I have an article under the above heading in the Guardian this morning. In it I argue, after analysing Amazon's tax payments:
Amazon's tax looks low because we can only confirm payment of tax of £4.7m, which is paid at one third of the expected rate on about one quarter of its UK activity. That could imply more than £50m of tax needs to be accounted for.
But the simple fact is that the missing payment might be in the accounts of Amazon's Luxembourg company, and we will never know because Amazon can legally get away with not telling us. And that is the real issue that needs to be addressed because, until we improve the accounting for tax, we can't have a meaningful debate on whether the right amount is paid by companies or not.
Thankfully, there are readily available solutions. First, we need the accounts and company files for a UK branch to make clear what the activities of that branch are in the country where they are filed, including tax paid. It's not acceptable that the figures be lost in totals for the company as a whole. UK law could be changed to require this.
Second, every multinational company with multiple trading entities in the UK as a whole should be required to file on public record a single set of accounts covering all of its UK operations so that we can see the whole picture for the company in this country in one single set of accounts. Without such accounts, a multitude of sins can be hidden from view by those companies who might want to do so.
Third, we need Amazon — and all large multinational corporations — to publish full country-by-country reports on their activities. I first proposed this idea in 2003; in 2016 the European commission proposed its adoption. But many EU member states are dragging their feet on it, even though it would show exactly what a company like Amazon makes in terms of sales, profit and tax paid in every country (including the tax havens) in which it operates.
We might get angry with Amazon. We may be right to do so. But frankly, we should be just as angry with our politicians. They are letting companies deliver poor quality 20th-century accounting when we need data fit for the 21st century. It's time for a root-and-branch reform of accounting.
The accountancy profession will hate it. But we have to ignore them: full accounting transparency is the way to ensure that the right amount of tax is paid in the right place at the right time, and nothing less will do. We need new accounting laws and standards, now.
I think it's time for this debate to look for the next round of solutions. That is to be found in reformed accounting, and not just getting angry.
And I believe that reformed accounting is within our reach.
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A couple of questions, Richard. First, why are comments not allowed on your article in The Guardian? Second, what rate of tax did Amazon UK pay on its actual profits after all valid expenses were deducted from revenues, so including the cost of share options (which are part of employee compensation)?
I have no idea what policy the Guardian have on comments
Amazon did deduct the cost of all expenses in its accounts
So the answer has already been supplied
If anyone has any complaints about the Guardian you can take this up with the reader’s editor, something which other papers do not do.
Full tax transparency would mean that you were able to look at the amount of tax paid by Amazon UK and know that it was as required by the law.
HMRC already have that view.
Or are you suggesting Amazon has broken any tax laws which HMRC let them get away with.
Your article is full of innuendo, light on facts. And you dismiss the share payments as a ‘sideshow’ when it is the actual reason for the low corporation tax due.
I’ve noticed that the BBC and the Guardian are losing listeners and readers in droves. They both use you to get their tax ‘knowledge’.
It is boring to have to continually deal with comments on things I have not said
I confess I sometimes wonder why I allow comments on this blog
Accounts are not just for HMRC
They are for investors and other stakeholders
We all have a right to make informed decisions on companies
In which case you are just wrong
As is all your innuendo
Please don’t call again
I confess I’m surprised that so many comments are allowed by yourself on this blog. It’s not as if there’s advertising down the side bar, and so it’s not worth the extra traffic that would be generated if a more industrial debate were allowed by yourself.
Contrast that with the Guardian which doesn’t accept comments but should as they are clearly desperately in need of the page views.
Unless the Guardian is part of a neoliberal plot to self-destruct by driving itself out of business leaving the traditional broadsheet media field to the Times , then their strategy makes no sense. Frankly I wouldn’t be surprised.
Richard, I endorse your campaigning on this issue but have three questions:
1. Do you fear that banging the drum Corporation Tax might divert attention away from their tax planning on VAT and NIC where there might be far greater leakage at stake?
2. Do you feel that rather than criticise the multi-national (which is just doing what multi-nationals do) we should focus more on the government that wantonly allows them to do so?
3. Do you suspect that it is inevitable that the EU will resort to the CCCTB (= unitary tax) to combat this tax planning and that this is one of the undisclosed reasons why the Hard Right is so keen on Brexit at any cost?
I am certainly trying to move the debate on. That is my aim here
I have said (elsewhere, I admit) that VAT abuse is much more important
And here I am saying it is governments that let this happen
But I do not think Brecit motivate this – the OECD is more powerful on tax
But we agree on the rest
Solution: How about creating a new classification of a business that has special tax rules in the countrys favour and in the interest of fairness and transparency.
I know this has been done in Thailand and it worked well. So instead of trying to fit this new collosal beast into a pre existing box, create a new box and a new type of business. Then apply rules that make a fair and level playing field.
Eg Multinational internet based business in a dominating or market leadership position. Mibbinadomlp.
