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U.S. tech giants enjoy U.K. "tax bonanza"

  • Seven major U.S. technology companies paid just £54M in U.K. corporate tax in 2012 - the last year for which figures are available - despite raking in combined sales of $15B (£9.13B), the FT reports.
  • The tax paid by Microsoft (MSFT), eBay (EBAY), Yahoo (YHOO), Facebook (FB) and Apple (AAPL) fell, while that of Amazon (AMZN) and Google (GOOG) rose.
  • The report comes amid efforts in the U.K. and elsewhere to stop multinational corporations from exploiting what one British legislator described as a "tax bonanza" by using low-tax jurisdictions such as Ireland, Switzerland and Luxembourg to keep their payments at minimal levels.
Comments (34)
  • muddauber
    , contributor
    Comments (3) | Send Message
     
    This isn't any different than when corporations seek out states in the U.S. that give them favorable tax treatment.
    5 Jan, 04:55 AM Reply Like
  • Stephen Aniston
    , contributor
    Comments (2700) | Send Message
     
    Taxation should happen at the place where the customer made the purchase. If a customer uses a computer in France to make a purchase, the tax should be paid in the jurisdiction of France.
    5 Jan, 08:46 AM Reply Like
  • Stephen Aniston
    , contributor
    Comments (2700) | Send Message
     
    If companies paid taxes according to the way the tax code was designed instead of getting around it, there will be no debt problems anywhere. Debt problems occur because legislation is designed with certain revenues in mind and then the corporate boys spend every waking and sleeping minute of their days trying to get around them. As a results revenues are lower than expected and hence debt. Corporations owe it to the countries where they operate to be more socially responsible. Charity alone doesn't cut it.
    5 Jan, 08:50 AM Reply Like
  • JG2000
    , contributor
    Comments (451) | Send Message
     
    Corporations are ultimately owned by individuals (with a few exceptions for government owned entities). Therefore asking companies to "be more socially responsible" and ignore legal tax breaks/loopholes is really asking the owning individuals to donate more money to their governments. If you subscribe to that philosophy then why not just cut out the middleman and ask individuals to ignore legal tax breaks and voluntarily pay higher taxes?
    5 Jan, 09:09 AM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    @Stephen Aniston: very strong statement made without proof. US has a national debt of $17trillion+ and yearly deficits have been like 05: $318bill, 06: $248b, 07: $161b, .... , 10: $1.29trill, ... 13: $680b. You mean to say that the gov. since at least 2005 has been counting higher corporate taxes into it's revenue stream but because of not getting that they have been having deficits.

     

    Some one should have realized that there calculations have been wrong all along and lowered their expectations of tax collection from the corporate sector.

     

    Maybe high debt is because gov.'s simply tend to overspend for populist measures. Maybe govt.'s don't really create anything but simply expect to get other people's money. just maybe.
    5 Jan, 09:12 AM Reply Like
  • leopardtrader
    , contributor
    Comments (1156) | Send Message
     
    So when you ( say in USA) buys something from a China based company( using your computer online) the Chinese company should pay tax to Uncle Sam? Thats ludicrous. Or if you visit a shop to buy something..then that shop must find out your tax abode and remit the tax appropriately lol
    Companies should pay tax where they are based. There are economic factors they let them locate where they are ( not only due to tax regime). Geographies should provide conducive environment, robust infrastructure and human capital to attract businesses. Apart from so-called taxes there are much more other economies of scale in localization of businesses.
    5 Jan, 09:20 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1609) | Send Message
     
    I agree, If a customer uses a computer in California to make a purchase, the customer should tax should pay sales tax to the state of California. I am a resident of Calif, I bought a $200 item through ebay from a vender in Hawaii yet I did not have to pay any sales tax.
    5 Jan, 10:13 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1609) | Send Message
     
    And this is getting worst as more and more purchases are made on line!
    5 Jan, 10:14 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1971) | Send Message
     
    @ruffdog In most states one has to declare all such online purchases in one's annual tax return, and the sales tax is paid at that point. So you will pay the taxes in April :)

     

    Since huge majority of people ignore this and basically cheat on their tax returns, there has been a lot of push recently (by state legislators) to move the responsibility of deducting the sales tax from the buyer to the seller, so that it is eBay or Amazon that needs to deduct the tax at the time of sale.

