U.K. Government Targets Tech Giants Like Apple and Amazon Over Tax Payments

[DeepIn2U]

The U.K. government announced in Wednesday's annual budget that it plans to clamp down on tax avoidance by increasing the tax it collects from online giants such as Apple and Amazon.

In his Treasury speech to the Commons, Chancellor Philip Hammond said income tax would be charged on royalties relating to U.K. sales, even when they are paid to a low-tax jurisdiction and would not normally be taxed in the UK under current rules.

The new rules are due to come into effect from April next year, and estimates suggest they will raise approximately 800 million pounds ($1.07 billion) in extra tax over the next five years. However, Hammond admitted they would only go some way to balancing out the taxation treatment of digital firms, and that more would have to be done to tackle tax avoidance.
Apple recently came in for criticism when the so-called Paradise Papers revealed that the company sidestepped a 2013 crackdown on its controversial Irish tax structure by moving the majority of its offshore cash holdings to the small island of Jersey, a self-governed territory with loose ties to the United Kingdom.

The papers showed that Apple's two key Irish subsidiaries were managed from the Jersey offices of offshore tax law firm Appleby from 2015 until early 2016. Apple reportedly chose Jersey after exploring several potential tax havens, such as Bermuda and the Cayman Islands.

Apple apparently turned to Jersey after European officials began to crack down on the so-called "Double Irish" tax structure it had exploited. The loophole allows for multinational corporations to funnel revenue through an Irish subsidiary, which in turn sends that money to another Irish subsidiary that has residency in a tax haven. The practice has enabled Apple to save billions of dollars in taxes globally.

Apple responded to the revelations contained in the Paradise Papers by saying that it made regulators in the U.S. and Ireland, and the European Commission, aware about the reorganization of its Irish subsidiaries, and added that the changes haven't reduced its tax bill.

Last year, the European Commission ordered Ireland to collect $14.5 billion in back taxes from Apple, after it concluded that the country's tax agreements with the tech giant represented "illegal state aid". Both Apple and the Irish government are currently appealing the ruling.

Apple has repeatedly highlighted its position as the largest taxpayer in the world and reiterated the fact that it holds overseas cash because that's where the majority of its products are sold. Apple CEO Tim Cook has said that Apple is willing to repatriate some of its offshore cash holdings into the U.S., but he also recently said that tax reform is "sorely needed" first.

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Article Link: U.K. Government Targets Tech Giants Like Apple and Amazon Over Tax Payments

This is how desparet the U.K. Government has become after pushing for Brexit ... after all that $4 Billion contingency coffers, that money has to come from somewhere. All in all I heavily agree that Brexit is needed for the U.K. no matter how bad it going to hit that country with family and friends there.

I think this will be a non-issue for Apple they've got the stones to pay it. Plus it'll go over well with citizens therein over this hardship and they'll remember it. Brand name recognition and faith building.

 

[Mike MA]

Very interesting. With exiting the European Union (what I don‘t think was the right decision) I actually expected increased tax dumping to attract companies to compensate others leaving the country. Let se.

 

[The-Real-Deal82]

Before we even voted for Brexit there was distain for companies like Apple, Amazon and Starbucks using tax avoidance loopholes. Finally the government are listening to the people and all the honest business people who don’t think these loopholes should be ignored.

Again, I’m amazed at how many people here who evidently feel some love for Apple feel the UK should be punished for enforcing our tax laws. Apple have had a decent break of well over a decade here and it’s only right they pay more than a third of the tax they owe going forward. If it drives prices of Apple products up then do be it. It can only be a win for consumers.

 

[PickUrPoison]

Before we even voted for Brexit there was distain for companies like Apple, Amazon and Starbucks using tax avoidance loopholes. Finally the government are listening to the people and all the honest business people who don’t think these loopholes should be ignored.

Again, I’m amazed at how many people here who evidently feel some love for Apple feel the UK should be punished for enforcing our tax laws. Apple have had a decent break of well over a decade here and it’s only right they pay more than a third of the tax they owe going forward. If it drives prices of Apple products up then do be it. It can only be a win for consumers.

You can change your tax laws of course, the point is there are consequences, intended and unintended.

Countries change tax laws all the time. If changes result in companies relocating, workers being laid off or prices going up, it may not be as beneficial to consumers as nationalistic politicians would have you believe.

Macroeconomic, international trade and domestic/international tax policies are interrelated and complex, and it’s unlikely changes in one area won’t have effects in many others.

Politicians looking to drum up votes with an “us first” message may not actually have your best interest at heart. But the message does seem to resonate with a certain percentage of the voting public, who would rather blame foreigners, domestic or abroad, for the source of all their troubles.

