13 ms·

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

47 points by sim1066 14y ago

tangue 14y ago
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.
- rhplus 14y ago
  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 http://www.investinluxembourg.lu/ict [1] http://treasureislands.org/this-is-what-apple-itunes-europe-looks-like/ http://treasureislands.org/this-is-what-apple-itunes-europe-...
  - tangue 14y ago
    That's what I meant with "something is broken in Europe". The concept of tax competition has been encouraged by the european commission. They've created this situation where each country competes against others. I won't blame the companies for playing by their rules.
patrickod 14y ago
I don't understand why British news outlets have started to try and "shame" certain corporations over their tax returns. The practice has been known and used for many years, yet it's suddenly deemed newsworthy. I'm really surprised the BBC felt the need to report on this.
- DanBC 14y ago
  News has fashion, and tax avoidance is fashionable at the moment. Partly that's because government has made announcements about it, and partly because we're in austerity measures.
  - jwdunne 14y ago
    It's also very interesting to note that we have a cabinet who have themselves been involved in fiddling with their tax returns. The very same who have proposed and implemented big austerity measures. I think it's good the public are aware what is happening with tax from corporations to cabinet ministers to the people. I know a few who wouldn't have any idea this is a standard thing and probably outraged that the public are being hammered for tax and large corporations pay relatively little in comparison (and if they don't, they may have it waivered). There is another one about how Vodafone owed around £6 billion in tax and it was let waiver whilst big crackdowns on tax cheats were in progress. I might have my facts wrong here but most people I speak to about say the same thing: "it's unfair". This also may be terribly biased though, most people I speak to are working class and support Labour. On the flipside, I can imagine some kind of rebound effect if any sort of big policy was made against it, where big companies are simply less inclined to do business here, with our economy suffering as a result since we're £100m out of pocket rather than £6bn up per co. I don't know much about politics or economics, I merely reiterate what the majority of people say about it all and my own perspective. Please correct me if I'm wrong.
- trevelyan 14y ago
  Subsidiary companies often reduce their profitability by licensing or purchasing materials from a parent company located overseas in a low-tax region. While this is usually a relatively legal way of transferring some profitability abroad, most countries also have regulations which specify that the relative contributions of various entities in complex corporate structures have to be reasonable and reflect the location where value is created. So while things are murky with IP licenses, increased news coverage and public pressure can succeed in calling attention to particularly egregious situations.
- polymatter 14y ago
thehodge 14y ago
Vodafone, Starbucks, Google, Amazon, eBay.. As a person with a few companies in the UK that pay tax, it seems that the big companies can get away with whatever, where as last week I had someone from HRMC actually turn up at my house demanding payment because there had been a mixup with a £4k PAYE payment.. It beggers belief
- tzs 14y ago
  Your companies probably aren't international, so don't get to enjoy a double Irish with a Dutch sandwich: http://www.nytimes.com/interactive/2012/04/28/business/Double-Irish-With-A-Dutch-Sandwich.html http://www.nytimes.com/interactive/2012/04/28/business/Doubl...
chime 14y ago
Who pays corporation taxes on sales? I thought that's what VAT was for. Isn't corporation tax based on profit? If the cost of goods sold and expenses were £795m, then £1.2m on £5m in profit would seem pretty reasonable.
- tzs 14y ago
  Assuming their profit margin in the UK is comparable to their profit margin elsewhere, they would have had about £180m profit in the UK.
- petercooper 14y ago
  Correct, but you may be assuming the BBC is writing for a financially literate audience. They are not. They want to perk up a non-story by conjoining two disconnected facts.
surrealize 14y ago
From the article: > According to the Sunday Times, eBay had sales of £789m during 2010 in the UK at its four British subsidiaries. Using its worldwide profit margin of 23%, it would have made a profit in the UK of £181m, leading to corporation tax owed of £51m. That's making a pretty big assumption, that Ebay's UK profit margin is the same as its worldwide profit margin.
- jammmuel 14y ago
  Why? I doubt it's an order of magnitude out.
jasiek 14y ago
It looks like the only tax regime that is stable in terms of revenue is one with low corporate income tax and relatively high personal income tax.
TomGullen 14y ago
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.
- Silhouette 14y ago
  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 http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm
- pan69 14y ago
  Because that will probably impact certain politicians and other "important" stake holders who benefit from these tax laws as well. In my opinion, every democratic country should make the following change to their laws: Politicians cannot own, or have a stake in, any commercial enterprise. Needs to be a bit refined but you get the idea.
  - chii 14y ago
    or put it more broadly - you should be able to acquire the financials of public servants. All of it, and if they have significant others like spouse or children, their financials are also considered public. And any stakes in any company will cause that company's financials to become public (whether its a privately held company or not). This way, there is a web of transparency so that any dodgy transactions will be definintely caught (probably by the opposing party). It sucks that these days, its possible to "hide" the true owners of companies and stocks. Its not in the public interest to have this feature.
    - Silhouette 14y ago
      That may all be true, but it may also not be in the public interest to put off people who are smart enough to make a lot of money on their own and therefore independently wealthy enough not to be subject to unhealthy influences from entering public service. Also, it would be blatantly illegal under our privacy laws to force that kind of disclosure for relations who aren't the ones making the choice but whose intimate financial details would suddenly become public, and rightly so IMHO.
fourstar 14y ago
It's technically legal, but now it seems the Brits are getting a little jealous and want some of that pie for themselves.
Gustomaximus 14y ago
