them.

Question:
Your pension fund manager has invested in, and is a shareholder of, a major institution.
Do you want that institution to behave "morally and ethically" and pay tax that is doesn't need to, thus reducing the amount that your pension fund will earn?
Or do you want them do act within the law whilst minimising their tax liability and maximising your pension fund?

If they are doing something illegal, then they will be prosecuted. If it is not illegal then the loophole needs closing.
It is the duty of any corporation to make money for their share holders. That is their prime reason for being. Companies are required to act legally, not morally.

A good example would be the case of Microsoft and its energy bill. Microsoft (and they are not the only ones to have done this) over-estimated its electricity usage or perhaps conserved usage to such an extent that they faced a financial penalty from its supplier of over $210,000. Instead they burnt $70,000 of the stuff to meet its minimum commitment.

Question. Was Microsoft morally wrong to have wasted electricity or would Microsoft be morally wrong wasting $140,000 of share holders' money by not doing so (and this may indirectly include you)? Microsoft have since renegotiated the deal.

The law is wrong. We all know avoiding tax is morally irresponsible. We all benefit from tax because it funds things like the military, police, schools, NHS and roads, all of which allow businesses to trade in a civilised environment.

Now what sort of country would we have if every company pulled the same trick Amazon is pulling? If they can dodge tax then why shouldn't everyone?

I have shopped at Amazon but not again after this until the law changes. I'm giving my money to an honest, British bookseller instead. And yes, they still exist, online too and often cheaper than Amazon.

That's totally your decision to make.

I don't know why people are calling it 'avoiding' or 'dodging' if it's not illegal - otherwise they would have been prosecuted AGES AGO.

But there's nothing illegal or dishonest in what Amazon are doing. They aren't dodging tax at all. If they are/were, they could be prosecuted. They are, rightly, looking after the interest of the shareholders. It's the Gvt which should lobbied for change to taxation laws.

But bear in mind the possible consequences including Amazon pulling all their UK based investments in, for example, distribution centres. Az are much more than just booksellers.

Hi Dickie, they're doing it legally, so blame the politicians , who sanction it, and not Amazon, who you can't blame, for wanting to make a few bob, after all, we'd do the same wouldn't we?

'But bear in mind the possible consequences including Amazon pulling all their UK based investments in, for example, distribution centres. Az are much more than just booksellers.'

They won't - For the reasons below,

The distribution centres employ mostly low wage employees of which a large percentage rely on government tax credits to top up their wages - So in effect the taxpayer is subsidising low wages.

Paying virtually no tax on a turnover of 71/2 billion over the last 3 years is highly lucrative - So Az walking away from their UK assets is very unlikely even if they were forced to pay tax.

We all know they are doing nothing illegal which is why the law needs to be changed as it is our underfunded hospitals and schools that suffer from tax avoidance.

Amazon tried to operate in Russia a few years ago using the same tricks - However the Russian government wouldn't have it and their homegrown equivalent of Az called Ozon is entirely Russian based which means tax on profits is payable directly to the Russian government.

Although Russians are fervent tax avoiders (my wife is Russian) they certainly wouldn't tolerate a foreign based company not paying tax on their profits as they see less revenue from foreign companies operating in Russia will mean higher taxation from central government to compensate for the shortfall needed to maintain their infrastructure.
Even if you sold ereaders to the Russians at £5 each and the company selling the ereaders made say 100 million profit, they would still kick up a fuss simply because they would know you are still making a huge profit from the ereaders and also because you are a foreign based outfit who is fleecing Russians and Russia.

I blame the Government. Too many tax loopholes. The richer you are, the easier it is to avoid paying tax.

and they can afford to hire people to make sure they are using every last loophole.

you know why? cos the people who make the laws are rich. if someone can figure out a solution to that catch 22...