     

    Anyways, fundamentally all this recent discussion regarding taxation of online sales is misguided in a sense that (pretty much all) online sales are already clearly taxable, but it is the enforcement that is lacking, and in a sense shifting the responsibility of enforcement (from state level tax authorities and to private companies by introducing new laws) would make tax dodging more difficult.
    5 Jan, 10:28 AM Reply Like
  • waynemailloux
    , contributor
    Comment (1) | Send Message
     
    That is not only naive beyond belief but moronic. We should pay into the wealth redistribution mechanism, where pols buy votes and waste is rampant, more than they ask for? Get real Pollyanna
    5 Jan, 12:21 PM Reply Like
  • jtmonrow
    , contributor
    Comments (54) | Send Message
     
    Hey, canigetanamenooneused, don't you mean "them there calculations". not "that there calculations"
    5 Jan, 01:08 PM Reply Like
  • Hank890
    , contributor
    Comments (1156) | Send Message
     
    Stephen, you are profoundly mistaken. Corporations follow the tax laws the legislatures write, as they are written. If they are written poorly, it is not the corporations' fault.

     

    In this case, the Europeans have written laws to benefit their native corporations and resentment is being deliberately whipped up against US firms using those mechanisms created by the legislatures for their own native firms. Some Europeans want one set of tax laws for their firms, and a different set for foreign firms,....this is called non-Tarriff barriers.

     

    Tax laws, if they need change, as the author suggests, must impact all firms in the same manner. US firms are hardly villains if they follow the same tax accounting methods open to European firms.

     

    The US nationalists can play this kind of game, too, btw. We can all generate negative incomplete publicity in order to inflame nativist fear, and thereby revert to a self-protective regime, as many trading nations did in the 1930s---with tragic results.

     

    5 Jan, 03:10 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    "that there calculations" sounds right. them doesn't seem to fit correctly. But I am not sure. you might be right.
    6 Jan, 10:31 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1609) | Send Message
     
    Hey Seppo, thanks for the warning, I am a new on-line shopper so did not know that I will be hit with the tax when I file my income tax return.
    6 Jan, 11:10 AM Reply Like
  • amg mic
    , contributor
    Comments (24) | Send Message
     
    Stephen Aniston debit problems all caused by corporations not paying more tax.
    So all along when balancing my check book I have been incorrect thinking that I need to spend less than I have in my account in order to prevent a returned check when all I need to do was take some of your money and put in my account and use your money however I see fit. I can politicize taking your money by telling other people that you are a fat cat and probably crooked and should not keep the money that you worked to earn. I could get support by telling people that if I take your money I will give some to them - I remember a day nobody would take a " hand out" they had pride and would earn for the self . Not sure but I believe that there is a question of honor and integrity at many levels. Think of this people that want to take from those who have been more successful will ultimately make it so much harder for the less successful to achieving more. Also giving hand outs will not create equality rather just create another subclass that does not contribute. I submit that we think of how we can get more people to contribute and produce and reward production instead of trying to oppress.
    But for now please send your money to all that claim they need it - you certainly do not. According to those who want to steal, take, tax you are not really capable of spending "properly" anyway. They will be better equipped to use your money.
    My intent is not to provoke but to promote compensation for production.
    -best
    5 Jan, 10:00 AM Reply Like
  • philipmax
    , contributor
    Comments (264) | Send Message
     
    In 1970, Corporations paid 70% of Treasury revenue
    Individuals paid 20%.

     

    in 2011, Corporations paid just 6% of Treasury revenues
    Individuals paid 78%.

     

    When we filed paper tax returns the government pamphlet had a pie chart of income and outflow. Since it became so embarrassing to reveal the numbers it is almost impossible to get the data.
    5 Jan, 10:51 AM Reply Like
  • Hank890
    , contributor
    Comments (1156) | Send Message
     
    Cite your sources Philip,...your comments do not square with the data. What jurisdiction are you describing, first of all?

     

    Are you speaking of sales taxes, or income taxes, or what?
    5 Jan, 03:19 PM Reply Like
  • philipmax
    , contributor
    Comments (264) | Send Message
     
    I am only citing the Federal Income Tax revenue source from the US Department of the Treasury.. Sales tax are trust money and don't belong to the corporation collecting them, therefore, tax revenue from sales tax does not enter the company books in the first place.
    5 Jan, 04:12 PM Reply Like
  • ahsan haque
    , contributor
    Comments (4) | Send Message
     
    here is spx ta analysis

     

    http://seekingalpha.co...
    5 Jan, 12:45 PM Reply Like
  • dmattern
    , contributor
    Comments (54) | Send Message
     
    only individuals pay taxes. corporate taxes are included in the prices we pay.
    sales tax on internet sales when seller has no presence in the state? let the states get their revenue some other way like income taxes or the value added tax paid by producers but passed on to us via prices. taxes are embedded in prices. when we buy we pay taxes. do we want to eat? buy food and pay the tax.
    5 Jan, 12:55 PM Reply Like
  • Queaks
    , contributor
    Comments (21) | Send Message
     
