Oh dear Ritchie, oh dear

Over the Amazon tax thing:

How can this happen? Because the UK’s ‘open for business’ policy is to not ask questions on tax. We’ll let a multinational do what it likes in its structuring to avoid upsetting them – inclduing letting them say that their sales really don’t take place here when they very obviously do – dammit, they’re even accounting for VAT on them here but still say they’re not in the UK.

It\’s not the UK. It\’s the EU.

Any company within the EU can supply to any consumer within the EU. That\’s it, full stop.

The company will be taxed upon the basis of its domicile.

The consumers will be taxed upon the basis of their domicile (umm, actually, residence of place of delivery but small difference). That\’s why VAT on a physical delivery to a consumer in the UK is at UK rates not Luxembourg. That\’s also why you cannot buy fags and booze at Luxembourg duty rates for delivery to a UK address.

It is possible to argue that this should not be the case: but if you do so you should remember that this is not the UK government pleasing the corporations. This is hard baked in to the Treaty of Rome.

And then HMRC have the gall to say the corporate tax gap on avoidance is tiny – maybe £1 billion. I say it’s £12 billion. That’s because I sgtart with the economic reality of the accounts

It just ain\’t tax avoidance when the entire structure is part of the constitution of the entire continent. This has been specifically written into the law which governs us all.

19 thoughts on “Oh dear Ritchie, oh dear”

  1. Does Murphy really believe that mutli-national corporations would actively flout the laws of the lands in which they operate? As long as companies operate within the legal framework for corporate taxation, VAT and reporting regulations, I honestly can’t see that there is a problem, except in the mind of Richard Murphy.

    Clearly, the man is a complete moron. But as long as this keeps him awake at night driving him to the edge of insanity, who are we to argue.

  2. Now the Beeb have got onto it and had an interview this a.m. with him about it.
    HMRC “declined to be interviewed”.

    The ignorance is truly mind-boggling.

  3. Unlike you who scares every mammal on Earth, Richard J Arnald.

    I might buy a few things on Amazon now just to spite Murph and the Graun.

  4. Henry

    There are plenty of instances where we can look at legal tax avoidance schemes and decide that they are not in fitting with how we think things should be.. and then, should parliament be so minded (and able), we can try to change them. I’m happy for a movement to exist to look for such practices and call for change. The problem is, this Amazon thing really isn’t one of those things.

    But that is what we should expect. The Guardian has picked it up, and UKUNcut are running with it. Those two, between them, have yet to pick a decent target. Murphy, I think, knows that these arguments are generally pretty weak, but is happy to take a PR Win which furthers the overall agenda/objective.

  5. oh Lord it’s pitiful isn’t it – Murphy is just one idiot, what’s more inexcusable is the ignorance of the organizations that broadcast and print him.

    unless I’m missing something, isn’t the obvious response, as somebody who wishes to minimize tax avoiding wheezes by corporations, to harmonize tax rates within in EU? Then Amazon would have no particular reason to be located in Luxembourg.

    or I suppose you could prat around with the laws that allow Amazon to classify its UK operations as a merely fulfilment centre.

    Even then I suppose there may be grounds for some complaint. Suppose taxes are harmonized, and a lots of economic activity within the EU is conducted by a small number of very large multinationals each of which only pay corp tax where domiciled. You might get some countries that do very well out of that, and others that do badly. So you might still want to spread the tax revenues around a bit, so profits made from sales in country A are taxed in country A. I suppose that would, as you suggest, require a major treaty re-write and would probably bring with it new problems of its own. I am just thinking aloud here.

  6. I suggest a single, low, corporation tax rate across the EU, with the money to go to the EU in exchange for giving up its cut of VAT. Then it needn’t bother with daft schemes like the FFT, companies could choose their location according to what’s actually efficient for them, and Murphy could put his energies into campaigning to increase the rate.

  7. Amazon are “scaring the horses”.

    What? More petulance and ignorance from our brain-dead Frenchman.

    Amazon are obeying UK and Luxembourg tax law. Neither the UK nor Luxembourg could change those bits of the tax code if they wanted to, without wholesale revision of various EU treaties. Which part of that counts as “scaring horses”.

  8. The Courageous State wouldn’t be thwarted by mere roadbumps like “laws”.

    Good intentions (or far-left dogma, to be accurate) are all.

  9. The real question is: “What was the spirit of the Treaty of Rome?” for that, as we know is what really counts, not what it actually says.

  10. There’s also our 100+ bilateral tax treaties, which say that we can’t tax a company from the other country unless it has a fixed place of business here. We’d have to re-negotiate all of those.

  11. And what the muppets all fail to realise is that the UK Treasury would lose money from this as well as gain.

    All the profits that UK business make from trading with foreigners will be taxed by those foreign countries rather than by HMRC.

  12. I’ve noticed Arsenald’s comments seem to fall into two camps: infuriatingly gnomic, as above, or lengthy, frothing Tourette’s-a-go-go screeds. In neither case do they contain any substantive argument beyond accusing most of us of being either dim, or in the EDL. Perhaps he veers from laconic to shrieking as his lithium alternately kicks in and wears off.

  13. I see that Tim Waterstone has just mentioned it in an article about the death of bookshops. He makes clear it’s legal, but still implies its somehow sharp practice (“under investigation since 2004”).

    Imagine if all traders had to pay company tax in every country they shipped to!

    It seems irrelevant too: it’s clear from the article, and some background knowledge, that as with the music industry, the problem was that the publishers had a nice thing going, and didn’t really try very hard.

  14. “Any company within the EU can supply to any consumer within the EU. That’s it, full stop.”

    I just tried switching from iTunes UK to iTunes Germany. It wouldn’t let me buy anything. Is this a breach of the Single European Act?

    Tim adds: No, it isn’t. Music distribution rights (like TV rights etc) are still based on the old national boundaries. It’s entirely possible to have such private sector conditions: the SEA refers more to government restrictions.

  15. “Tim adds: No, it isn’t. Music distribution rights (like TV rights etc) are still based on the old national boundaries. It’s entirely possible to have such private sector conditions: the SEA refers more to government restrictions.”

    I buy CDs from Amazon Germany and have them delivered to my UK address with no questions asked. But downloading the same music from iTunes Germany is impossible without a German bank account.

    Tim (or anyone else with the legal knowledge): Does the SEA definitely say something like “this act shall not apply where it conflicts with national intellectual copyrights/distribution rights”? My guess would be that it is in conflict with those rights. Its framers probably intended for it to conflict with such “parochial” national rights. But vested interests (major movie and music companies) are working with the powers that be to ensure its non- enforcement. I’d love to know more…

    Tim adds: I know more about books but the issues are the same.

    The author sells the right to publish in certain languages territories to the publisher (OK, more likely sells all then the publisher splits them up). So, we might have a US, a UK, An Oz, NZ etc version of the same book. The rights to sell that book in the different territories are owned by different people. It does actually happen that a UK or US version comes out first, then they see sales coming from that other territory (on Amazon, say). Amazon will ship the US verstion to hte UK…..but it is possible, and it does sometimes happen, that the UK rights owner will say, well, our version is coming out in a few weeks, please don’t ship any more US copies. So, they don’t.

    Music distribution rights are similarly territorial.

  16. Offshore Observer

    what people fail to appreciate is that Amazon is doing the UK economy, authors and readers a massive favour by providing discounted books.

    Its only the bookstores that are suffering due to the fact that thier business model became defunct through technological progress. cest la vie, if it weren’t for that we would all still be pig farmers, although these days Hugh Fenly-Whittingstall has made that a lifestyle choice.

    There is an article about this here:


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