This reminds me of the 'bottom of the harbour' tax scheme from the 70's in Australia (though that was properly criminal). Something I liked about how they dealt with it was they changed the law retrospectively meaning companies/individuals had to pay back tax they had avoided from previous years. I would love to see this done more where there is blatant tax avoidance. http://en.wikipedia.org/wiki/Bottom_of_the_harbour_tax_avoidance http://en.wikipedia.org/wiki/Bottom_of_the_harbour_tax_avoid...
- arkem 14y ago
  Applying new laws retrospectively makes me nervous. Why should anyone be compelled to follow laws that don't currently exist?
ChuckMcM 14y ago
Sigh, another story of "outrage" about how a company is legitimately avoiding taxation. Guess what, if you are an international company you can take advantage of the rules that the local politicians put in place. I ask people though what do they really want? Do they want Ebay to pay 45% in tax to the UK so 350M pounds of tax revenue from Ebay? Then the next complaint will be "Gee nobody does business in our country!" and you have to take the train over to France or something to buy stuff from Ebay. So the actual choices are "access to ebay" or "no access to ebay" which do you want?
- beedogs 14y ago
  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.
  - ChuckMcM 14y ago
    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 is it yours?
    - lotu 14y ago
      I need to save this and use it the next time an article comes out like this.
    - beedogs 14y ago
      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.
jasonlingx 14y ago
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-friendly or hospitable regimes.
- Silhouette 14y ago
  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.
  - nikcub 14y ago
    NPR Planet Money did an episode on the claim that rich people move states based on increasing tax rates: http://www.npr.org/blogs/money/2011/04/22/135635574/the-friday-podcast-do-the-rich-flee-high-tax-states http://www.npr.org/blogs/money/2011/04/22/135635574/the-frid... They found, based on research, that the effect was negligible, and that other impacts of increasing taxes are much more noteworthy.
  - jasonlingx 14y ago
    Businesses might not be able to choose so much where their market is, but they surely have a choice in where they set up manufacturing, R&D, corporate HQ etc etc. Countries constantly compete for business investment. Wealthy individuals are similar. They probably won't move their chosen country of residence for tax reasons, but I am pretty sure they will move their assets and investments to protect their value. Most tax systems are inherently unfair with the middle-class and small business taking more than their fair share of the burden. The increasingly globalised and virtual nature of the economy only exacerbates this.
ryanwaggoner 14y ago
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 previous year that lowered their tax. 3. These "sales" may just be gross revenue, completely ignoring the issue of COGS, which means gross income might only be $50m or something much lower. I know the article cited Ebay's global profit margin as being 23%, but is that on gross revenue or gross income? That seems high to be on gross revenue... 4. This revenue may have been earned by subsidiaries owned by Ebay UK, but the money was never brought into the UK and has been reinvested into those subsidiaries. For example, Ebay UK owns Ebay Monaco, where there are no corp taxes. Ebay Monaco does $10m in profit. If they sent that money back to Ebay UK, they'd owe UK taxes on it. Instead, they reinvest it into hiring more staff and expanding the Monaco office. If and when the money goes back to the parent entity, it'll be taxed then. Getting upset about corporate tax law based on newspaper articles is a fool's errand. EDIT: More details: http://www.forbes.com/sites/timworstall/2012/10/21/ebay-is-not-avoiding-taxes-no-this-is-instead-the-point-of-the-system/ http://www.forbes.com/sites/timworstall/2012/10/21/ebay-is-n... Looks like they're just taking advantage of EU law to have payments from consumers go to a subsidiary in a lower tax jurisdiction. How is this different from running your company in Texas instead of New York for lower state taxes?
- lancewiggs 14y ago
  It's legally fine, but ethically corrupt, and ultimately means the country you are doing business in will decline. Pay your taxes. And governments - fix these issues, which are only going to increase as we shift to more and more virtual services.
  - maratd 14y ago
    > ethically corrupt There is nothing ethically corrupt over paying the taxes you legally owe. There is no ethical or moral duty to pay more than what you owe. Do you hire somebody to do your taxes? I do. Am I ethically corrupt because I take measures to make sure I don't pay more than I have to?
deleted 14y ago
[deleted]
deleted 14y ago
[deleted]
ktizo 14y ago
I find pretty funny the current UK governments avowed surprise at the fact that companies are paying very little tax. "... In March 2011, the Chancellor of the Exchequer, the British cabinet minister who is responsible for all economic and financial matters, announced in his budget statement three major changes to UK corporation tax." "The first was that the rate for large companies in the UK was set to fall to 23%. The second was that the UK would move to a corporate tax system where only the profits of companies arising in the UK would be subject to UK corporation tax; this representing a compete reversal of the situation that existed prior to 2009 when UK companies were (albeit convolutedly) taxable on their worldwide income. And thirdly he announced that if in the future a UK company runs its internal banking arrangements through a tax haven subsidiary then that company will benefit from a special UK tax rate of just 5.75 per cent of the resulting profits. ..." from "Tax havens, secrecy jurisdictions and the breakdown of corporation tax" - http://rwer.wordpress.com/2011/09/06/rwer-issue-57-richard-murphy/#more-5948 http://rwer.wordpress.com/2011/09/06/rwer-issue-57-richard-m...
nikcub 14y ago
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.
- chii 14y ago
  consumption tax (like VAT, or GST in australia), unfairly taxes the poor as a percentage of their income. The gov't tries to fix this by having some categories of goods that are _not_ taxed (at least this is true in australia), to alleviate this problem, but its not quite perfect. I don't like consumption tax at all. However, i can't think of a way to levy that won't have loopeholes for the mega rich.
  - Silhouette 14y ago
    Consumption taxes are regressive, and arguably not so desirable for that reason. However, it's a lot easier to change the personal income tax system in one country to balance that effect for its own citizens than it is to change corporation taxes on profits that operate as a global market. Having big players in that market win the game by bending the rules in ways most people can't, ultimately denying tax revenue to some nations so those nations have to increase taxes on smaller businesses and individuals, isn't exactly doing the poor in those nations any favours either.

