Amazon and Tax-Avoidance: Is it immoral to buy amazon?

[jgaiser]

Originally Posted by Rizla

Presumably you saved a lot less than Amazon. In the real world that makes a difference.

In which real world is that? I indeed saved a lot less than Amazon, but then my income was considerably less than Amazon. If I was making the money they do, I would still be seeking every opportunity to lower my tax burden.

And has been pointed out already in this thread, Amazon is not the only ebook vendor taking advantage of tax laws. Or even the only multinational corporation.

[murraypaul]

Originally Posted by avantman42

I suspect other comparable companies avoid tax to a similar degree. I know Starbucks avoid paying a lot of tax. IIRC, they've paid no tax in the UK in the past 10 or so years because their UK operation has always made a loss. They do declare profit, and pay tax, elsewhere (Switzerland I think).

The UK operation makes a "loss" because they transfer all the money to the Netherlands as royalty payments for use of the Starbucks brand. They also buy all their coffee from related companies in other geographies at inflated prices. They have created a loss in order to avoid paying taxes.

[pdurrant]

Originally Posted by murraypaul

Well actually the problem isn't the tax law, it is that Luxembourg are not abiding by the tax law. They are not allowed to operate the 3% tax rate on eBooks.

Until someone (EU Commission? European Court?) tells them they can't, they can. Eventually they might get told that they can't, and that if they carry on, they'll face fines.

By that time, I expect that the VAT rules on electronic goods (or at least, on electronic books) will have changed again.

But this is, again, a governmental problem, not a company problem.

[JoeD]

Originally Posted by murraypaul

Well actually the problem isn't the tax law, it is that Luxembourg are not abiding by the tax law. They are not allowed to operate the 3% tax rate on eBooks.

That's between the EU and Luxembourg though isn't it? Which afaik the EU had demanded that the VAT rate be raised until they can decide whether to reclassify ebooks to make them the same VAT rate as paper books.

Lets say Luxembourg abide by the EU demands to raise the VAT rate on ebooks and bring it up to the minimum they can, 15%, according to what Rizla is saying, Amazon would still be acting immorally to charge 15% VAT when other companies based in the UK are charging 20% VAT.

I don't see it myself.

[avantman42]

Originally Posted by murraypaul

The UK operation makes a "loss" because they transfer all the money to the Netherlands as royalty payments for use of the Starbucks brand. They also buy all their coffee from related companies in other geographies at inflated prices. They have created a loss in order to avoid paying taxes.

That was my point. They are (presumably legally) avoiding tax, just as Amazon are.

[murraypaul]

Originally Posted by pdurrant

Until someone (EU Commission? European Court?) tells them they can't, they can. Eventually they might get told that they can't, and that if they carry on, they'll face fines.

You mean like this:

Taxation: VAT on electronic books in France and LUXEMBOURG

The European Commission is asking France and Luxembourg to amend their VAT rates on electronic books (e-books).

Since 1 January 2012, France and Luxembourg have applied a reduced rate of VAT to e-books, which is incompatible with the current rules under the VAT Directive. Under the Directive, e-books constitute electronically supplied services, and application of a reduced rate to this type of services is excluded.

This situation is creating a serious distortion of competition to the disadvantage of operators in the 25 other Member States of the Union, as e-books can be easily purchased in a Member State other than that in which the consumer is resident, and current rules provide for application of the VAT rate in the Member State of the provider rather than that of the customer. The Commission has received complaints from a number of Ministers of Finance highlighting the negative effect on book sales in their domestic markets.

The Commission is aware of the different treatment being applied to e-books and printed books and notes the importance of e-books. Under the new VAT strategy, the Commission has opened this debate with the Member States and should put forward proposals before the end of 2013 (see IP/11/1508).

In the meantime the Commission, as guardian of the treaties, requires Member States to respect the VAT rules they themselves unanimously approved.

The Commission has therefore issued reasoned opinions to the two Member States. This is the second stage in the infringement procedure following the letters of formal notice sent in July 2012 (). The two Member States have one month in which to bring their legislation into compliance with EU law. Otherwise, the Commission may refer the matter to the European Court of Justice. (References: IN/2012/2098 and IN/2012/4080).

