Opinions: UK's digital services tax

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londonmyst
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https://news.sky.com/story/us-threat...l-tax-11914884

Britain is one of several nations considering proposals to tax social media platforms, search engines and online marketplaces- on their sales revenue.
Former chancellor Philip Hammond originally proposed the tax on all digital companies whose global sales exceed £500m and have at least £25m worth of UK sales.

Primarily targeting american social media giants and global technology firms, the digital service tax has been predicted to raise more than £400m for the Treasury by 2022.
Chancellor Sajid Javid appears committed to implementing the proposals in April.
He has described the proposals as “proportionate” and “deliberately designed as a temporary tax".

But the USA none too keen on the proposals apparently viewing them as a "tax grab" on American companies.

Opinions?

Please no personal abuse of either Sajid Javid or Donald Trump.
Let's remain civil in all discussions.
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Last edited by londonmyst; 1 year ago
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999tigger
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We need to grovel for a trade deal.
The US are going to fight tooth and nail to oppose it because it affects them more.
Trump will be brutal and you would be naive to trust all the big words and promises, which amount to nothing.
As the high street collapses/ vanishes and people go online, then governments need a way of taxing businesses which use their markets and make money to replace high street shops no longer contributing taxes.
Seems only fair to tax internet businesses if they make profits from accessing UK markets.
It is going to be hard to resist this as the UK alone.
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londonmyst
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(Original post by 999tigger)
We need to grovel for a trade deal.
The US are going to fight tooth and nail to oppose it because it affects them more.
Trump will be brutal and you would be naive to trust all the big words and promises, which amount to nothing.
As the high street collapses/ vanishes and people go online, then governments need a way of taxing businesses which use their markets and make money to replace high street shops no longer contributing taxes.
Seems only fair to tax internet businesses if they make profits from accessing UK markets.
It is going to be hard to resist this as the UK alone.
I agree that it is crucial to Britain's economic interests to negotiate attractive trade deals- with the usa and many other countries.
I'm not keen on taxing any company on their sales revenue, instead of their profits.
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999tigger
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(Original post by londonmyst)
I agree that it is crucial to Britain's economic interests to negotiate attractive trade deals- with the usa and many other countries.
I'm not keen on taxing any company on their sales revenue, instead of their profits.
I dont think thats the issue, its about taxing a company which does business in the UK markets but whose premises are outside the UK itself.
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londonmyst
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(Original post by 999tigger)
I dont think thats the issue, its about taxing a company which does business in the UK markets but whose premises are outside the UK itself.
Yes, the american tech giants with sales revenue in excess of £500m, uk sales of over £25 million and a obsession with complex lawful tax avoidance arrangement do represent a very attractive prospect for taxing.

But the 2% digital services tax will be levied upon sales revenue.
Not profits made by uk operations or profits reported in country of incorporation.
But sets a terrible policy precedent- imagine doing this in relation to english premier league football clubs or starbucks.
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fallen_acorns
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tax them to hell... tax them so much that they get out of the UK for good because its not worth it for them..

then watch as kids mental health improves. Any product that is as bad for young people as social media is, should be taxed like cigarets/alachol or the like.

While your at it, tax online retail so that the prices are the same as the high street, and watch our towns come back as well. Yes people will miss their cheap amazon crap, but when they see the social impact of actually having good functioning town centers that aren't just full of betting shops, takeaways, charity shops etc.

Its a very left-wing policy.. taxing rich businesses to improve society for those most vulnerable.. and one I fully support. It will hurt us economically somewhat, hence why the right will never do it, but the left? Maybe.. if they can give up their precious twitter.. maybe then they can have the balls to do it.
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creepyguy79
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These companies wouldn't be in this position, if they didn't avoid the tax in the first place.

I see a long term solution as making all current tax avoidance schemes illegal in the same as tax evasion.

But this would be good until that day.

