Lloyds shares offer to the public

markharriers

it confirms for me that i will keep my £1000 out of investing now as its too unsettled for me

gadgetmind

John_Clark wrote: »

the amount paid by Google is a miniscule percentage of turnover and profit compared to other companies

Turnover and profit are very different things, and even profit needs to be seen in the context of what has created this profit.

Analogy.
BMW employ tens of thousands of engineers in Germany to design their very complex automobiles, create and run the factories that build them, etc. If that car is then sold in Malaysia, how should the government there tax the BMW subsidiary that runs the dealership? On just their markup, on the difference between sales price and build cost, or something else? How does the profit made get back to Germany to fund all those engineers?

This is an area called International Transfer Pricing, and it's very complicated. While the tabloids may grumble about subsidiaries of large companies not paying much UK tax, those of us with more intelligence should understand how complicated it is and also recognise that the bulk of the tax should be paid where the bulk of the work is actually done.

Note that I don't think this argument extends to operations like Starbucks!

colsten

John_Clark wrote: »

All we know is the amount paid by Google is a miniscule percentage of turnover and profit

Also worth repeating that corporation tax is never due on turnover. Measuring corporation tax as a %age of turnover gives a meaningless result.

grey_gym_sock

gadgetmind wrote: »

Turnover and profit are very different things, and even profit needs to be seen in the context of what has created this profit.

Analogy.
BMW employ tens of thousands of engineers in Germany to design their very complex automobiles, create and run the factories that build them, etc. If that car is then sold in Malaysia, how should the government there tax the BMW subsidiary that runs the dealership? On just their markup, on the difference between sales price and build cost, or something else? How does the profit made get back to Germany to fund all those engineers?

This is an area called International Transfer Pricing, and it's very complicated. While the tabloids may grumble about subsidiaries of large companies not paying much UK tax, those of us with more intelligence should understand how complicated it is and also recognise that the bulk of the tax should be paid where the bulk of the work is actually done.

that would be a reasonable point if google had a UK subsidiary, whose turnover was its total UK advertizing revenue, and whose profits were that minus both
(a) the specific costs of their UK operation; and
(b) a fee paid to the parent company, reflecting a proportion of the costs of developing the technology which they use worldwide. (what is a suitable proportion? this is debatable, but 1 answer would be in proportion to the revenue of each subsidiary.)

what they actually do is claim that much of the turnover generated from advertizing in the UK can instead be recorded in ireland or bermuda, which are low/no tax jurisdictions. this is what ordinary ppl would call tax cheating (to be more technical, that term covers both tax evasion and tax avoidance).

grey_gym_sock

a bit more about how google do this:
http://waitingfortax.com/2016/01/23/that-google-deal/
http://waitingfortax.com/2016/01/26/the-google-deal-a-response-to-my-critics/

gadgetmind

I don't have a problem with a subsidiary marketing services on behalf of the parent or any other part of the company. We have sales subsidiaries in other countries that engage with customers to market/license our products, but the licenses are all signed in the name of the part of the company that owns the rights to the product.

grey_gym_sock

gadgetmind wrote: »

I don't have a problem with a subsidiary marketing services on behalf of the parent or any other part of the company. We have sales subsidiaries in other countries that engage with customers to market/license our products, but the licenses are all signed in the name of the part of the company that owns the rights to the product.

i'm not claiming that marketing services contracts are always a way of cheating. the point is pretty simple: google is using using various means (including marketing services contracts) to shift much of their profits to tax havens - jurisdictions which are not where the real economic activity is taking place, and where there is minimal tax. that's tax cheating.

bigadaj

This aspect of tax tourism does seem to finally be coming under some scrutiny, and it's interesting how companies now see it as optional where and how much tax they pay, which used to be minimal but under the public gaze rapidly becomes a competition to show how honest and supportive they are of the larger economies where they make the majority of their money.

The programme about crickhowell was interesting, tracing the route through the isle of man via Amsterdam to mean nearly zero tax can be paid. Also the documentary on Cayman with similar tactics being undertaken by large multi nationals, which was more damning in many ways when contrasted with the widespread poverty on what is essentially a small and high cost Caribbean island.

Glen_Clark

With all the tax havens it supports (Gibraltar, Channel Islands, Isle of Man etc) the British Government is hardly fit to lecture anyone on tax cheating.
I suppose thats why they accept such a paltry amount from the likes of Google and Starbucks, and make up the difference through stealth taxes on the poor.

Thrugelmir

Glen_Clark wrote: »

I suppose thats why they accept such a paltry amount from the likes of Google and Starbucks, and make up the difference through stealth taxes on the poor.

Neither Company has broken any tax laws though. For the Companies concerned it's as much about PR as anything else. I'm not personally happy with the way corporations transact their business. But that's life. At least the likes of Starbucks will need to rise their wage rates to meet the requirements on the new MW and also contribute to their employees pension schemes. Best way to react is not to buy or use a Company's products. Buy British, buy from fro independents instead.