It just ain’t tax avoidance folks
MUCH has been made in the past couple of days of the way that Facebook doesn’t pay any corporation tax in the UK despite selling £175 million of ads here. The same has been said in the past about Google, about Apple and Amazon flogging stuff from Luxembourg and so on.
All this terrible tax avoidance, entirely legal of course, but so immoral doncha think?
Fortunately, we’ve had the HMRC itself weigh in on the subject:
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
Not only is it not tax avoidance, not only is it just the way that corporation tax works. This is also exactly the way that the European Union set the system up to work. We’ve got this Single Market thing: meaning that any company can sell from anywhere to anywhere inside the EU. That’s the whole point of it and that’s the reason the tax system works this way.
It just ain’t tax avoidance folks.