The amount some entities go to avoid tax is unreal, I know one person who spent £10k to avoid paying £1.3k in tax, and he considered it money well spent.
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username1799249
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(Original post by londonmyst)
I'm not keen on taxing any company on their sales revenue, instead of their profits.
Which is fine, except multi-nationals only seem to make any profit in tax havens that deman no taxes on profits. Any profits made in the UK are swallowed up by regressive licensing arrangements with the sister companies that just happen to be based in a tax haven.

It is vastly unjust that the shop keeper grafting pays taxes on her profits but Facebook and Costa pay £0.
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londonmyst
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(Original post by fallen_acorns)
tax them to hell... tax them so much that they get out of the UK for good because its not worth it for them..

then watch as kids mental health improves. Any product that is as bad for young people as social media is, should be taxed like cigarets/alachol or the like.

While your at it, tax online retail so that the prices are the same as the high street, and watch our towns come back as well. Yes people will miss their cheap amazon crap, but when they see the social impact of actually having good functioning town centers that aren't just full of betting shops, takeaways, charity shops etc.

Its a very left-wing policy.. taxing rich businesses to improve society for those most vulnerable.. and one I fully support. It will hurt us economically somewhat, hence why the right will never do it, but the left? Maybe.. if they can give up their precious twitter.. maybe then they can have the balls to do it.
Do you believe that amazon, google, twitter, facebook and whatsapp are all detrimental to young people's mental health?

I do a lot of online shopping for myself and have to buy other people's shopping in-store.
Lousy customer service, limited product choice and high streets dominated by Philip Green's Arcadia Group or Mike Ashley.
Often an abundance of food products that are mislabelled, past expiry or should never have got past quality control.
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londonmyst
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(Original post by creepyguy79)
These companies wouldn't be in this position, if they didn't avoid the tax in the first place.

I see a long term solution as making all current tax avoidance schemes illegal in the same as tax evasion.

But this would be good until that day.

The amount some entities go to avoid tax is unreal, I know one person who spent £10k to avoid paying £1.3k in tax, and he considered it money well spent.
Do you view large multinationals seeking to lawfully minimise their tax bills as an activity deserving of punishment?

Most western governments will always be on the lookout for additional potential sources of tax revenue from large scale operations with large cash reserves/billions in sales/property portfolio.

I've worked for clients and companies that save a fortune by paying ultra-savvy tax avoidance specialists.
From what I've seen there are three main reasons to embrace elaborate legal tax avoidance schemes:
1) To maximise profits by minimising tax liabilities,
2) Ideological aversion to the concept of paying taxes to particular nations,
3) Ideological aversion to paying high rates of tax to fund 'big governments' committed to huge public spending and on things like: large welfare budgets, expansive foreign aid programmes or national access to free abortion on demand.
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londonmyst
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(Original post by ByEeek)
Which is fine, except multi-nationals only seem to make any profit in tax havens that deman no taxes on profits. Any profits made in the UK are swallowed up by regressive licensing arrangements with the sister companies that just happen to be based in a tax haven.

It is vastly unjust that the shop keeper grafting pays taxes on her profits but Facebook and Costa pay £0.
I know.
I've worked in lawyers offices and professional services firms that specialise in helping their clients take advantage of lawful tax avoidance measures.
Plenty of hard working sole traders and two partner import-export firms also coming for specialist advice on how to lawfully minimise their tax liabilities.
I suspect that the UK will go down the tax haven route for at least a couple of years post-Brexit.

Multinationals with billions in turnover and millions of customers scattered all over the globe may be taking advantage of more loopholes in order to keep hold of a larger chunk of their profits.
But they are far from the only ones playing the same game.
Footballers earning six figure sums per week, freelancing film/documentary directors charging fees that start at £5k a day, investment bankers, stars of the adult entertainment industry, celebrity musicians and everyone famous involved in Hollywood&Bollywood.
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creepyguy79
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(Original post by londonmyst)
Do you view large multinationals seeking to lawfully minimise their tax bills as an activity deserving of punishment?

