Friday, 16 November 2012

Multinationals and UK tax

In the light of  all the fracas over Starbucks, Google and Amazon paying minimal corporation tax, it's interesting to read how the tax people at HMRC justify their record on collecting tax from multinationals - and acknowledge how Amazon, for instance, is simply exploiting the current rules by accounting for its huge UK sales in Luxembourg...

"Non-resident trading companies which do not have a branch in the UK, but have UK customers, will therefore pay tax on the profits arising from those customers in the country where the company is resident, according to the tax law in that country. The profits will not be taxed in the UK. This is not tax avoidance: it is simply the way that corporation tax works.

Most major economies operate corporation tax in the same way as the UK, so UK-resident companies are treated in a similar way in other countries. In other words, UK companies do not pay corporation tax to another country on the profits from sales in that country, unless they trade through a branch based there. Instead, they pay corporation tax in the UK."

1 comment:

  1. Let's all move to Luxembourg as they must be so awash with multinational's tax income, they will be able to support me in my old age in a manner I could become used to.