Vince Cable lost the plot - VAT

It puts prices up and, believe it or not, business hates putting its prices up, above all else, as they understand that always means they will sell less and therefore make less money.

Besides, the Internet allows purchase from anywhere in the world, say the US where tax is lower and the C&E simply haven't got the resource to deal with that.

Currently they are forced to pretty much ignore all mail order into the UK from the US even though taxes are due.

From the US?

Edster posted

In what sense is it "tax avoidance" to set up a business in a jurisdiction that charges less sales tax than the UK? If we take your suggestion seriously, every jurisdiction in the world must be compelled to charge the same sales tax rate as every other. Why?

In the sense of the generally accepted meaning of the word "avoid". That is to say, you would avoid paying as much tax as otherwise. Let's not confuse avoidance with evasion. When applied to tax, one is perfectly legal, the other is not.

Which would of course be unenforceable. Who would do the compelling? Countries the world over set their own tax rates according to whatever criteria they deem appropriate. One such criterion may be to attract business from abroad. Like Ireland has done with corporation tax.

Why should companies cheating the country out of tax revenue get an unfair advantage over companies that do the right thing?

On the internet, the point of sale is the location of the buyer, not the location of the supplier.

But Sainsburys seems to be a UK company, so it should pay UK taxes anyway.

They are supposed to, but I can't really see how they could be forced to against their will. Easynews was asked for VAT from all their UK customers a few years ago, they just ignored it.

Any idea why it is that way round and not treated the same as if the buyer went abroad, visited the (bricks & mortar) shop and personally imported the goods? Plus, many internet sellers' T&C state that the sale, and any disputes, are subject to the seller's local jurisdiction.

Edster posted

Your question isn't valid because it contains at least three unsupported assumptions. That the company concerned is cheating; that its advantage is unfair; and that other companies are doing the right thing. Before anyone answers the question they would want to hear your evidence for these statements.

No, you'd pay less tax than if you operated from the *UK*. But why should a business choose to operate from the UK?

People like Edster always assume that UK tax rates are right and good and everybody in the world should pay them unless they can think of a damned good reason for doing otherwise. He forgets that every country could equally vaildly make the same statement by substituting its own name for "UK".

I'd be sacked :)

That's pretty much the point I was making.

Probably because the seller could be anywhere, and wouldn't necessarily tell the truth about their location. I don't know about consumer rights, that might be determined by seller location, but if they are in another country you would have trouble enforcing them anyway.

A company that is cheating the country out of tax revenue will be able to sell them cheaper than a company that isn't because they won't be adding on the cost of the tax. I would have thought that would be obvious.

Not everyone, just UK companies like Sainsburys.

If only UK companies ever paid tax that would pretty much be the death of our economy.

Mark

Yes, but UK law also allows UK consumers to import low-value items from outside the UK without paying tax. So the point of sale is indeed the UK, but because the sale is an import then it is exempt from VAT below a certain threshold.

Sainsbury's, like any other UK company, is permitted to own non-UK subsidiaries. Such subsidiaries are subject to the local law and taxes of wherever they are incorporated (and it could hardly be otherwise; consider what would happen if, say, Amazon were able to treat Amazon UK as being subject to US law and tax). If the non-UK subsidiary makes a profit and returns that profit to the UK parent, then UK corporation tax is due on that income. But taxes due on the subsidiary's local income and expenditure, such as VAT on sales and purchases, income tax on staff salaries, property taxes, etc are solely a matter for the tax regime of the subsidiary's location.

Mark

Look, at the end of the day, the only genuine profit, money that is made by a business, is what gets paid out to shareholders (individuals) and they pay tax already.

All other company taxes are immoral levied on illusionary profits that basically, for the most part, don?t even exist.

Cynical governments only get away with idiotic taxes, such as corporation taxes, because companies can?t vote and because, something for nothing, selfish electorates are always in favour of all the usual suspects (wicked big business, the stinking rich, fill in as applicable) paying for their way.

We all pay for those taxes, one way or another, through the price of goods and services, end of story.

Once one company finds a way of avoiding those taxes, the rest have to follow, and, more to the point, once they have avoided those taxes then chances are, thanks to competitive markets, those companies will have passed on that saving to the rest of us and are therefore in no fit position to ever start paying the taxes again.

The idea that all that avoided tax is out there, just waiting to be collected, is just the stuff of Neverneverland ?Nuts in May? airy fairy socialists.

Yes, however, that does mean companies, usually non-global small ones, are at a disadvantages which is even more reason why such taxes as corporation tax shouldn't exist in the first place.

But, there is an even bigger reason why companies shift abroad to avoid these taxes.

That?s that they simply can?t afford to expose their highly sophisticated businesses to the doctrinal whims of interfering politicians who arrive in politics, direct from the student union bar, utterly clueless as to how the real world of business works.

To even the biggest corporations, clueless politicians like Brown and Milliband are downright dangerous, loose cannons capable of highly damaging economic measures that could so easily finish off even the best run of companies.

What country? It's based in Jersey and paying Jersey tax. Why should it pay UK tax any more than it pays French tax?

It is, but it doesn't prove any of your three unsupported assumptions as listed above.