Happy New year?

[blues_r_best]

Sorry, I did of course mean tax evasion, which while highly unethical is completely legal.:blush:

Oh dear...

 

[Pubey]

Sorry, I did of course mean tax evasion, which while highly unethical is completely legal.:blush:

Jesus wept.:nope:

 

[Tangled up in Blue]

If I were a Business English teacher, I'd probably want to clarify my understanding of the difference between tax evasion and tax avoidance - for both professional and legal reasons.

Oh dear...

I suggest you scroll back to post number four in this thread which clearly indicates I'm aware of the difference between tax avoidance and evasion.

 

[blues_r_best]

I suggest you scroll back to post number four in this thread which clearly indicates I'm aware of the difference between tax avoidance and evasion.

I suggest you look at the post quoted.

 

[Pubey]

I suggest you scroll back to post number four in this thread which clearly indicates I'm aware of the difference between tax avoidance and evasion.

LOL. "The Al Capone defence".

 

[Tangled up in Blue]

Are you sure?

Oh dear...

Jesus wept.:nope:

I suggest you look at the post quoted.

Just goes to show the perils of lunchtime drinking, (it's a public holiday in Spain today).:smile:

 

[chapperzUK]

Sorry, I did of course mean tax avoidance, which while highly unethical is completely legal.:blush:

Out of curiousity, where would you draw the line on the ethics of saving money on tax bills? Based on how much tax is saved or are all methods than reduce the tax bill of an individual unethical?

 

[Neil_F]

Needs a change in the law as over here everyone buys from Amazon and if that spending doesn't benefit this country in the way that spending with their rivals does then laws need changing. Aggressive pricing to bankrupt their rivals is of no real benefit to us in the medium and long term.

The bendfits to the consumer are always lost from this debate. Amazon provide me with a whole host of goods at a cheaper price than would otherwise be possible and I don't have to leave the house. Happy days!

A UK law change won't do anything. The recent cases of tax planning/avoidance in the press have largely relied on EU law and double tax treaties. Neither were drafted with the internet age in mind and hence neither are fit for purpose. Don't expect either to change though, not least because the EU part would need a new Treaty.

Personally I would get rid of corporation tax once the government is running a surplus again. It doesn't raise that much money and is effectively a drag on UK only companies. Not to mention the fact that just about all the economic evidence suggests the cost is actually borne by employees through lower wages. It would also equate to the fiscal stimulus that Barna has been calling for, so I'm sure he will be in favour....

 

[Tangled up in Blue]

Out of curiousity, where would you draw the line on the ethics of saving money on tax bills? Based on how much tax is saved or are all methods than reduce the tax bill of an individual unethical?

Pubey's point about Amazon only paying corporation tax at a rate 0f 0.1 % of turnover is a fair one.It's clearly not enough.And it's a disgrace that multinationals can still get away with this sort of thing in the digital age.

Having just completed my own tax return for the last quarter,as a self-employed freelance,(after I'd sobered up a little),I'm perhaps not really in the best postion to comment on individual ethics in regard to reducing tax bills.:smile:

 

[chapperzUK]

Pubey's point about Amazon only paying corporation tax at a rate 0f 0.1 % of turnover is a fair one.It's clearly not enough.And it's a disgrace that multinationals can still get away with this sort of thing in the digital age.

Having just completed my own tax return for the last quarter,as a self-employed freelance,(after I'd sobered up a little),I'm perhaps not really in the best postion to comment on individual ethics in regard to reducing tax bills.:smile:

That isn't how tax works. Amazon may have had a turnover of £4bn worldwide, but does that mean they have to pay corporation tax in every country they do business in?

 

[MK Shrimper]

That isn't how tax works. Amazon may have had a turnover of £4bn worldwide, but does that mean they have to pay corporation tax in every country they do business in?

Yes, why not? I can't bugger off to Germany and refuse to pay their taxes on the excuse that, hey I live in the UK so stick your German VAT up your arse.

 

[chapperzUK]

Yes, why not? I can't bugger off to Germany and refuse to pay their taxes on the excuse that, hey I live in the UK so stick your German VAT up your arse.

But if you go to Germany you won't be living in the UK. If you do freelance work to a German company, you don't pay tax to the German government.

So your company makes £3m profit and makes sales in 4 countries (not a lot compared to Amazon).

24% to UK = £720k
39% to US = £1,170k
33.33% to France = £1m
29.8% to Germany = £894k

Total tax due = £3,784k

Congrats on having a successful business, now you have made a £784k loss.

 

[MK Shrimper]

But if you go to Germany you won't be living in the UK. If you do freelance work to a German company, you don't pay tax to the German government.

So your company makes £3m profit and makes sales in 4 countries (not a lot compared to Amazon).

24% to UK = £720k
39% to US = £1,170k
33.33% to France = £1m
29.8% to Germany = £894k

Total tax due = £3,784k

Congrats on having a successful business, now you have made a £784k loss.