Most western governments will always be on the lookout for additional potential sources of tax revenue from large scale operations with large cash reserves/billions in sales/property portfolio.

I've worked for clients and companies that save a fortune by paying ultra-savvy tax avoidance specialists.
From what I've seen there are three main reasons to embrace elaborate legal tax avoidance schemes:
1) To maximise profits by minimising tax liabilities,
2) Ideological aversion to the concept of paying taxes to particular nations,
3) Ideological aversion to paying high rates of tax to fund 'big governments' committed to huge public spending and on things like: large welfare budgets, expansive foreign aid programmes or national access to free abortion on demand.
The question is answered in the post you replied to.

I agree on the three reasons you posted, I do expect a lot of tax avoidance happens for ideological reasons.
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creepyguy79
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(Original post by londonmyst)
I know.
I've worked in lawyers offices and professional services firms that specialise in helping their clients take advantage of lawful tax avoidance measures.
Plenty of hard working sole traders and two partner import-export firms also coming for specialist advice on how to lawfully minimise their tax liabilities.
I suspect that the UK will go down the tax haven route for at least a couple of years post-Brexit.

Multinationals with billions in turnover and millions of customers scattered all over the globe may be taking advantage of more loopholes in order to keep hold of a larger chunk of their profits.
But they are far from the only ones playing the same game.
Footballers earning six figure sums per week, freelancing film/documentary directors charging fees that start at £5k a day, investment bankers, stars of the adult entertainment industry, celebrity musicians and everyone famous involved in Hollywood&Bollywood.
Tax avoidance/evasion is rampant from people with the means.

Run a sole trader business? how tempting is it to "not declare" a % of cash in hand payments.
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Rakas21
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I’m personally opposed to this, it’s a tax penalising firms which are already liable to pay business rates and corporation tax. It’s also a cop out of engaging in meaningful tax reform and reviewing the thousands of pages of different tax stipulations.
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londonmyst
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(Original post by creepyguy79)
Tax avoidance/evasion is rampant from people with the means.

Run a sole trader business? how tempting is it to "not declare" a % of cash in hand payments.
In my reply to another poster, I was specifically referring to lawful tax avoidance measures.
Not illegal tax evasion.

But I do agree with you as regards conveniently developing amnesia as regards declaring or bank depositing cash in hand payments.
Similar thing in relation to incoming VAT payments, which may or may not have been charged.
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londonmyst
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(Original post by Rakas21)
I’m personally opposed to this, it’s a tax penalising firms which are already liable to pay business rates and corporation tax. It’s also a cop out of engaging in meaningful tax reform and reviewing the thousands of pages of different tax stipulations.
I mostly agree with you.

However, some tech giants do not pay any uk taxes, national insurance or business rates.
Because they don't have any premises, staff or an incorporated subsidiary operation located within Britain.
They have been benefiting from the enterprise friendly environment in Ireland.
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Rakas21
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(Original post by londonmyst)
I mostly agree with you.

However, some tech giants do not pay any uk taxes, national insurance or business rates.
Because they don't have any premises, staff or an incorporated subsidiary operation located within Britain.
They have been benefiting from the enterprise friendly environment in Ireland.
Part of that is EU law (the EU would rather business came to a European tax haven than a rival) but again that's largely the choice of governments in the UK not going to the extent of demanding tax payments or removing their ability to do business in the UK.
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Quady
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(Original post by Rakas21)
I’m personally opposed to this, it’s a tax penalising firms which are already liable to pay business rates and corporation tax. It’s also a cop out of engaging in meaningful tax reform and reviewing the thousands of pages of different tax stipulations.
Rates are based on property so that so a thing.
Avoiding tax by magically almost making all the profit from the worlds 6th largest economy in a 3rd country means corporation tax isnt a thing either.

You're right, the UK should sort out our crown dependencies as a starting point.
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