 

[nutjob]

Don’t see what that’s got to do with anything. Debt and deficit problem has been going since 2008, when there was no hint of Brexit. The EU didn’t stop us racking up £1.7trn of debt, it didn’t stop Apple avoiding tax (indeed it helped facilitate legal tax avoidance), it didn’t stop our productivity being abysmal, it didn’t help us manufacture and export, or to maintain a good balance of trade.

This is a completely separate issue, whether Brexit is a good or bad thing, it’s irrelevant to this discussion. This is about the British government making a move towards a no ifs no buts 20% means 20% on corporation tax, and it should be welcomed by any sane taxpayer.

You're looking backwards. Brexit hasn't happened yet, and when it does the UK finances will be feeling rather poorly, to say the least. They need to claw back as much illegally avoided tax as they can.
[doublepost=1511560402][/doublepost]

Very interesting. With exiting the European Union (what I don‘t think was the right decision) I actually expected increased tax dumping to attract companies to compensate others leaving the country. Let se.

That's assuming that the UK is in a position to offer such things.

 

[Mike MA]

assuming that the UK is in a position to offer such things.

Sure they are, why not? Ireland, Luxemburg and the Netherlands certainly are not in a better position as rather more being restricted by the EU regulations but do so.

 

[PickUrPoison]

Sure they are, why not? Ireland, Luxemburg and the Netherlands certainly are not in a better position as rather more being restricted by the EU regulations but do so.

So maybe the answer is to become the newest tax haven, instead of trying to increase taxes for foreign corporations?

Hmm, that could be interesting, but it’s not the way they seem to be going.

 

[Mike MA]

So maybe the answer is to become the newest tax haven, instead of trying to increase taxes for foreign corporations?

Hmm, that could be interesting, but it’s not the way they seem to be going.

Well, of course this would make everything worse, as the European Union would answer by introducing punitive duties. But the UK is already having below average corporate tax rates, so they basically already hunt into this direction from my point of view Would it be a good thing for all? No.

 

[Naraxus]

Good job UK. More and more countries should start taking Apple to task over it's criminal & illegal tax avoidance policies and ensure Apple pays its fair share.

 

[Falhófnir]

You're looking backwards. Brexit hasn't happened yet, and when it does the UK finances will be feeling rather poorly, to say the least. They need to claw back as much illegally avoided tax as they can.

Say, seeing as you have that crystal ball could you tell me next weeks winning lottery numbers?

But in all seriousness, anything you or anyone says is nothing but speculation. And all the overly negative speculation has been wrong so far. And we're past the most uncertain point now, that's the biggest detrimental factor to investment led growth, uncertainty, companies will adapt to the new normal very quickly once it is established.

 

[vvswarup]

Good job UK. More and more countries should start taking Apple to task over it's criminal & illegal tax avoidance policies and ensure Apple pays its fair share.

Were you being serious or were you using hyperbole to get your point across?

People can say all they want that Apple didn't pay enough to the countries it operates in for the services that those countries provide that enable Apple to do business but there isn't a shred of proof that Apple did anything illegal. It sucks but the fact of the matter is that being smart with the tax code isn't a crime.

If any government feels a corporation isn't paying its fair share, it's the government's job to pass laws to increase taxes. It's not a corporation's job to pay a penny more than it legally owes.

 

[bobdobalina]

As much as I'm in support of the UK collecting fair taxation from corporations like Apple, I'm reminded that the UK government has been actively abetting tax avoidance and capital flight from countries worldwide. Are you for tax evasion and money laundering abroad but corporate accountability and social welfare at home? Take a side already.

 

[Naraxus]

Were you being serious or were you using hyperbole to get your point across?

People can say all they want that Apple didn't pay enough to the countries it operates in for the services that those countries provide that enable Apple to do business but there isn't a shred of proof that Apple did anything illegal. It sucks but the fact of the matter is that being smart with the tax code isn't a crime.

If any government feels a corporation isn't paying its fair share, it's the government's job to pass laws to increase taxes. It's not a corporation's job to pay a penny more than it legally owes.

No hyperbole. Apple is well known for its tax evasion policies. Tim's "We pay what we owe." bs is like most of the verbal diarrhea that spews out of his mouth - complete bunk. It's easy to claim you pay what you owe when you're busy shuffling money around in shell companies and countries that you've bribed/extorted to gain favorable tax rates.

 

[gnasher729]

No deal, no money.

We are enjoying every single second as the EU squirms for money for which it has no legal claim whatsoever. Apple owes Ireland €13bn and the EU is suing Ireland for non-collection. What a mess

The EU is "squirming"? Reminds me of Monty Python's "Black Knight": "Running away, eh? You yellow bastards! Come back here and take what's coming to ya! I'll bite your legs off!" (Americans can google for the explanation).

