UK enacts new tax to cope with companies like Apple, Google diverting profits overseas

Posted:
in General Discussion edited April 2015
A new tax in the U.K. directly targets companies such as Apple, Amazon, and Google, which have been accused of shifting profits overseas to avoid paying taxes in countries where they nevertheless do business.




The Diverted Profits Tax -- sometimes nicknamed the "Google Tax" -- will see multinationals owe 25 percent on offshored profits, Sky News reported on Wednesday. That's above the level of the U.K.'s Corporation Tax, which is today being reduced from 21 percent to 20 percent.

Google paid ?11.6 million ($17.2 million) in local taxes during 2013, while Apple paid ?11 million ($16.3 million), despite the U.K. being one of the world's most lucrative markets. One of the worst offenders is thought to be Facebook, which paid out just ?3,169 ($4,696), below what many households might owe.

Starbucks however paid no Corporation Tax at all between the years of 2009 and 2012, claiming that it had suffered a loss. The coffee vendor managed ?400 million ($592.8 million) in 2011 sales alone.

One of the most common tax havens is Ireland, which until recently had a loophole known as the "Double Irish." Apple specifically has funneled much of its non-US revenue through the country, and in 2014 paid only $1.1 billion in taxes on $30.5 billion in foreign earnings, or roughly 4 percent. That loophole should be closed by 2020, which will force companies like Apple and Google to either accept a higher tax obligation or find other havens.

Late last month, Italian prosecutors accused Apple of failing to pay over 879 million euros ($964 million) in corporate taxes, citing the company's Irish tax scheme. The case could go to trial. Apple has denied any wrongdoing, claiming that allegations against some of its Italian and Irish staff are "without merit."
«13456789

Comments

  • Reply 1 of 169

    Well, raise prices on all UK Apple products to cover the tax. Put the pain where it belongs.

     

    Be sure and put it on the receipts as well, "Google Tax - 25%".

  • Reply 2 of 169
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    Well, raise prices on all UK Apple products to cover the tax. Put the pain where it belongs.

     

    Be sure and put it on the receipts as well, "Google Tax - 25%".




    It doesn't belong with the consumer.

     

    Sales tax (VAT) is already 20% in the UK, increasing prices further to cover their corporation tax will only create more mess.

  • Reply 3 of 169
    Quote:

    Originally Posted by MazeCookie View Post

     



    It doesn't belong with the consumer.

     

    Sales tax (VAT) is already 20% in the UK, increasing prices further to cover their corporation tax will only create more mess.




    The consumers voted in these bozos, they pay the penalty.

  • Reply 4 of 169
    richlrichl Posts: 2,213member
    Quote:



    Originally Posted by TheWhiteFalcon View Post

     

    Well, raise prices on all UK Apple products to cover the tax. Put the pain where it belongs.

     

    Be sure and put it on the receipts as well, "Google Tax - 25%".


     

    Every other major western nation is going to follow suit. This is a tax loophole that needs to be closed. Good luck raising prices by 25% everywhere.

  • Reply 5 of 169
    sog35 wrote: »
    Looks like Benny Frost will be paying more for his 4 inch iPhone 6S

    As long as they make one, I, and many others, will be happy, as long as the camera doesn't protrude.

    As to the tax, seeing as it is just 4% more, it's going to make no material difference to Apple.
  • Reply 6 of 169
    tiguktiguk Posts: 1member
    Not sure the UK consumer market would react well to a 20% hike. We already pay 20% VAT (sales tax).
    I'm also not sure whether businesses are even allowed to directly pass this cost on to consumers - it's a corporation tax, not a product tax. It'll be interesting, and annoying, to see if that happens!
  • Reply 7 of 169
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     



    The consumers voted in these bozos, they pay the penalty.


     

    They are bozos, but these issues with the tax code have ran globally over many different political parties for decades.

     

    All I'm saying is: blanket-raising prices and effectively further taxing the consumer is not the answer.

  • Reply 8 of 169
    Quote:

    Originally Posted by sog35 View Post

     

     

    Its the only answer.  

     

    Less government = less taxes.  That's the true problem.




    It quite clearly is not the only answer.



    The answer is a global tax code.

     

    Clearly.

  • Reply 9 of 169
    sog35 wrote: »
    As long as they make one, I, and many others, will be happy, as long as the camera doesn't protrude.


    As to the tax, seeing as it is just 4% more, it's going to make no material difference to Apple.

    I would not mind at all if Apple makes a 4inch top end phone.  Would you be wiling to pay just as much as the 4.7 model?

    My fear is not many will want to buy the 4 inch top end phone and that will hurt margins (less economies of scale)

    Yes, I would certainly be prepared to pay as much as the 4.7" iPhone costs.

    In my opinion, 4" is a more desirable size.
  • Reply 10 of 169
    mazecookie wrote: »

    It quite clearly is not the only answer.


    The answer is a global tax code.

    Clearly.

    I'll agree to that if it eliminates all taxes. :lol:
  • Reply 11 of 169
    gprovidagprovida Posts: 252member
    As usual tax law confuses me. As I understand it there is a "hidden sales" tax on all sales of Apple hardware, VAT that is substantial, this does not include any direct sales tax. So Governments make quite a penny on Point of Sale of Apple products.