Lol, I obviously have no idea what I'm talking about :hilarious: Can't argue with that.

 

[Tangled up in Blue]

The bendfits to the consumer are always lost from this debate. Amazon provide me with a whole host of goods at a cheaper price than would otherwise be possible and I don't have to leave the house. Happy days!

A UK law change won't do anything. The recent cases of tax planning/avoidance in the press have largely relied on EU law and double tax treaties. Neither were drafted with the internet age in mind and hence neither are fit for purpose. Don't expect either to change though, not least because the EU part would need a new Treaty.

Personally I would get rid of corporation tax once the government is running a surplus again. It doesn't raise that much money and is effectively a drag on UK only companies. Not to mention the fact that just about all the economic evidence suggests the cost is actually borne by employees through lower wages. It would also equate to the fiscal stimulus that Barna has been calling for, so I'm sure he will be in favour....

It's an interesting idea.

How much revenue does corporation tax actually raise for the UK government though?

Obviously, there would only be a fiscal stimulus if the equivalent of the revenue currently gained from corporation tax were to be actually invested in the UK economy directly by the government, eg in the form of a VAT cut etc.Otherwise the only people to benefit would be the multinationals.

In any case, we still seem to be some way off running a surplus again, even by the government's own optimistic forecasts.

 

[Neil_F]

Pubey's point about Amazon only paying corporation tax at a rate 0f 0.1 % of turnover is a fair one.

Corporation tax is levied on profit not revenue. If you want to levy tax on revenue then you have to tax loss making businesses as well.

The Guardian Media Group had revenue in 2012 of £254m yet paid only £100k corporation tax. That is an effective rate of 0.39%. Is this an outrage, Barna, or does the fact that the Guardian made a loss, just as Amazon did, make a difference????

 

[chapperzUK]

Lol, I obviously have no idea what I'm talking about :hilarious: Can't argue with that.

Well I did just do my Business Tax exam last month so I hope I know what I'm talking about. :winking:

While I agree it is immoral (it may not come across that way), I really can't see a way of forcing companies like Amazon and Starbucks to pay more tax without potentially screwing over hundreds or thousands of smaller businesses.

One for Neil_F, for your idea of getting rid of corporation tax would that also get rid of the 10% tax credits on dividends too?

 

[Tangled up in Blue]

Corporation tax is levied on profit not revenue. If you want to levy tax on revenue then you have to tax loss making businesses as well.

I note that corporation tax currently yields "the fourth-largest source of government revenue (after income, NIC, and VAT)."

Can't see it being abolished any time soon then.

http://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom

 

[Neil_F]

It's an interesting idea.

Obviously, there would only be a fiscal stimulus if the equivalent of the revenue currently gained from corporation tax were to be actually invested in the UK economy directly by the government, eg in the form of a VAT cut etc.Otherwise the only people to benefit would be the multinationals.

Wow - really???

You are seriously saying that the abolition of corporate income tax wouldn't by itself constitute a fiscal stimulus? The point of a fiscal stimulus is to increase aggregate demand. Eradicating corporate income tax to zero would increase investment in the UK (since returns on that investment would not be subject to tax) which would increase trend growth and reduce unemployment. It would also increase earnings given that all evidence suggests corporate income tax is borne by employees through lower wages.

In terms of what it raises, £43bn last year, which is only 10% of all taxes raised. The loss of tax corporate tax revenue would be partially offset by increased PAYE and NICs (due to higher employment) and higher VAT (due to increased aggregate demand).

 

[Neil_F]

One for Neil_F, for your idea of getting rid of corporation tax would that also get rid of the 10% tax credits on dividends too?

It would. Since the 10% notional tax credit on dividends is designed to avoid double taxation on corporate profits (once through corporate income tax and then again when taxing dividends) then there would be no need to retain it. Dividends could be taxed at the full personal income tax rates, which would reduce the cost of the abolition.

It would also be a dramatic simplification of the entire tax system.

 

[Tangled up in Blue]

Wow - really???

You are seriously saying that the abolition of corporate income tax wouldn't by itself constitute a fiscal stimulus? The point of a fiscal stimulus is to increase aggregate demand. Eradicating corporate income tax to zero would increase investment in the UK (since returns on that investment would not be subject to tax) which would increase trend growth and reduce unemployment. It would also increase earnings given that all evidence suggests corporate income tax is borne by employees through lower wages.

In terms of what it raises, £43bn last year, which is only 10% of all taxes raised. The loss of tax corporate tax revenue would be partially offset by increased PAYE and NICs (due to higher employment) and higher VAT (due to increased aggregate demand).

Only if the savings to multinationals were passed on directly to the consumer.

Your argument about increased investment in the UK is a hypothetical one.

Can you cite any developed countries where corporation tax has been reduced to zero and has led to the sort of increases in investment and earnings along with the reduction in unemployment that you mention?