Vince Cable continues to dither on tax. The Guardian reports this morning that:
The chancellor should use his autumn statement next month to "get to grips" with growing evidence that multinational corporations are "systematically abusing" the UK tax system, business secretary Vince Cable said on Thursday.
"Some of them do seem to be avoiding tax systematically – and this is deeply angering," said Cable. "There are tens of thousands of British companies who do pay their tax properly. We have got to get to grips with it." However, he added it was impractical to suggest George Osbornecould act without international support.
Ever the excuse.
And it is an excuse. France is moving against Google and Amazon without international support or law change. They are simply saying they do not believe that these companies are trading into France. They are are saying they are trading in France.
That "to" is vital. If the claim that Amazon is in Luxembourg and exports products into the UK when an order is placed on amazon.co.uk is treated as risible, as the PAC did earlier this week, then the UK derived profits of Amazon Luxembourg can be taxed in the UK as it can be deemed to have a branch (or "permanent establishment") here in the UK. The same could be done to Google Ireland. It's profits arising in the Uk could be taxed here.
It's time to make that challenge and change the law on tax residence if need be so that we can clearly state that these companies are trading in the UK - as is so very obviously true.
That does not require international consent.
And the same change in the law could also deem offshore PFI companies resident here too: a bomus of ever I saw one. So Cable is dithering when a change in the law is entirely possible. Now, is he going to do it?
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You are entirely correct in what you are proposing and lets hope we finally see some movement on it. Just an aside, having looked at the Amazon accounts recently, it appears that they don’t actually make a profit selling stuff any more and all the profits seem to come from their IT hosting business in the US. This is why they are cheaper than anyone else, but surely can’t be a sustainable business model.
Very good idea, Richard. PE rules do need reforming given the changes to the way businesses operate.
How are the French planning to get around the EU law on this?
Do you think that those who argue that the EU prevents national governments taking such steps are wrong? Or are the French just being more, well, *French*,/i> in their interpretation of the rules?
I don’t think there is any conflict with EU law
It bis about challenging fantasy
“If the claim that Amazon is in Luxembourg and exports products into the UK when an order is placed on amazon.co.uk is treated as risible”
Why is it risible? That’s what’s happening isn’t it?
What is your new definition of residence? What is your new definition of an export?
Only in the mind of someone with no relationship to reality is this happening
Thanks for the non-response.
Where is Amazon’s UK Branch? Or Google’s?
Should British manufacturers exporting goods within the EU be taxed in the EU country where they make their profit? Or in Britain? Are you OK with France taxing British exporters in France because they assign the profit on the exports to a non-existent French branch?
Amazon = Slough HQ and massive warehouses employing 15,000 people
Ditto Google and its operation that is much bigger than Ireland
And let’s get real – no one is arguing we change exprts
Most gods sold by Amazon UK have probably neve left the UK but are still claimed to be imports. That’s the fallacy
And you know it
What about the limitation to a domestic application of PEs by bilateral tax treaties.
Change them
Really, how simplistic. Do you have any idea what they would entail, apart from the UK withdrawing from the OECD.
Try renegotiating over 110 double tax treaties.
Think again please.
Oh no, not simplistic at all
I am absolutely right
We can define residence afresh as we are, for example, with individuals ( I have helped write new rules) without renegotiating any DTA
So, we can refine PE to make sure it reflects reality in same way
Just as the French are
Think again I say to you
I know what I am suggesting
Still wrong.
Irrespective of what a treaty partner may legislate domestically, it is bound by the treaty interpretation of a PE – go and read Art 5.
The residence article in OECD modelled treaties (Art 4) is totally different as it regards a resident of a treaty country as one who is deemd so by virtue of the laws of the land.
You may know what you are suggesting but what you are suggesting is wrong.
Yes
And making the UK end of those operations PEs is entirely plausible
If not – the OECD will be forced to change it
Now go and get real and stop time wasting here
You are failing to add to debate, and that breaches moderation principles
Surely the fact that they operate from a .co.uk domain name and charge prices in sterling means they’re trading in the UK. The whole point of having Amazon.co.uk, as seperate from Amazon.com, is to position it as a separate UK based entity targeted at UK customers. It even sells UK versions of products (such as DVDs) as standard whilst referring to European versions as “Imports”.
Indeed
But tax people don’t worry about reality
One area that seems to be forgotten in all this is healthcare companies.
I am sure that Richard Branson is rubbing his hands in glee at the demonisation of Starbucks, etc., instead of Virgin.
There is no company more British than Virgin, yet he does exactly the same.
Virgin is far from British
It’s Britishness comes from the British Virgin Islands