Timmy elsewhere

Wonder how long this will stay up at the Guardian?

Dear Guardian:

” In the same period, however, the social media giant Facebook paid just £4,327 in corporation tax to the exchequer, despite having a global market value in excess of $300bn, despite paying its UK staff an average of £210,000 a year and despite, by some estimates, generating up to a tenth of its income in this country and making £1bn profit in the UK every three months. “

You’re getting your information from idiots.

Stock market value is not correlated with profit being made in the UK. for example, Amazon is worth hundreds of billions and yet rarely makes a profit larger than a rounding error. Uber loses billions each year and yet is worth $60 billion. Capital value is something different from annual profit.

If the staff are being paid £210,000 each a year then that’s some £110,000 in tax from each and every one of them (including employers’ NI, which must indeed be included). That’s rather larger than the tax take if the company paid them less, made a larger profit and then paid corporation tax.

And this?

” making £1bn profit in the UK every three months.”

The company made just shy of $4 billion globally in 2015. That’s rather less than the £4 billion you are claiming just from the UK.

You’re also claiming that Facebook gets near 10% of its revenue from the UK (we know it cannot be more because that must be detailed in their US accounts). Total revenue was $18 billion or just under for 2015. 10% of that is $1.8 billion, or around and about £1.2 billion.

For the year. And it would be entirely wondrous for anyone to be making £4 billion profit on £1.2 billion turnover.

Perhaps your economic leaders should be written by someone who can count rather than Mr. Chakrabortty?

“The company announced that, from April, it will route its major face-to-face advertising deals through the UK tax system, instead of through Ireland, where the company is based for tax purposes. This is likely to have a significant effect on Facebook’s UK tax bill, since corporation tax of 20% on the profits from those deals can be expected to raise millions of pounds. Online advertising – which may be around half of the business – remains unaffected, however, even when it is paid for by British taxpayers and companies, and will still be treated as Ireland-based. Since nothing else about the company’s business has changed, this suggests that the UK tax collectors HMRC have failed to secure a fair return for the taxpayer from Facebook and similar multinationals in the past – as the 2014 returns imply – as well as failing to nail the online side of the business. Why can the new arrangements not apply to 2015-16?”

The international tax system attempts to tax profits where the economic activity takes place. Not where the sales take place, where the activity takes place. Those large customers will in the future be dealt with by UK salesmen, employed in the UK. This creates that permanent establishment which brings that activity into the UK tax net. There’s nothing odd or surprising about this, this has been the basis of the system since the 1920s when the League of Nations drew up the basic tax treaties.

Those sales being handled in Ireland are not part of the UK tax system: both the double taxation treaties and EU law say they are not.

Both HMRC and Facebook are simply applying the law as it is. and we’d not want either of them to be doing anything different of course.

And a little bonus point for you. Now that those sales are being booked in the UK there is still some significant part of that economic activity which is taking place outside the UK. Facebook wasn’t written in the UK, is not updated here either. So, some part of the economic activity is taking place in California, where that work is done. And that same international tax system which tries to tax where the economic activity is taking place means that Facebook UK must (yes, must) pay a royalty for that economic value.

Thus I predict you’ll all be up in arms sometime in 2018 when we see the 2017 accounts showing that royalty payment being made.

Gold CD up above has the correct answer. Forget taxing the companies, just tax the shareholders.

18 thoughts on “Timmy elsewhere”

  1. It is the output of a community of innumerate abydocomists stirring their hate-porridge.

    Why on earth would it be taken down?

  2. And yet most every day I read commentators (not here) – the self-same whingers – saying ‘I can’t believe we get all this stuff free!

  3. The Facebook thing is wonderful. They are taking advantage of reduced UK tax rates and the fact that they have about £9m accumulated UK tax losses to make a PR coup – look how virtuous we are. They end up paying less tax in Eire, which does not bother Murph and the other taxsturbators, and they will pay no tax in the UK for a couple of years at least. Trebles all round.

