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I don't understand ..

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By (user no longer on site) OP   
over a year ago

Genuinely frustrated here with my own lack of understanding.

Recent thread on 'Starbucks' and the whole corporate Tax Loophole stuff.

I've just been googling, trying to understand why the loopholes exist and why they can't be changed and why our country is seemingly held to ransome by these businesses.

The site I found turned out to be a USA site (despite searching UK) and it seems that this problem is Global, and other countries are as frustrated as the UK are about it.

I just can't get my head around it, if every country is in the same situation, and every counties 'Starbucks' (or similar) threaten to fuck off somewhere else... why can't every country say

"OK, fuck off somewhere else"

Where would they fuck-off to? If every country stood up to them and fixed the loopholes then they would have to pay or have no business at all... wouldn't they?

Please help a frustrated thicky to understand

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By (user no longer on site)
over a year ago

You don't understand why the loopholes can't be closed... does that mean you know how to close them then?

You can't exactly add "no playing silly buggers" to legislation and you can't add "you'll pay whatever we say you'll pay" either. Starbucks are entirely within their legal rights to do enerything they do on this matter, as are all multinationals that do the same.

If you can choose to pay a high level of tax or a low level, you choose the low level. We'd all do exactly the same.

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By (user no longer on site)
over a year ago

I'm with you in this one, its not just us there screwing

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By *icketysplitsWoman
over a year ago

Way over Yonder, that's where I'm bound

It is a giant game of chicken. Every country builds in a some loopholes that they hope will attract global businesses.

Think of it like single males on here. If they all told every woman on here to take it or leave it then behaviours might change. They don't because they want to be seen as the one you would choose.

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By (user no longer on site)
over a year ago

You get the feeling if they shut one door there smart arse lawyers would find another one

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By (user no longer on site)
over a year ago

Not every country would tell them to take a hike…..

Some counties base their economies on providing corporate tax havens and flags of convenience.

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By (user no longer on site)
over a year ago

There's a big difference between 'everyone should pay their way' and 'why do they get to pay less than me??'

Everyone thinks they pay too much tax, and that the person who earns £1 more than them pays too little..

Jealousy is a poor way to establish a tax system!

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By *icketysplitsWoman
over a year ago

Way over Yonder, that's where I'm bound


"There's a big difference between 'everyone should pay their way' and 'why do they get to pay less than me??'

Everyone thinks they pay too much tax, and that the person who earns £1 more than them pays too little..

Jealousy is a poor way to establish a tax system!"

I don't think it's fair to say everyone thinks like that. I don't and the Swedes accept higher taxes to support their state system, have less disparity between salaries and seem to be surviving just fine.

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By (user no longer on site) OP   
over a year ago


"You don't understand why the loopholes can't be closed... does that mean you know how to close them then? "
Clearly not, or I wouldn't be asking the question.


"Starbucks are entirely within their legal rights to do enerything they do on this matter, as are all multinationals that do the same.

"

I already know it's legal and said so in the Starbucks thread. What I don't know is how and why the loopholes came about and if they are such a terrible thing - and a genuine error - why they cannot be changed?


"

If you can choose to pay a high level of tax or a low level, you choose the low level. We'd all do exactly the same."

This is what's known as statin' the bleedin' obvious

Perhaps someone can actually help me to understand all of this instead of trying to make me feel like an idiot for not understanding it.

Are there any good websites where a novice like myself could read and get in touch with this stuff?

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By (user no longer on site)
over a year ago


"I don't think it's fair to say everyone thinks like that."

I know.. Socialists vs capitalists.. It's all about aspiration in my mind.

Re Starbucks.. If you look, Luxembourg takes about 5% of its GDP in corporation taxes, we get 3%.. maybe if we lower our rates, companies would use us as a tax haven (French business people (individuals) are already doing it!)

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By *agna Cum LaudeMan
over a year ago

Laudable


"There's a big difference between 'everyone should pay their way' and 'why do they get to pay less than me??'

Everyone thinks they pay too much tax, and that the person who earns £1 more than them pays too little..

Jealousy is a poor way to establish a tax system!

