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Good luck with that. There is no way short of global world government to force a company with subsidiaries and business all over the world to pay taxes everywhe

Good luck with that. There is no way short of global world government to force a company with subsidiaries and business all over the world to pay taxes everywhere.

awjr 12y ago
Don't think it's about everywhere. What they are trying to stop is the profits made in the UK being offset against artificial debts from another division of the same company in a different more tax efficient country.
- mike_hearn 12y ago
  The problem is profits aren't made in the UK at all. For big tech companies usually they have a subsidiary in a given country, and that subsidiary charges the parent company for access to its work/innovations/whatever. The subsidiary does not itself receive payment for the global companies operations in that country, despite how unintuitive it is. This is why the UK arms of these companies don't make any profit - they charge the parent companies more or less at cost. Meanwhile people who want to buy their services sign a deal with the Irish subsidiary. But legally these are different companies. Additionally it's impossible to say how much profit is being made in a particular country. You can count income quite easily, but then what percentage of the cost of developing Facebook can be accounted to servicing the UK market? It wouldn't make sense to allocate ALL the cost of creating Facebook to the US market and treat every other country as pure profit, as obviously there are costs involved with being international. I'm not convinces Osborne has any real clue about the morass he's wading in to here. It gets worse when you think about the possible future impact. Imagine Google and Facebook didn't have any UK presence at the moment but were looking to hire people there, because of an abundance of skilled people in, say, London. But entering the UK suddenly means a 25% tax on their UK sourced income. Why would they ever hire the first employee? If they stay out entirely, they aren't in UK jurisdiction so there'd be no reason for them to pay any tax there.
  - awjr 12y ago
    Amazon is a classic example of this, an apparently UK based selling business that in fact sells via Luxemburg with Amazon UK only being a fulfillment/delivery service.
  - realusername 12y ago
    Yeah but this is an artificial construction which only exists on paper, in reality, Google is indeed making profit in the UK, that's the point.
    - ptaipale 12y ago
      This "artificial construction" is called the EU Single Market, where the idea is that a company in, say, Luxembourg, can sell to the UK.

Good luck with that. There is no way short of global world government to force a company with subsidiaries and business all over the world to pay taxes everywhere.

awjr 12y ago

Don't think it's about everywhere. What they are trying to stop is the profits made in the UK being offset against artificial debts from another division of the same company in a different more tax efficient country.

mike_hearn 12y ago
The problem is profits aren't made in the UK at all. For big tech companies usually they have a subsidiary in a given country, and that subsidiary charges the parent company for access to its work/innovations/whatever. The subsidiary does not itself receive payment for the global companies operations in that country, despite how unintuitive it is. This is why the UK arms of these companies don't make any profit - they charge the parent companies more or less at cost. Meanwhile people who want to buy their services sign a deal with the Irish subsidiary. But legally these are different companies. Additionally it's impossible to say how much profit is being made in a particular country. You can count income quite easily, but then what percentage of the cost of developing Facebook can be accounted to servicing the UK market? It wouldn't make sense to allocate ALL the cost of creating Facebook to the US market and treat every other country as pure profit, as obviously there are costs involved with being international. I'm not convinces Osborne has any real clue about the morass he's wading in to here. It gets worse when you think about the possible future impact. Imagine Google and Facebook didn't have any UK presence at the moment but were looking to hire people there, because of an abundance of skilled people in, say, London. But entering the UK suddenly means a 25% tax on their UK sourced income. Why would they ever hire the first employee? If they stay out entirely, they aren't in UK jurisdiction so there'd be no reason for them to pay any tax there.
- awjr 12y ago
  Amazon is a classic example of this, an apparently UK based selling business that in fact sells via Luxemburg with Amazon UK only being a fulfillment/delivery service.
- realusername 12y ago
  Yeah but this is an artificial construction which only exists on paper, in reality, Google is indeed making profit in the UK, that's the point.
  - ptaipale 12y ago
    This "artificial construction" is called the EU Single Market, where the idea is that a company in, say, Luxembourg, can sell to the UK.