A flat rate of vat on the total using a Cashflow return on investment, plus other models to make a reasonable Corporation and VAT tax payment for and on behalf of sellers using its platform. Yes its a catch all however the number of companies in it would be small as only by special approval could this onerous requirements be added by the Government preferably advised by yourself.
This would correct the persistant and sustained domination by a monopoly establishing player that is putting off the payment of tax for 20 years or more to the detriment of local competition, bricks and mortar businesses that support the tax base and the countrys infrastructure and investments.
Amazen and Facesquich are two such entities with gogle close behind. (I misspell them to give us a little time before they pick up this idea and marshall billions of resources against it.)
What do you think Richard out of 10?
It doesn’t fly for me
I want the system to work
Not to keep tinkering with it in ways that simply create new rules to arbitrage and abuse
Good to have your confirmation that you didn’t ask The Guardian not to allow comments. How about asking them to allow them?
And on tax paid, yes, perhaps, in their accounts, but not in your article. Either the employee options are a sideshow or they actually mean Amazon actually paid all the tax due. It would be good to know which.
There are 200 plus of them
What is the issue?
Dear Richard,
I believe i’ve finally got my head around MMT, after listening to youtube videos by people like yourself, Stephanie Kelton,L Randrall Wray, Steve Keen – then reading ‘where does money come from’ by Ryan-Collins et.al, and the BoE’s own publication in 2014. Being CIMA qualified myself it all makes a lot of sense.
I am amazed that this isn’t the single biggest talking point on the Left, in any of its forms – whether its at labour party associated events, Left forums, or being the single focal point for anyone who wants a progressive government and value for money.
Pretty much every single news feature – Newsnight, Daily politics, Sunday politics, Peston – always boils down to the following question “How will you pay for it”. In fact they should scrap all their campaigning until they can formulate clear slogans and approaches to answer that question – because its the single weapon in the media/Tory’s armoury that seems to dislodge any kind of momentum that is built up. And because the idea that Government has a budget account and cannot spend more than it earns is so seductive to people who don’t understand things, peoples default position is “well it’d be nice to have free education and healthcare, but thats just a fantasy”.
So my question to you is this.
If you were given 1 minute on TV, as you have been in the past, and the question “but how will you pay for it” comes up – How would you go about answering it please?
Try this
http://www.taxresearch.org.uk/Blog/2018/07/24/the-right-answer-to-how-are-you-going-to-pay-for-it/
And thanks for your comment
Compare the lackadaisical attitude to Amazon’s tax issues with that of HM Government’s zest in dealing with disabled people where they are harried and treated as work shy and then 84% of them can only get PIP and other payments they are entitled to if they appeal!!
I have come to the conclusion that I do want to grow old and/infirm in my country. I would rather die early than be treated like the disabled are at the moment. I hope that when I slip off my mortal coil, I go quickly.
My dad is 92 in two days
I admit he’s pretty frail now
But until a couple of years ago life was not at all bad for him
I’ll take that
That’s a great age. Some grow old better than others. Hopefully you a blessed with good genes too.
Not just the disabled!
The old, at least the poorer old, are treated almost as bad as the disabled.
And things are not getting any better.
Pensions are generally becoming less worthwhile, and need a higher amount of funds input to obtain a livable income from. Although I note the pension *industry* seems to be buoyant.
And a look at how women are treated, both at work and retired (and noting also that “women may need to give-up work to look after elderly relatives”) would imply we are still in the late Victorian age.
Seriously, this country seems to be regressing back to an age that existed many decades ago.
I expect the govt to start building flotillas of wooden ships, propelled by the wind, with massed cast-iron cannon on multiple decks, and go forth into the world to build an[other] empire soon.
“That could imply more than £50m of tax needs to be accounted for.”
Are you suggesting that Amazon is not paying £50m in tax that is legally due?
“until we improve the accounting for tax, we can’t have a meaningful debate on whether the right amount is paid by companies or not.”
Isn’t it HMRCs job to monitor if companies are paying the right amount of tax?
You claim Amazon is ‘playing games’. Are you saying they are doing anything illegal? If not what games are they playing? Obeying the law isn’t playing games. Driving at 39 mph in a 40 mph zone isn’t playing games. It isn’t “speeding fine avoidance”. You might want to campaign to lower the speed limit but in the meantime you can’t accuse the drivers of playing games. They are obeying the law.
Why isn’t your headline “Amazon is doing nothing illegal”? That’s the truth.
Read what I said
My argument is very clear
You are making things up….
I am making nothing up. I see you refuse to answer. Perhaps you have no answer?
It is a direct quote from you.
“That could imply more than £50m of tax needs to be accounted for.”
Are you suggesting that Amazon is not paying £50m in tax that is legally due?
Having myself reviewed the accounts, note 8 explains everything about the tax position. There is no missing tax. A proper accountant would see that. Or an honest one.
My workings are apparent
And my logic sound
Now stop wasting my time