There are two facts: One, the EU and the UK are not friends anymore. Two, the EU has the UK by the balls.

No hyperbole. Apple is well known for its tax evasion policies.

You are using these words: "Tax evasion". I assume that you don't know what they mean. Otherwise, your post is libel.

 

[vvswarup]

No hyperbole. Apple is well known for its tax evasion policies. Tim's "We pay what we owe." bs is like most of the verbal diarrhea that spews out of his mouth - complete bunk. It's easy to claim you pay what you owe when you're busy shuffling money around in shell companies and countries that you've bribed/extorted to gain favorable tax rates.

I get it that it sucks that Apple shuffles money around to tax havens but it's not tax evasion if what Apple is doing is legal. If Apple was engaging in tax evasion, we would be talking about criminal charges. There isn't a shred of proof that what Apple is doing is illegal.

Constituents in countries on the receiving end of this kind of tax avoidance are not getting a good deal for the services that their tax dollars provide that enable Apple to operate but that's on just not on Apple. That's on politicians. I wish the constituents of the UK nothing but the best in getting their politicians to vote them a better deal.

 

[MacCurry]

I get it that it sucks that Apple shuffles money around to tax havens but it's not tax evasion if what Apple is doing is legal. If Apple was engaging in tax evasion, we would be talking about criminal charges. There isn't a shred of proof that what Apple is doing is illegal.

Constituents in countries on the receiving end of this kind of tax avoidance are not getting a good deal for the services that their tax dollars provide that enable Apple to operate but that's on just not on Apple. That's on politicians. I wish the constituents of the UK nothing but the best in getting their politicians to vote them a better deal.

Shame on the UK for this anti-trade activity. It is the UK which engaged in the worst mercantilism and regressive taxation of people through the entire colonial era. Now it wishes to illegally tax an American company? This is the same UK that allows its arms merchants to engage in corruption to bribe middle east tyrants to buy their arms.

 

[Gutwrench]

Apple is well known for its tax evasion policies.

Tax avoidance or evasion? If avoidance, then change the law. If evasion, then prosecute.

 

[Septembersrain]

Oh but not paying Qualcomm royalties is cool because "They charge too much!".

Yeah okay Apple.

 

[The-Real-Deal82]

You can change your tax laws of course, the point is there are consequences, intended and unintended.

Countries change tax laws all the time. If changes result in companies relocating, workers being laid off or prices going up, it may not be as beneficial to consumers as nationalistic politicians would have you believe.

Macroeconomic, international trade and domestic/international tax policies are interrelated and complex, and it’s unlikely changes in one area won’t have effects in many others.

Politicians looking to drum up votes with an “us first” message may not actually have your best interest at heart. But the message does seem to resonate with a certain percentage of the voting public, who would rather blame foreigners, domestic or abroad, for the source of all their troubles.

My opinion is not based on blaming foreigners or being at all nationalistic. I voted firmly to Remain and work for a foreign company with many foreign colleagues. My company incidentally pay their fair share of tax with profits in the UK exceeding €80m.

If closing tax loopholes to prevent companies getting away with only paying a third of the corporation tax owed drives prices up or pushes them out of the market then it’s on the company, not the country. Apples image would be they caused mass job losses because they didn’t want to pay tax.

In an era of austerity where the poorest people in the country are being continually squeezed financially, companies like Apple are going to get very little sympathy. If they want to charge us 2 grand for an iPhone or pull out of the UK altogether then that’s their loss.

Apple have $261.5 Billion in cash reserves. They can afford to pay their European tax bills without being scummy about it and retaliating against honest working people.

 

[H2SO4]

I get it that it sucks that Apple shuffles money around to tax havens but it's not tax evasion if what Apple is doing is legal. If Apple was engaging in tax evasion, we would be talking about criminal charges. There isn't a shred of proof that what Apple is doing is illegal.

Constituents in countries on the receiving end of this kind of tax avoidance are not getting a good deal for the services that their tax dollars provide that enable Apple to operate but that's on just not on Apple. That's on politicians. I wish the constituents of the UK nothing but the best in getting their politicians to vote them a better deal.

Is it really though?
When they entered into the deal with Ireland it was even questionable then. If they turn a blind eye they are at best being dishonest.

 

[AlexH]

Good job UK. More and more countries should start taking Apple to task over it's criminal & illegal tax avoidance policies and ensure Apple pays its fair share.

Tax avoidance, by definition, is legal. Look it up. Corporations do it, individuals do it. That’s normal.

Tax evasion, on the other hand, is illegal.

Let’s use the right words for things.