  4. Chubbybotty is presumably too young for the diagnosis to be dementia. Does that mean he is simply a lying cunt?

  5. “They end up paying less tax in Eire, which does not bother Murph and the other taxsturbators,”

    Oh, it does disturb them.. But even their level of stupid has enough sense of self-preservation to recognise that they can’t argue for an outright unilateral (tax) landgrab according to their Opinions.

  6. I still believe a lot of this tax discussion is diverting from the real issue about tax, not where it has been collected, but where it will be spent. The policy should be “we’re not going to extort it from companies, which will ultimately be paid for by citizens, so lets not spend so much”. Then we’d all be better off.

    The previous mob who frittered away all our tax money, and all my son’s tax money, and all my unborn grandchildren’s tax money, should hang their heads in shame, crawl under a rock and STFU, instead of continuing to try and squeeze more blood out of the stone that already gave it all.

  7. Don’t worry about ever paying the tax bill. Since 1973 the US policy, with a pause because Carter didn’t understand, has been to try to keep interest payments below inflation. Inflation rates that are given to the public by the government are artificially low. Since inflation for what people actually need to buy for the past 20 years is around 7% the national debt is virtually the same as it was in 1996.

  8. Tim: At least you didn’t call anyone a cunt.

    dearieme: Chakrabortty is just like Murphy – telling a tale to those interested in such tales, for money. I personally wish him all the best. It is immoral to let a Guardianista keep his money.

  9. Worstall is attempting some sort of media break-out, isn’t he?. In the last week or so he’s been on Turkish TV, a laughed-at commentator on TJN, and now trying to outwit those well-regarded masses at the Guardian!

    It must be hugely galling to Worstall, and this band of tireless arseholes, that the likes of Murphy get so much medium-level OP exposure in MSM.

    Worstall must long for those days trying to get the very few votes needed to get elected to his “hang em all” EU MEP “cunts”. In London.

    So now he relies on the fucked-up Forbes website and this blog/stream of consciousness, pandering to his mates and school chums (he knows Ironman isn’t doing straight-on-gay action with the HMRC teaboy) and facilitates Mr Ecks’s discarded spuff-rag dementia.

    You need to try harder, Tim. The majority of your posts are playground attacks on people that are more successful than you, you are deeply unpatriotic with your love of illiberal corporatism, and you hate women who have strong opinions.

    A zero rated brand. Murphy shits all over you whether he’s wrong or not – and that’s without rummaging in your bins for tabloid fodder, speculating about your wife’s mental state, or comparing your whitey cock with Robert Mugabe.

  10. lol, no correction from the Guardian of the screaming errors, and there’s a fair bit of schooling going on in that thread about CT vs IT.

  11. Tim,

    Excellent comment and still there now.

    The left’s chip on both shoulders weighs them down so much they are incapable of understanding anything to do with turnover, profits, costs etc.

    P

  12. @Arnald

    Lord, you got to an awful lot of trouble (not to mention typing) in an effort to do little more than call Tim Worstall a tool. Why do you so much time on a site with so many “tireless arseholes”? There are sites I wouldn’t waste eyeball time on, let alone pen garbage like that.

    Why? I’m genuinely interested. What do you get from it if it offends you so much?

  13. “Since inflation for what people actually need to buy for the past 20 years is around 7% the national debt is virtually the same as it was in 1996.” What an immensely cheering argument. I wonder if Hellary will use it

  14. No, dearieme, because that doesn’t fit the narrative that Bush II is at fault for the debt. Pointing out the system’s flaws would most likely backfire.

  15. Arseald, are you so simple minded to think that anything anyone does must be done to raise their celebrity status? You have no concept that people can do things just because they believe in something, or just because they can.

    So all Tim’s work is to do about gaining celeb status is it. So what is your favourite celebrity’s work all about then? Gaining status too? So you acknowledge that there is no meat or brains behind Murphy, just blindly spouting words to gain celeb status. Well done.

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