I don't think it's fair to say everyone thinks like that. I don't and the Swedes accept higher taxes to support their state system, have less disparity between salaries and seem to be surviving just fine."
The Scandanavians have high rates of tax but a higher standard of living. They have a collective view on society and tend not to demonise those who claim benefit or need state aid. I know as I spend most of my time in one of those countries at the moment.

Strabucks are an American conglomerate who seek to maximise the revenue for their shareholders.

To answe the gorgeous Ms Fia's question; The main holding company (US based) takes all the revenue and pays tax in the most efficent state. It then distributes part of the revenue back to the Franchisees who pay tax locally. Its a scam ...........but legal!

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By (user no longer on site) OP   
over a year ago


"It is a giant game of chicken. Every country builds in a some loopholes that they hope will attract global businesses.

Think of it like single males on here. If they all told every woman on here to take it or leave it then behaviours might change. They don't because they want to be seen as the one you would choose."

Thanks so the 'Loopholes' were always intentional then but but the consequences have turned out differently to expected? I wasn't sure if the 'loopholes' were accidents.

So.. can 'loopholes' not be changed once put in place? Do the goverments themselves not want to change them?

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By (user no longer on site) OP   
over a year ago


"There's a big difference between 'everyone should pay their way' and 'why do they get to pay less than me??'

Everyone thinks they pay too much tax, and that the person who earns £1 more than them pays too little..

Jealousy is a poor way to establish a tax system!"

I didn't say I was jealous, just frustrated by my lack of understanding it all

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By (user no longer on site) OP   
over a year ago


"Not every country would tell them to take a hike…..

Some counties base their economies on providing corporate tax havens and flags of convenience. "

I wish I understood what that meant

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By *icketysplitsWoman
over a year ago

Way over Yonder, that's where I'm bound


"It is a giant game of chicken. Every country builds in a some loopholes that they hope will attract global businesses.

Think of it like single males on here. If they all told every woman on here to take it or leave it then behaviours might change. They don't because they want to be seen as the one you would choose.

Thanks so the 'Loopholes' were always intentional then but but the consequences have turned out differently to expected? I wasn't sure if the 'loopholes' were accidents.

So.. can 'loopholes' not be changed once put in place? Do the goverments themselves not want to change them? "

The legislation was intentional but bad wording has led to unintended outomes. Some loopholes are there intentionally - we take away with this hand but give it back to you this way.

Some governments want to change some of them. For instance, something that was only expected to affect a few companies but as the world changed affects a lot more. The Jimmy Carr situation, is case in point. Then the problem is to work through the scenario of what else is affected by closing a loophole. That's when you end up with the rhetoric of morals versus what is legal, even coming from Prime Ministers.

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By *stwoCouple
over a year ago

anywhere

Starbucks are not screing anyone.We are screwing ourselves.We are the country that allowed the loophole to exist.Starbucks did not create it.

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By *isscheekychopsWoman
over a year ago

The land of grey peas and bacon

Don't worry I don't understand it... I am the type of person that needs things explaining to me in simple terms.. A guy once taught me the off side rule using handbsgs as an example..

I have not been the cleverist type of girl. I have subjects I know a lot about and I don't know things about other subjects..

I don't get the tax and the Starbucks thing.. Is it that they are not paying enough tax? Do they not think they should be paying the amount that is owed..

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By (user no longer on site)
over a year ago

The government could bring in emergency legislation to close loopholes plus the hmrc are reknowned for accepting offers of paying tax by large organisations and this in part is what i believe is behind the offer by starbucks to pay a sum of 20 million.

This is not a new problem but as mentioned i believe the coalition are just all talk when it comes to tax avoidance. Not long ago a tory minister stated he wants uk to be a tax haven based on starbucks and others it looks kike we are.

In my view if you do business in a country you should pay tax on what you trade on.

Its not the businesses fault but governments. Based on whats been mebtiined in press if the unpaid taxes were collected the deficit would be wiped out but far easier to hit the small businesses and individuals here as it suits them to keep folk down.

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By *nnyMan
over a year ago

Glasgow

[Removed by poster at 27/01/13 14:52:54]

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By *nnyMan
over a year ago

Glasgow


".........