    However, as in the US, there is a tax on profit or income (not necessarily the same thing) the Apple Apple pays to US Government (I think on profit made in the US while profit made overseas is deferred until money returns to US). Apparently, Apple also pays a tax on its profits or income earned overseas e.g., if Apple earned $100M in profit selling Apple products in the IK, then there would be a 30% tax on the $100M. However, if Apple is "incorporated or some such thing" in an EU country e.g., Ireland, then it pays on EU profits at the Irish rate.

    Apparently, this rate is effectively extremely low and there non-Irish countries feel they are being cheated. Of course Apple's profit or income in the EU if returned to the U.S. is taxed as well at our significant corporate tax.

    I won't get into the right or wrongs of this but do I have this right?

    In other words, Apple complies with US and EU, and individual country tax laws, but the laws are constructed to either create enormous "loopholes" or if intent was fully enforced be a huge hit of company earnings.
  • Reply 12 of 169
    sog35 wrote: »
    I would not mind at all if Apple makes a 4inch top end phone.  Would you be wiling to pay just as much as the 4.7 model?

    My fear is not many will want to buy the 4 inch top end phone and that will hurt margins (less economies of scale)

    The 4" was a lousy compromise size. They should honestly do a 3.5" if they want a smaller iPhone. 3.5", 4.7", and 5.5" seems to make some sense.
  • Reply 13 of 169
    gatorguygatorguy Posts: 23,171member
    Well, raise prices on all UK Apple products to cover the tax. Put the pain where it belongs.

    Be sure and put it on the receipts as well, "Google Tax - 25%".
    There shouldn't be any need to raise the price to cover taxes. Apple already made an allowance for corporate taxes, and they declare it in their financials when reporting results as do the other techs AFAIK. They just hadn't gone so far as to actually pay them up to this point.
  • Reply 14 of 169
    The government of any civilised country should aim to provide public services for its citizens and it does that through tax revenue. Each individual - that's me - has to pay each year and each company doing business here (who does not have the luxury of an army of tax advisors in their phone book) should also pay their fair share. Fair meaning fair, not simply their legal commitment.

    If the law has convenient loopholes that as being used by wealthy corporations then those loopholes should be closed.
  • Reply 15 of 169
    The government of any civilised country should aim to provide public services for its citizens and it does that through tax revenue. Each individual - that's me - has to pay each year and each company doing business here (who does not have the luxury of an army of tax advisors in their phone book) should also pay their fair share. Fair meaning fair, not simply their legal commitment.

    If the law has convenient loopholes that as being used by wealthy corporations then those loopholes should be closed.

    Fair is such a loaded word, especially with taxes. So let's not go there. Because I may break my iPad.
  • Reply 16 of 169
    chadbagchadbag Posts: 1,470member
    Quote:

    Originally Posted by MazeCookie View Post

     



    It doesn't belong with the consumer.

     

    Sales tax (VAT) is already 20% in the UK, increasing prices further to cover their corporation tax will only create more mess.


     

    You do realize that ALL corporate taxes are paid by the consumer, in the end, right?

  • Reply 17 of 169
    thomprthompr Posts: 1,513member
    Quote:

    Originally Posted by Benjamin Frost View Post





    As long as they make one, I, and many others, will be happy, as long as the camera doesn't protrude.



    As to the tax, seeing as it is just 4% more, it's going to make no material difference to Apple.

    How did you arrive at the conclusion that this tax will only be 4% more?

  • Reply 18 of 169
    chadbagchadbag Posts: 1,470member
    Quote:

    Originally Posted by KiltedGreen View Post



    The government of any civilised country should aim to provide public services for its citizens and it does that through tax revenue. Each individual - that's me - has to pay each year and each company doing business here (who does not have the luxury of an army of tax advisors in their phone book) should also pay their fair share. Fair meaning fair, not simply their legal commitment.



    If the law has convenient loopholes that as being used by wealthy corporations then those loopholes should be closed.

     

    Better yet, reduce the needs for tax by the government.   Governments want more and more every year.  They aren't providing more services than they were, and are getting in the way more and more.   Economic growth would be much higher -- real economic growth, not fake based on government expenditures, without a corporate income tax.

     

    Starve them.

     

    Everyone, from the lowliest individual taxpayer to the biggest corporation should take advantage of as many so-called loopholes as possible.

  • Reply 19 of 169
    jr_bjr_b Posts: 64member

    I think that no person or company should be taxed.  That's one way of taking the US back several hundred years.  Dirt roads, horses, buggies, gardens, etc.  But I wonder who is going to do the work?  It's certainly not going to be the wealthy people.  Who will protect us?  No one can purchase slaves.  No more iPhones, iMacs, iWatches,  TV, and most importantly, fewer politicians.  You don't think they would do anything for free, do you?

     

    Let's do it people.  Fun times.

  • Reply 20 of 169
    dougddougd Posts: 292member
    I though we kicked the Redcoats ass once do we have to do it again ?
Sign In or Register to comment.