    Taxes should be paid where the companies reside business wise. If a country ( or state) has too high of taxes then they lose business. Sales taxes should be the same. If I cross the state line and buy something at a store in Ohio, I pay Ohio taxes. It should work the same on the internet , pay the retail taxes where the "internet" store is located. That would be equal treatment. High tax states ( and countries) should not have to pay or withhold taxes where they do not reside. Never have I been asked what state I lived in when visiting, and then had them withhold taxes for my state. Tax efficient states and countries would thrive, the less business minded would not. My two cents.
    5 Jan, 01:24 PM Reply Like
  • Antrader
    , contributor
    Comments (243) | Send Message
     
    It is all legal. The Uk politicians know they can only lay the blame on their own antiquated tax collection system. The politicians can throw mud and call it immoral but It is all legal in terms of the different countries tax laws in which they operate. Some liberal lefties call for a consumer boycott. That's going to be really hard as the UK's number 1 favourite brand is.........Amazon.
    5 Jan, 01:30 PM Reply Like
  • Hank890
    , contributor
    Comments (1156) | Send Message
     
    Absolutely correct. The UK tax laws are painfully antiquated, and do need reform. But the laborite's do not control the current gov. Labour pols will spew any pejorative half truths they need in order to whip up a frenzy of resentment. Large well known American firms are a convenient target, nothing more.

     

    These stories about American firms inferring supposed "cheating" are just cheap propaganda, designed to stir up nativisitic fears among the majority of the British population that left school before the age of 16. Labour politicians are traditionally quite skilled at pandering to the fears and envies of this unfortunate unskilled group.

     

    Do British firms selling goods to Americans online (think British Air, or Burberry) pay US state sales taxes, or even federal taxes ? Or, if you fly into London, check the unusually exorbitant size of the landing taxes you need to pay for this "privilege". The US does not extort nearly so much for its landing fees, and neither does Ireland, or Netherlands, or most other European countries. It is a deliberate policy to soak affluent foreigners, and how else can the government afford to pay for the poor immigrants flooding into the UK. If non-UK international firms follow the existing laws, which clearly they are doing, why is the complaint made against these firms? The valid complaint needs to be made to the poorly written tax policy itself. But that is too hard; it is easier to point an accusatory finger against successful foreign firms, and stir up nativisitic and class resentments among the terminally ignorant.
    5 Jan, 03:43 PM Reply Like
  • TokyoRed
    , contributor
    Comments (9) | Send Message
     
    Less than 20% of people in the UK do not continue education past the age of 16 which, incidentally, is the minimum leaving age - where do you get your stats showing the majority leaving at 15 or earlier?)

     

    http://bit.ly/JXWRwi

     

    I would agree the tax code needs to be changed but these companies are conducting their UK business entirely in the UK but booking offshore to avoid paying taxes. I wouldn't point the finger at US firms in particular as I am sure anyone who can take advantage of this already does so.
    6 Jan, 08:32 AM Reply Like
  • Galactic Cannibal
    , contributor
    Comments (15) | Send Message
     
    Why can't people understand that Global Corporations employ armies of lawyers and Accountants to find legal loop holes around not paying taxes. And Governments are too stupid or spineless to stop those anti-tax loop holes. Never spend more than you earn or can pay for. The USA is up to its credit card eyeballs in a $17 trillion ocean of debt,and each month the Fed Reserve prints $85 billion to shore up this Mt.Everest of debt. This adds $1.02 trillion to the USA's national debt at each year end. Sadly the tax paying masses do not understand this, and they do nothing about it. Fact is Capitalism-Consumerism is a financial system that is doomed to fail. Unless its controlled based on mandate "U must not spend more than you earn".
    5 Jan, 02:40 PM Reply Like
  • amg mic
    , contributor
    Comments (24) | Send Message
     