(for more information: E. Traynor - Tel. +32 229 21548 - Mobile +32 498 98 3871)

[JoeD]

Originally Posted by murraypaul

The UK operation makes a "loss" because they transfer all the money to the Netherlands as royalty payments for use of the Starbucks brand. They also buy all their coffee from related companies in other geographies at inflated prices. They have created a loss in order to avoid paying taxes.

Doesn't that only avoid income tax on profits and not VAT. VAT would be charged at 20% by starbucks and be payable whether they're operating at a profit or loss?

I do agree that if a company is running as a "shell" for the sole purpose of been run at cost or a loss in order to bolster the revenue of a company based outside the same country that needs looking into and laws changing. However, that's not what Amazon is accused of/doing is it?

[Apache]

[QUOTE=ucfgrad93;2385659]So, it is only immoral to avoid taxes on a large scale. The small amount you avoid is ok? QUOTE]

I think it is coming to this. US Prosecutors are not prosecuting HSBC because they are to big to prosecute.

I have a very small business and I use every legal means available to reduce my tax burden. And before you start criticizing businesses about the amount of tax they pay look into how much over all taxes businesses do pay. Businesses have to match Social Security and Medicare deductions of their employees. They pay 100% of both federal and state unemployment taxes. They collect and pay Sales Tax. They pay taxes on their inventory, including the things not for sale like furniture and computers. If you have not sold it by the end of the year you pay a tax on it. This is why companies do not like to be caught holding a lot of merchandise at the end of the year. Then there is Corporate Taxes due by March 15Th. Your business license is a tax. It is calculated on your sales for the year combined with the type of business you are in. I love it when people complain that April 15Th is coming around again. I pay taxes every month.
Apache

[pdurrant]

Originally Posted by murraypaul

You mean like this:

Yes, exactly that. Thanks.

The VAT change happened in January 2012.
The commission decided to send "Formal Letters" in July 2012.
The commission issued "reasoned opinions" in October 2012

Nothing further has happened yet.

The EU is already discussing changes to VAT on ebooks, and the UK government may be facing a case in the European Court over VAT on ebooks in the middle of this year which could force the UK Government to exempt ebooks from VAT.

And the EU is already considering change to VAT, and is apparently going to change the VAT rate to that of the customer's country, rather than the supplier's in 2015.

I really don't expect to see any action taken against France and Luxembourg.

[HarryT]

ISTR that they did take action against Spain, when they lowered the VAT rate on ebooks a couple of years ago.

[Jozawun]

Originally Posted by HarryT

When I drive at 30MPH in a 30MPH zone I don't consider the moral implications of doing so - I simply obey the law. When I pay the taxes that my accountant tells me I need to, and no more, I don't consider the moral implications of that - I simply obey the law. The law is the law. I'll leave the morals to the theologians.

Why would you leave moral issues to theologians, they would know about as much on them as your bricklayer.

[taustin]

Originally Posted by Rizla

Indeed, our governments should put a stop to it. But do you think it's moral?

No more, or less, immoral than it would be for Amazon to deny their shareholders dividends by paying taxes they aren't required to.

And corporations, especially publicly traded corporations, are required by law to protect their shareholders' interests, after all. It would be arguably illegal for them to not take full advantage of any tax loopholes they come across.

[taustin]

Originally Posted by Rizla

IMO a large company paying a reasonable level of taxation in a democracy is a moral practice. Those taxes contribute to the general health of the democracy.

The trick is, who decides what's a "reasonable" level of taxation? The only real answer is, the government, specifically, the legislative body that enacts tax codes. And they have quite definitively decided that what Amazon is doing now is reasonable. Neither your opinion nor mine is really relevant on that score.

[taustin]

Originally Posted by Rizla

Presumably you saved a lot less than Amazon. In the real world that makes a difference.

Why? And what difference?

[taustin]

Originally Posted by Rizla

No, I don't. But I don't avoid more tax than the guy next to me who is also making a living. We both contribute to society. We play by the same set of rules. Amazon is not doing that. They are avoiding more tax than other comparable companies.

No, they're not. All large, multi-national companies do the same sorts of things. They may disagree on the exact details; profits are rooted in more than just not paying any more tax than is absolutely required, but it's certainly one of the major factors.

Amazon is publicly traded. The law requires the people running the company to protect their shareholders' interests. Would you feel the same if you owned Amazon stock? Would you go to a shareholder meeting and raise a stink demanding that Amazon pay more in taxes than they are required to? Do you think the other shareholders (who are the owners of Amazon) would vote with you?