47 points by sim1066 14y ago

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.

rhplus 14y ago
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 http://www.investinluxembourg.lu/ict [1] http://treasureislands.org/this-is-what-apple-itunes-europe-looks-like/ http://treasureislands.org/this-is-what-apple-itunes-europe-...
- tangue 14y ago
  That's what I meant with "something is broken in Europe". The concept of tax competition has been encouraged by the european commission. They've created this situation where each country competes against others. I won't blame the companies for playing by their rules.

patrickod 14y ago

I don't understand why British news outlets have started to try and "shame" certain corporations over their tax returns. The practice has been known and used for many years, yet it's suddenly deemed newsworthy. I'm really surprised the BBC felt the need to report on this.

DanBC 14y ago
News has fashion, and tax avoidance is fashionable at the moment. Partly that's because government has made announcements about it, and partly because we're in austerity measures.
- jwdunne 14y ago
  It's also very interesting to note that we have a cabinet who have themselves been involved in fiddling with their tax returns. The very same who have proposed and implemented big austerity measures. I think it's good the public are aware what is happening with tax from corporations to cabinet ministers to the people. I know a few who wouldn't have any idea this is a standard thing and probably outraged that the public are being hammered for tax and large corporations pay relatively little in comparison (and if they don't, they may have it waivered). There is another one about how Vodafone owed around £6 billion in tax and it was let waiver whilst big crackdowns on tax cheats were in progress. I might have my facts wrong here but most people I speak to about say the same thing: "it's unfair". This also may be terribly biased though, most people I speak to are working class and support Labour. On the flipside, I can imagine some kind of rebound effect if any sort of big policy was made against it, where big companies are simply less inclined to do business here, with our economy suffering as a result since we're £100m out of pocket rather than £6bn up per co. I don't know much about politics or economics, I merely reiterate what the majority of people say about it all and my own perspective. Please correct me if I'm wrong.
trevelyan 14y ago
Subsidiary companies often reduce their profitability by licensing or purchasing materials from a parent company located overseas in a low-tax region. While this is usually a relatively legal way of transferring some profitability abroad, most countries also have regulations which specify that the relative contributions of various entities in complex corporate structures have to be reasonable and reflect the location where value is created. So while things are murky with IP licenses, increased news coverage and public pressure can succeed in calling attention to particularly egregious situations.
polymatter 14y ago