 

[PickUrPoison]

My opinion is not based on blaming foreigners or being at all nationalistic. I voted firmly to Remain and work for a foreign company with many foreign colleagues. My company incidentally pay their fair share of tax with profits in the UK exceeding €80m.

If closing tax loopholes to prevent companies getting away with only paying a third of the corporation tax owed drives prices up or pushes them out of the market then it’s on the company, not the country. Apples image would be they caused mass job losses because they didn’t want to pay tax.

In an era of austerity where the poorest people in the country are being continually squeezed financially, companies like Apple are going to get very little sympathy. If they want to charge us 2 grand for an iPhone or pull out of the UK altogether then that’s their loss.

Apple have $261.5 Billion in cash reserves. They can afford to pay their European tax bills without being scummy about it and retaliating against honest working people.

Raise taxes all you want, my point is companies—all companies, not just Apple—set prices with taxes taken into account. If taxes are increased, selling prices will increase. Corporate taxes just get tacked on to the selling price, not unlike VAT.

One could easily say that prices on iPhones were artificially low all those years when tax laws were used to keep corporate taxes to a minimum.

I’m fine with changing the laws, but realize it isn’t done in a vacuum, and there will be economic consequences, intended and unintended. It has nothing to do with being scummy and trying to hurt honest working people—your government’s austerity program has already taken care of that... the working class, frankly, decimated as a result. (And the middle class hardly faring any better.)

 

[The-Real-Deal82]

Raise taxes all you want, my point is companies—all companies, not just Apple—set prices with taxes taken into account. If taxes are increased, selling prices will increase. Corporate taxes just get tacked on to the selling price, not unlike VAT.

One could easily say that prices on iPhones were artificially low all those years when tax laws were used to keep corporate taxes to a minimum.

I’m fine with changing the laws, but realize it isn’t done in a vacuum, and there will be economic consequences, intended and unintended. It has nothing to do with being scummy and trying to hurt honest working people—your government’s austerity program has already taken care of that... the working class, frankly, decimated as a result. (And the middle class hardly faring any better.)

We’ve always paid more for Apple products in comparison to America. The prices were supposed to be higher here because of VAT and corporation tax. The fact Apple have been paying just under 5% instead of the correct 19% means they’ve been raising prices for well over a decade and enjoying higher profits here than they should have done. The consumer has been mugged off already and if Apple decide to raise prices further to maintain this greedy margin, then I’m pretty confident it will reflect in their sales figures.

You can blame the US banks for our extended period of austerity as the whole mess was created by the 2008 banking crisis. Our government have just mismanaged the recovery and given tax breaks to the wrong end of society including the likes of Apple.

 

[PickUrPoison]

We’ve always paid more for Apple products in comparison to America. The prices were supposed to be higher here because of VAT and corporation tax. The fact Apple have been paying just under 5% instead of the correct 19% means they’ve been raising prices for well over a decade and enjoying higher profits here than they should have done. The consumer has been mugged off already and if Apple decide to raise prices further to maintain this greedy margin, then I’m pretty confident it will reflect in their sales figures.

You can blame the US banks for our extended period of austerity as the whole mess was created by the 2008 banking crisis. Our government have just mismanaged the recovery and given tax breaks to the wrong end of society including the likes of Apple.

Apple doesn’t have any obligation to pay any more tax than is legally due. The EU claims Apple underpaid by some 13 billion and if that’s upheld I’m sure Apple will pay it.

You can bet if Apple had been paying 14 percentage points higher corporate tax that prices would have been higher; that you think Apple makes too much profit is not relevant. Like all sellers, Apple charges what people are willing to pay.

Yes US banks played the largest part by far in precipitating the 2008 economic collapse, but your own banks were complicit and share some responsibility. And it’s not the banks who are to blame for the austerity program.

We can agree the recovery was mismanaged, but if you’d gotten a few billion more from Apple it would have made absolutely no difference to your current situation, so they should hardly shoulder the blame for the current plight.

 

[The-Real-Deal82]

Apple doesn’t have any obligation to pay any more tax than is legally due. The EU claims Apple underpaid by some 13 billion and if that’s upheld I’m sure Apple will pay it.

You can bet if Apple had been paying 14 percentage points higher corporate tax that prices would have been higher; that you think Apple makes too much profit is not relevant. Like all sellers, Apple charges what people are willing to pay.

Yes US banks played the largest part by far in precipitating the 2008 economic collapse, but your own banks were complicit and share some responsibility. And it’s not the banks who are to blame for the austerity program.

We can agree the recovery was mismanaged, but if you’d gotten a few billion more from Apple it would have made absolutely no difference to your current situation, so they should hardly shoulder the blame for the current plight.

I’d just be repeating what I’ve already said if I respond to your points here. Not bothered if prices had been higher or rise going forward. It would be an easy decision.