    I do not know how to validate those numbers but what I do know is in 1970 most households had single wage earners. For 2011 most households have 3. If workers are paying taxes on wages earned that is triple the base on individuals paying taxes. Note that tax rates have increased for most taxpayers overall. When governments take away deductions to get at those "evil rich" they are really putting their thumb on everyone. Taking away the home mortgage deduction ( already happening) is bad all around. Not good for economy and not good for hardworking people that may choose to upgrade living quarters. The way to prosper is for government to be kept in check to provide infrastructure, defense and compete with global economy creating environment that leads to growth - lower taxes both corporate and individual look at how much money could be brought here if not for high taxation. How would our economy look if individuals kept more of their income. Spending would go up increasing demand thus producing more tax being paid overall making up more than the difference in high taxes. Corporations going to lowest tax options is still legal individuals not paying taxes by using cash and not claiming money earned is not . Looks like both are trying to achieve same result pay less tax. This world seams to be keen on legalizing things because people are doing it. ( Colorado condoning pot) why not try lowering taxes instead and see what it produces. In all it is more about control than it is about being fair and respecting individuals
    5 Jan, 02:55 PM Reply Like
  • Hank890
    , contributor
    Comments (1156) | Send Message
     
    Inappropriate deficit spending by governments, all governments, is a cancer,...can we all agree on that much?

     

    Therefore, there are two paths available:

     

    1) tax the living daylights out of all productive organizations and individuals, so that the unproductive can be "cared-for" OR
    2) cut government spending far back (except for essential services, such as defense, roads, rails, ports, other shared infrastructure; and perhaps education and basic research). Let the least productive segment of society sink into relative neglect.... the Darwinian approach.

     

    Or, perhaps, try to cut a middle route between the two, and muddle along.
    5 Jan, 03:56 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    It's kind of sad education and research (that too only basic) ranks behind all other things you think gov.'s should do. I would put edu. and basic and advanced research in the beginning of my list.

     

    Basically research is what allows you to be typing this stuff on a computer. and Darwin's research is what allows you to be talking about Darwinian approach.
    6 Jan, 10:40 AM Reply Like
  • philipmax
    , contributor
    Comments (264) | Send Message
     
    bookmark this blog for the next meltdown.
    I predict that the next financial d-buckle that will hit the markets will be directly linked to the untaxed corporate dollars parked in so called safe harbor jurisdictions. The amount of money parked overseas is roughly 7-10 Trillion Dollars. Money, that was never taxed, and available for these foreign government to confiscate.
    Does anyone think that China (or Malaysia, or the Netherlands, or Where-ever) will allow billion of dollars to leave their shores without taking advantage of confiscating it?
    What will Apple and Microsoft do when China tells them to blow-it-out their-ears at the first instance that these companies will want to repatriate the money back to the USA?
    5 Jan, 04:23 PM Reply Like
  • pullindeep
    , contributor
    Comments (2) | Send Message
     
    Is there any correlation to aapl and msft or are they completely independent?
    5 Jan, 08:10 PM Reply Like
  • gwynfryn
    , contributor
    Comments (4328) | Send Message
     
    It shows what happens when states or countries introduce low taxes, in order to attract businesses; it may create jobs locally, but only at the expense of others elsewhere. How much simpler things would be if governments globally could agree to a minimum rate on taxes involving international entities! Same goes for minimum wages (but necessarily geared to local conditions)...
    6 Jan, 10:28 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1609) | Send Message
     
    So the IRS should change the accounting code so that audit firms need to see a provision for "future taxes owed" for all companies headquartered in the US. It would be equal to the lowest tax rate times the amount held overseas.
    6 Jan, 11:14 AM Reply Like
  • steve4466
    , contributor
    Comments (95) | Send Message
     
    Basic problem is that UK tax law, like in many countries, has not kept up with technological and business progress. Politicians only bothered to notice after public finances declined in the post-crisis, previously they weren't interested. If the UK government changed their tax laws I'm sure companies would comply and pay more taxes. They might or might not need to adjust their pricing to reflect tax levels (the customer always ends up paying). Governments and the tax officials who work for them need to sharpen up their act.
    6 Jan, 11:25 AM Reply Like
  • philipmax
    , contributor
    Comments (264) | Send Message
     
    Further to my d-buckle alert above. Double whammy coming down the pike. First, as defined above, companies will have great difficulty extricating untaxed money from third world countries. Second, those companies that see this coming are going to try to minimize future deposits overseas, and will soon embark on front running the herd of would-be withdrawals. The unintended consequence of this will be huge inflow of capital into the USA leading to price inflation, the likes which we have not seen since the late 1970's.
    Keep it under your hats, it is sure to come our way.
    Think about this,the past 6 years were spent by the FED in re-infusing the $16T that left at the end of Bush Jr. term. That money went to 3rd-world nations. If it comes back to the USA it will double our money supply.
    14 Jan, 03:09 PM Reply Like
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