I don't get the tax and the Starbucks thing.. Is it that they are not paying enough tax? Do they not think they should be paying the amount that is owed.. "

They probably think they shouldn't be paying tax at all.

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By *agna Cum LaudeMan
over a year ago

Laudable


"The government could bring in emergency legislation to close loopholes plus the hmrc are reknowned for accepting offers of paying tax by large organisations and this in part is what i believe is behind the offer by starbucks to pay a sum of 20 million.

This is not a new problem but as mentioned i believe the coalition are just all talk when it comes to tax avoidance. Not long ago a tory minister stated he wants uk to be a tax haven based on starbucks and others it looks kike we are.

In my view if you do business in a country you should pay tax on what you trade on.

Its not the businesses fault but governments. Based on whats been mebtiined in press if the unpaid taxes were collected the deficit would be wiped out but far easier to hit the small businesses and individuals here as it suits them to keep folk down."
Tripod is right. The Country of income should be the country of taxation. That is the fairest way to discharge tax liabilities.

To simplify the equation

Starbuck sets up a shop in the UK. Itakes advantages of all the capital allowamces for spending on capital projects (well done that is good!) All the money it takes from the tax payers of the UK it sends to the Netherlands to a holding company which then sends it to a country where tax is very low. It then distributes its profits to its share holders after paying large salaries to its senior executives. The consolidation accounts of Starbuck states that it pays taxes in the US and other places of operation, which it does but only a small fraction of what it should.

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By *exySwing3rsCouple
over a year ago

In Your Hearts

As a matter of interest, how much would the coffee farmer be earning in some poor third world country.

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By (user no longer on site) OP   
over a year ago


"It is a giant game of chicken. Every country builds in a some loopholes that they hope will attract global businesses.

Think of it like single males on here. If they all told every woman on here to take it or leave it then behaviours might change. They don't because they want to be seen as the one you would choose.

Thanks so the 'Loopholes' were always intentional then but but the consequences have turned out differently to expected? I wasn't sure if the 'loopholes' were accidents.

So.. can 'loopholes' not be changed once put in place? Do the goverments themselves not want to change them?

The legislation was intentional but bad wording has led to unintended outomes. Some loopholes are there intentionally - we take away with this hand but give it back to you this way.

Some governments want to change some of them. For instance, something that was only expected to affect a few companies but as the world changed affects a lot more. The Jimmy Carr situation, is case in point. Then the problem is to work through the scenario of what else is affected by closing a loophole. That's when you end up with the rhetoric of morals versus what is legal, even coming from Prime Ministers."

Thank you, so it would seem a perfectly good idea at the time, has become outdated due to modern times (I'm doing me best! ) and so really needs updating but the updating could cause more trouble than we could handle. Yeah?

phew... though my head was gonna explode for a minute there

x

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By *atisfy janeWoman
over a year ago

Torquay


"As a matter of interest, how much would the coffee farmer be earning in some poor third world country."

It's not really thst relevant, the passage between the raw crop and the coffee being poured into your cup in a coffee shop is both drawn out and very expensive....

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By (user no longer on site) OP   
over a year ago


"The main holding company (US based) takes all the revenue and pays tax in the most efficent state. It then distributes part of the revenue back to the Franchisees who pay tax locally. Its a scam ...........but legal!"

Right so... erm... I think I get that.... but why can they pay UK taxes to someone else?

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By *icketysplitsWoman
over a year ago

Way over Yonder, that's where I'm bound


"It is a giant game of chicken. Every country builds in a some loopholes that they hope will attract global businesses.

Think of it like single males on here. If they all told every woman on here to take it or leave it then behaviours might change. They don't because they want to be seen as the one you would choose.

Thanks so the 'Loopholes' were always intentional then but but the consequences have turned out differently to expected? I wasn't sure if the 'loopholes' were accidents.

So.. can 'loopholes' not be changed once put in place? Do the goverments themselves not want to change them?

The legislation was intentional but bad wording has led to unintended outomes. Some loopholes are there intentionally - we take away with this hand but give it back to you this way.