thehodge 14y ago

Vodafone, Starbucks, Google, Amazon, eBay.. As a person with a few companies in the UK that pay tax, it seems that the big companies can get away with whatever, where as last week I had someone from HRMC actually turn up at my house demanding payment because there had been a mixup with a £4k PAYE payment.. It beggers belief

tzs 14y ago
Your companies probably aren't international, so don't get to enjoy a double Irish with a Dutch sandwich: http://www.nytimes.com/interactive/2012/04/28/business/Double-Irish-With-A-Dutch-Sandwich.html http://www.nytimes.com/interactive/2012/04/28/business/Doubl...

chime 14y ago

Who pays corporation taxes on sales? I thought that's what VAT was for. Isn't corporation tax based on profit? If the cost of goods sold and expenses were £795m, then £1.2m on £5m in profit would seem pretty reasonable.

tzs 14y ago
Assuming their profit margin in the UK is comparable to their profit margin elsewhere, they would have had about £180m profit in the UK.
petercooper 14y ago
Correct, but you may be assuming the BBC is writing for a financially literate audience. They are not. They want to perk up a non-story by conjoining two disconnected facts.

surrealize 14y ago

From the article: > According to the Sunday Times, eBay had sales of £789m during 2010 in the UK at its four British subsidiaries. Using its worldwide profit margin of 23%, it would have made a profit in the UK of £181m, leading to corporation tax owed of £51m. That's making a pretty big assumption, that Ebay's UK profit margin is the same as its worldwide profit margin.

jammmuel 14y ago
Why? I doubt it's an order of magnitude out.

jasiek 14y ago

It looks like the only tax regime that is stable in terms of revenue is one with low corporate income tax and relatively high personal income tax.

TomGullen 14y ago

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.

Silhouette 14y ago
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 http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm
pan69 14y ago
Because that will probably impact certain politicians and other "important" stake holders who benefit from these tax laws as well. In my opinion, every democratic country should make the following change to their laws: Politicians cannot own, or have a stake in, any commercial enterprise. Needs to be a bit refined but you get the idea.
- chii 14y ago
  or put it more broadly - you should be able to acquire the financials of public servants. All of it, and if they have significant others like spouse or children, their financials are also considered public. And any stakes in any company will cause that company's financials to become public (whether its a privately held company or not). This way, there is a web of transparency so that any dodgy transactions will be definintely caught (probably by the opposing party). It sucks that these days, its possible to "hide" the true owners of companies and stocks. Its not in the public interest to have this feature.
  - Silhouette 14y ago
    That may all be true, but it may also not be in the public interest to put off people who are smart enough to make a lot of money on their own and therefore independently wealthy enough not to be subject to unhealthy influences from entering public service. Also, it would be blatantly illegal under our privacy laws to force that kind of disclosure for relations who aren't the ones making the choice but whose intimate financial details would suddenly become public, and rightly so IMHO.

fourstar 14y ago

It's technically legal, but now it seems the Brits are getting a little jealous and want some of that pie for themselves.

Gustomaximus 14y ago

This reminds me of the 'bottom of the harbour' tax scheme from the 70's in Australia (though that was properly criminal). Something I liked about how they dealt with it was they changed the law retrospectively meaning companies/individuals had to pay back tax they had avoided from previous years. I would love to see this done more where there is blatant tax avoidance. http://en.wikipedia.org/wiki/Bottom_of_the_harbour_tax_avoidance http://en.wikipedia.org/wiki/Bottom_of_the_harbour_tax_avoid...

arkem 14y ago
Applying new laws retrospectively makes me nervous. Why should anyone be compelled to follow laws that don't currently exist?

ChuckMcM 14y ago

Sigh, another story of "outrage" about how a company is legitimately avoiding taxation. Guess what, if you are an international company you can take advantage of the rules that the local politicians put in place. I ask people though what do they really want? Do they want Ebay to pay 45% in tax to the UK so 350M pounds of tax revenue from Ebay? Then the next complaint will be "Gee nobody does business in our country!" and you have to take the train over to France or something to buy stuff from Ebay. So the actual choices are "access to ebay" or "no access to ebay" which do you want?

beedogs 14y ago
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.
- ChuckMcM 14y ago
  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 is it yours?
  - lotu 14y ago
    I need to save this and use it the next time an article comes out like this.
  - beedogs 14y ago
    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.

jasonlingx 14y ago

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-friendly or hospitable regimes.

