Harold Wilson\’s to blame for Amazon not paying tax

No, no, really, it is all Harold Wilson\’s fault.

Here\’s the double taxation treaty between the UK and Luxembourg:

(1) For the purposes of this Convention, the term `permanent establishment` means a fixed place of business in which the business of the enterprise is wholly or partly carried on.

(2) The term `permanent establishment` shall include especially:

(a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, quarry or other place of extraction of natural resources; (g) a building site or construction or assembly project which exists for more than six months.

(3) The term `permanent establishment` shall not be deemed to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

That pretty much covers whether Amazon has a permanent establishment in the UK or not. And if it doesn\’t then it don\’t pay corporation tax.

And no, it\’s not even tax avoidance. For here we\’ve got a specific clause in the law that outlines exactly that in Amazon\’s situation no tax is payable.

But why Harold Wilson then?

DT12250 – Luxembourg: Agreement

The comprehensive agreement (SI1968/1100) came into force on 12 July 1968 and has effect

a) In the United Kingdom for
i) Income Tax from 1966-67,
ii) Capital Gains Tax from 1966-67,
iii) Corporation Tax from 1 April 1966.

This is old, old stuff. Nowt to do with any politician currently in power.

6 comments on “Harold Wilson\’s to blame for Amazon not paying tax

  1. Isn’t it more likely to be the Chancellor who is responsible?

    Signed 24 May 1967, so that would be Callaghan. (www.hmrc.gov.uk/taxtreaties/in-force/l.htm)

    Unless you want to blame the foreign secretary, but George Brown was unlikely to have been able to grasp the finer points of a tax treaty (especially if it were presented to him after lunch).

    But I wonder who actually signed it? Recent ones have been by various people (from Foreign Secretary down to the Exchequer Secretary to the Treasury). I can’t seem to find the original online.

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