Some governments want to change some of them. For instance, something that was only expected to affect a few companies but as the world changed affects a lot more. The Jimmy Carr situation, is case in point. Then the problem is to work through the scenario of what else is affected by closing a loophole. That's when you end up with the rhetoric of morals versus what is legal, even coming from Prime Ministers.

Thank you, so it would seem a perfectly good idea at the time, has become outdated due to modern times (I'm doing me best! ) and so really needs updating but the updating could cause more trouble than we could handle. Yeah?

phew... though my head was gonna explode for a minute there

x"

That's one part of it. It may not be that outdated but the consequences weren't anticipated or no-one spotted the potential loophole until an accountant started using it.

Tax law and politics are so closely linked.

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By *agna Cum LaudeMan
over a year ago

Laudable


"The main holding company (US based) takes all the revenue and pays tax in the most efficent state. It then distributes part of the revenue back to the Franchisees who pay tax locally. Its a scam ...........but legal!

Right so... erm... I think I get that.... but why can they pay UK taxes to someone else? "
No you have paod tax on the disposal income you use to buy their coffee. You have paid 22 or 40 or even 50% tax before you can but their product. That is whay its a scam!!

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By *agna Cum LaudeMan
over a year ago

Laudable


"As a matter of interest, how much would the coffee farmer be earning in some poor third world country."
In accounting terms.........fuck all squared on a big ship with two funnels!

Now we getting down to the basics of capitalism!!!

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By *agna Cum LaudeMan
over a year ago

Laudable


"The main holding company (US based) takes all the revenue and pays tax in the most efficent state. It then distributes part of the revenue back to the Franchisees who pay tax locally. Its a scam ...........but legal!

Right so... erm... I think I get that.... but why can they pay UK taxes to someone else? No you have paod tax on the disposal income you use to buy their coffee. You have paid 22 or 40 or even 50% tax before you can but their product. That is whay its a scam!!"
buy*

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By *nnyMan
over a year ago

Glasgow


"..............

Right so... erm... I think I get that.... but why can they pay UK taxes to someone else? "

Starbucks allegedly use a system whereby profits generated in some countries are reduced by a 'royalty charge'.

This seems to have the effect of artificially increasing profits in a low tax country and reducing profits in high tax countries.

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By (user no longer on site) OP   
over a year ago


"The government could bring in emergency legislation to close loopholes plus the hmrc are reknowned for accepting offers of paying tax by large organisations and this in part is what i believe is behind the offer by starbucks to pay a sum of 20 million.

This is not a new problem but as mentioned i believe the coalition are just all talk when it comes to tax avoidance. Not long ago a tory minister stated he wants uk to be a tax haven based on starbucks and others it looks kike we are.

In my view if you do business in a country you should pay tax on what you trade on.

Its not the businesses fault but governments. Based on whats been mebtiined in press if the unpaid taxes were collected the deficit would be wiped out but far easier to hit the small businesses and individuals here as it suits them to keep folk down."

Thank you, another nice, simple explanation, albeit a sad one

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By *nnyMan
over a year ago

Glasgow


"As a matter of interest, how much would the coffee farmer be earning in some poor third world country.

It's not really thst relevant, the passage between the raw crop and the coffee being poured into your cup in a coffee shop is both drawn out and very expensive...."

Yeah, but the guys who grows the coffee is usually the one who gets shafted most.

Hence the move towards Fairtrade.

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By (user no longer on site) OP   
over a year ago


"Don't worry I don't understand it... I am the type of person that needs things explaining to me in simple terms.. A guy once taught me the off side rule using handbsgs as an example..

I have not been the cleverist type of girl. I have subjects I know a lot about and I don't know things about other subjects..

I don't get the tax and the Starbucks thing.. Is it that they are not paying enough tax? Do they not think they should be paying the amount that is owed.. "

I'm not up on the whole politics of handbags... now if someone could just equate all this to shoes

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By (user no longer on site)
over a year ago


"Clearly not, or I wouldn't be asking the question."

Ok, so what you're saying is you just don't understand the law at all? Go and learn tax law then, surely?


"

I already know it's legal and said so in the Starbucks thread. What I don't know is how and why the loopholes came about and if they are such a terrible thing - and a genuine error - why they cannot be changed?"

