Amazon has apparently patented a floating warehouse system to be located in what are effectively airships floating at 45,000 feet above high density delivery areas. The warehouses are to be replenished with stock by associated ballon or airship systems and staff working at 45,000 feet would arrive and depart in these same way.
I suspect that technically the system has a long way to go before it might work, but let me assume Amazon has reason for thinking this way. Suppose, just for a moment, that the airship warehouse was replenished with stock from another warehouse anchored in international waters. There, is surely, no reason why this is not my possible? Where then is tax paid on the transaction? Might this be the reason for Amazon's interest? And if so what is the appropriate tax response?
I am, in general, deeply cynical of destination based sales taxes. Does such a situation require it though, maybe as an exceptional charging basis?
Or do we require the alternative minimum corporation tax that I have already proposed?
And what about tackling the VAT issues involved?
Let alone the fact that any company using such a system might be wholly avoiding the contribution retailers with stores make to the societies in which they work through the local taxes that they pay that Amazon will claim are, quite literally, beneath them?
I am not saying Amazon cannot develop their ideas. But I do think we need to presume their goal is to subvert tax systems to secure competitive advantage when doing so and make sure we are ready to counter that.
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Making an enormous charge for Air Traffic Control and GPS services could be useful too.
I wonder how the probability of extreme weather is likely to affect such a plan. would they then become believers in climate change I wonder?
Richard. It is a joke. That is about 8 miles up in the air. And the drawings are childish.i suspect a hoax designed to get the foolish to waste time discussing it.
The USA has notoriously lax patent rules so it might be a way of “patenting” something to future proof themselves. So if somebody did something resembling this… Patent trolling in the US is quite a business.
Tax on helium?
Wasn’t there something about Amazon setting up its one and only physical bookshop on the International Space Station and that taxes on sales would coincide with where the station was in relation to the earth at point of sale? Truly not joking…
Knew I hadn’t dreamt it. Issue was over discounting and book rights but still a territorial matter that would apply to the tax problem: http://www.thebookseller.com/news/amazon-open-bookstore-international-space-station
it’s not April 1, is it?
I hate to think what sanctions their Disciplinary Policy will have- the long drop perhaps?!!
You could make an opera out of this, “Der Fliegender Retailer”.
Very good
“Suppose, just for a moment, that the airship warehouse was replenished with stock from another warehouse anchored in international waters. There, is surely, no reason why this is not my possible? Where then is tax paid on the transaction?”
Tax would be paid on the transaction in exactly the same way as tax would be paid on a transaction using ground-based warehouses outside the UK.
For VAT, place of supply rules cover this perfectly well. Place of supply rules and distance selling make it clear that if a business outside the UK sells to a consumer inside the UK then UK VAT needs to be accounted for. With a customs handling charge, which is quite often a multiple of the VAT, if it’s not intra-EU.
For direct tax, if there’s no PE in the UK then we are in exactly the same situation as we are now: the selling company has taxable profits where it’s established, with Diverted Profits Tax to counter any deliberate removal of profits from the UK.
Your question is trivial, with a clear and obvious answer.
As is your other questions: “I am, in general, deeply cynical of destination based sales taxes. Does such a situation require it though, maybe as an exceptional charging basis?” Yes, yes it does – although not as an exceptional charging basis, it would be as a perfectly normal charging basis that has been in effect for years.
Respectfully, we have no idea how VAT will work post Brexit
And how would this be diverted from the UK?
And your last comment just reveals ignorance. I am seriously wondering why you aren’t on the troll list
No, we don’t know how VAT will work after Brexit. So it seems rather a stretch to assume that it will deliberately introduce a massive hole that doesn’t currently exist.
But even if it did, these airships would not be the way to exploit it. A warehouse in Luxembourg would work perfectly well, or if you wanted to stay outside any jurisdiction you could got the Radio Caroline route and use converted trawlers outside the 12-mile limit. I’m no great expert on drones, but I’m fairly sure that the technical implications of flying horizontally for 12 miles are less than those of flying 9 miles straight up and down.
I am right behind the idea that this is merely a publicity stunt.
Let us compare the two hypotheses:
1) It is a tax dodge.
My argument against this idea is that for it to work we need a massive increase in drone capabilities, we need the VAT rules to be changed to allow it, and we need to overcome the air safety implications of drones going up and down through air traffic. That is, it can’t be a tax dodge because it wouldn’t dodge tax.
2) It is a publicity stunt.
Your argument against this idea is that the media have covered it extensively. That is, it can’t be an attempt to gain publicity, because it has gained a lot of publicity.
I know which argument convinces me 🙂
“Amazon has apparently patented a floating warehouse system to be located in what are effectively airships floating at 45,000 feet above high density delivery areas.”
Do you ever stop to reality check the subjects you write on? Apart from the technical difficulties of creating a large, pressurised facility at that altitude, have you considered the air safety implications? Such an object would be sitting right over the commercial air corridors & filling the airspace over its delivery footprint with drones. Effectively creating a massive no-fly zone. It’d put out of action virtually every airport located anywhere near a major city.
The patent application’s simply publicity seeking, blue sky thinking. OK, journalists who have a well deserved reputation for profound ignorance might run with it. But someone claiming to be an economist should know better.
Have you noticed vast amounts of the media covered this?