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Amazon’s UK Tax Debacle: Time for the scapegoat to butt back?

Posted By Paul St John Mackintosh On May 16, 2013 @ 2:57 pm In Amazon | 1 Comment

Amazon [1]UK press, politicians and public all seem heated up about Amazon’s tax bills in the UK—or lack thereof. Seems those deceitful corporations have been daring to incorporate and structure across jurisdictions [2], rather than standing meekly inside good honest British borders and reaching their hands into their pockets whenever that nice Mr. Osborne tells them to. Whisper it not, but rumor has it that some of them even have profit motives. Scandalous, I know.

Politicians eager for scapegoats to fling before an electorate grumbling under the weight of misgovernment have seized on Amazon [3], Google, et al, as a Godsend. Watching them posture against the very people they ply with grants and incentives to come and invest and employ is almost as educational and edifying as watching a dog chase its tail round a lamppost. (“Amazon UK given £2.5m in govt grants = £1.3k per high street bookshop,” tweeted @saltpublishing.) But it distracts voters’ attention, I guess.

The prime concern for me is not tax liability at the corporate level, but at the product level. Companies can legally treaty-shop across borders for the best tax breaks until we finally arrive at the nirvana of an international tax monoculture. But with the virtualization of e-books and similar wares, local taxation, like local copyright, becomes not only harder to administer, but also harder to justify.

Why pay Belgian rates to download a e-book from France? And why shouldn’t continental Europeans benefit from the UK’s zero percent Value Added Tax on printed books? What right does any European government have to tax an object written and edited in the U.S. and distributed through a global network that may not even warehouse any data in their country. (And yes, I know Amazon sells other things besides books, but I bet headline-readers are thinking of books first and foremost when they clock Amazon on their tabloid billboard.)

And there are perfectly legal ways around the problem. “Increasingly, non-EU companies are turning to agency agreements with local distributors to avoid the burden of charging and complying with VAT,” notes website VATLive [4] on non-EU companies’ VAT on electronic services, books, video, apps and software. “This is perfectly lawful, and shifts the burden of the tax compliance to the distributor.”

National jurisdictions are simply incompetent to deal with these matters any more. National politicians clearly are. But I have a solution for those lost tax revenues. Instead, how about a carbon tax on politicians’ wasteful and environmentally damaging emissions of  hot air? Now I’d vote for that.


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1 Comment To "Amazon’s UK Tax Debacle: Time for the scapegoat to butt back?"

#1 Comment By Michael W. Perry On May 18, 2013 @ 11:44 am

I’m no fan of taxes, much less the high and hidden European VAT scheme, but an element of fairness needs to be part of this debate.

Taxes always do some harm where they’re applied (i.e. income taxes discourage working). That’s why I consider single-tax schemes (i.e. a federal sales tax) as dreadful. Among other things, it creates an enormous incentive to avoid that single tax. All this European trickery is, in part, due to highness of VAT. In the U.S. it’s our corporate taxes, almost twice those of most European countries, that keeps profits earned offshore from being invested here at home.

Taxes also need to be evenly applied. Doing the same thing should result in the same taxation. Dentists, for instance, shouldn’t pay a different income tax rate from realtors.

Like it or not, various corporate and VAT are how Europeans have chosen to fund their governments. The taxes when they buy a car, for instance, might be how programs that deal with child abuse get funded. (It’s rather hard to tax child abusers.) When some corporations move their legal presence elsewhere to evade taxes, those costs still have to be paid, so they shift those costs on to others. Typically that means that small businesses selling stuff get stuck with paying taxes that the giants (i.e. Amazon also selling stuff) can avoid.


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URLs in this post:

[1] Image: http://www.teleread.com/amazon/amazons-uk-tax-debacle-time-for-the-scapegoat-to-butt-back/attachment/bkvlbjkcyae5zpy-jpg-large/

[2] to incorporate and structure across jurisdictions: http://www.bbc.co.uk/news/business-22549434

[3] have seized on Amazon: http://www.theglobeandmail.com/report-on-business/international-business/european-business/amazons-uk-unit-slammed-for-pathetic-37-million-tax-bill/article11935725/

[4] notes website VATLive: http://www.vatlive.com/eu-vat-rules/non-eu-companies-vat-on-electronic-services-books-video-apps-and-software/

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