Silhouette 14y ago
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.
- nikcub 14y ago
  NPR Planet Money did an episode on the claim that rich people move states based on increasing tax rates: http://www.npr.org/blogs/money/2011/04/22/135635574/the-friday-podcast-do-the-rich-flee-high-tax-states http://www.npr.org/blogs/money/2011/04/22/135635574/the-frid... They found, based on research, that the effect was negligible, and that other impacts of increasing taxes are much more noteworthy.
- jasonlingx 14y ago
  Businesses might not be able to choose so much where their market is, but they surely have a choice in where they set up manufacturing, R&D, corporate HQ etc etc. Countries constantly compete for business investment. Wealthy individuals are similar. They probably won't move their chosen country of residence for tax reasons, but I am pretty sure they will move their assets and investments to protect their value. Most tax systems are inherently unfair with the middle-class and small business taking more than their fair share of the burden. The increasingly globalised and virtual nature of the economy only exacerbates this.

ryanwaggoner 14y ago

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 previous year that lowered their tax. 3. These "sales" may just be gross revenue, completely ignoring the issue of COGS, which means gross income might only be $50m or something much lower. I know the article cited Ebay's global profit margin as being 23%, but is that on gross revenue or gross income? That seems high to be on gross revenue... 4. This revenue may have been earned by subsidiaries owned by Ebay UK, but the money was never brought into the UK and has been reinvested into those subsidiaries. For example, Ebay UK owns Ebay Monaco, where there are no corp taxes. Ebay Monaco does $10m in profit. If they sent that money back to Ebay UK, they'd owe UK taxes on it. Instead, they reinvest it into hiring more staff and expanding the Monaco office. If and when the money goes back to the parent entity, it'll be taxed then. Getting upset about corporate tax law based on newspaper articles is a fool's errand. EDIT: More details: http://www.forbes.com/sites/timworstall/2012/10/21/ebay-is-not-avoiding-taxes-no-this-is-instead-the-point-of-the-system/ http://www.forbes.com/sites/timworstall/2012/10/21/ebay-is-n... Looks like they're just taking advantage of EU law to have payments from consumers go to a subsidiary in a lower tax jurisdiction. How is this different from running your company in Texas instead of New York for lower state taxes?

lancewiggs 14y ago
It's legally fine, but ethically corrupt, and ultimately means the country you are doing business in will decline. Pay your taxes. And governments - fix these issues, which are only going to increase as we shift to more and more virtual services.
- maratd 14y ago
  > ethically corrupt There is nothing ethically corrupt over paying the taxes you legally owe. There is no ethical or moral duty to pay more than what you owe. Do you hire somebody to do your taxes? I do. Am I ethically corrupt because I take measures to make sure I don't pay more than I have to?

deleted 14y ago

[deleted]

deleted 14y ago

[deleted]

ktizo 14y ago

I find pretty funny the current UK governments avowed surprise at the fact that companies are paying very little tax. "... In March 2011, the Chancellor of the Exchequer, the British cabinet minister who is responsible for all economic and financial matters, announced in his budget statement three major changes to UK corporation tax." "The first was that the rate for large companies in the UK was set to fall to 23%. The second was that the UK would move to a corporate tax system where only the profits of companies arising in the UK would be subject to UK corporation tax; this representing a compete reversal of the situation that existed prior to 2009 when UK companies were (albeit convolutedly) taxable on their worldwide income. And thirdly he announced that if in the future a UK company runs its internal banking arrangements through a tax haven subsidiary then that company will benefit from a special UK tax rate of just 5.75 per cent of the resulting profits. ..." from "Tax havens, secrecy jurisdictions and the breakdown of corporation tax" - http://rwer.wordpress.com/2011/09/06/rwer-issue-57-richard-murphy/#more-5948 http://rwer.wordpress.com/2011/09/06/rwer-issue-57-richard-m...

nikcub 14y ago

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.

chii 14y ago
consumption tax (like VAT, or GST in australia), unfairly taxes the poor as a percentage of their income. The gov't tries to fix this by having some categories of goods that are _not_ taxed (at least this is true in australia), to alleviate this problem, but its not quite perfect. I don't like consumption tax at all. However, i can't think of a way to levy that won't have loopeholes for the mega rich.
- Silhouette 14y ago
  Consumption taxes are regressive, and arguably not so desirable for that reason. However, it's a lot easier to change the personal income tax system in one country to balance that effect for its own citizens than it is to change corporation taxes on profits that operate as a global market. Having big players in that market win the game by bending the rules in ways most people can't, ultimately denying tax revenue to some nations so those nations have to increase taxes on smaller businesses and individuals, isn't exactly doing the poor in those nations any favours either.