Loopholes aren't really the sort of things that 'come about', they're basically a disparity between written legislation and the subjective, intangible idea of the 'spirit' of the law. The questions you're asking miss the point, it's the legislation itself you don't understand. If you don't know how the law works in the first place you'll get nowhere asking why it doesn't work a slightly different way.

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By (user no longer on site)
over a year ago

ITs simple.

The government plugs the loophole and stops bitching about. Or, it can have a nice cup of STFU.

Just because it may be immoral, it doesnt make it illegal

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By *nnyMan
over a year ago

Glasgow


"Clearly not, or I wouldn't be asking the question.

Ok, so what you're saying is you just don't understand the law at all? Go and learn tax law then, surely?

................

"

That's a bit harsh.

Even George Osborne doesn't understand tax law.

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By *atisfy janeWoman
over a year ago

Torquay


"As a matter of interest, how much would the coffee farmer be earning in some poor third world country.

It's not really thst relevant, the passage between the raw crop and the coffee being poured into your cup in a coffee shop is both drawn out and very expensive....

Yeah, but the guys who grows the coffee is usually the one who gets shafted most.

Hence the move towards Fairtrade."

I use an awful lot of Fair Trade base product in my business, the difference in income to a cocoa or coffee farmer is almost nothing between them selling it to a Fair Trade exporter or a General Trade exporter.....even Fair Trade has been subject to many loopholes.

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By *xodussxMan
over a year ago

sheffield

There is one person to blame here: the lawyer explaining them how to trick the legislation

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By *xodussxMan
over a year ago

sheffield


"Clearly not, or I wouldn't be asking the question.

Ok, so what you're saying is you just don't understand the law at all? Go and learn tax law then, surely?

................

That's a bit harsh....

Even George Osborne doesn't understand tax law."
...very harsh. Even me doing a PHd in ...taxation law still can't get my head around it

It doesn't matter how much you know about it, there will always be a grey area

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By *nnyMan
over a year ago

Glasgow


"............

Yeah, but the guys who grows the coffee is usually the one who gets shafted most.

Hence the move towards Fairtrade.

I use an awful lot of Fair Trade base product in my business, the difference in income to a cocoa or coffee farmer is almost nothing between them selling it to a Fair Trade exporter or a General Trade exporter.....even Fair Trade has been subject to many loopholes."

I thought that was because the sums paid by General Trade had risen to match (almost) the sums pad by Fairtrade.

BTW. Fairtrade coffee isn't very good.

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By *atisfy janeWoman
over a year ago

Torquay


"There is one person to blame here: the lawyer explaining them how to trick the legislation

"

Lawyers and Accountants have a duty to ALWAYS give advice that is both legal and beneficial to their employers/Customers.....That is all they are doing

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By (user no longer on site)
over a year ago


"Clearly not, or I wouldn't be asking the question.

Ok, so what you're saying is you just don't understand the law at all? Go and learn tax law then, surely?

................

That's a bit harsh.

Even George Osborne doesn't understand tax law."

It's not harsh at all. You shouldn't be surprised that you don't understand some specific in depth piece of tax law if you don't know anything about tax law in the first place.

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By *exySwing3rsCouple
over a year ago

In Your Hearts


"As a matter of interest, how much would the coffee farmer be earning in some poor third world country.

It's not really thst relevant, the passage between the raw crop and the coffee being poured into your cup in a coffee shop is both drawn out and very expensive....

Yeah, but the guys who grows the coffee is usually the one who gets shafted most.

Hence the move towards Fairtrade.

I use an awful lot of Fair Trade base product in my business, the difference in income to a cocoa or coffee farmer is almost nothing between them selling it to a Fair Trade exporter or a General Trade exporter.....even Fair Trade has been subject to many loopholes."

Never trustedthe Fair Trade malarkey. Think it's created by some clever marketing company (that's the cynic in me anyway) hoping that many unsuspecting souls will jump on the bandwagon.

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By *issHottieBottieWoman
over a year ago

Kent


"Don't worry I don't understand it... I am the type of person that needs things explaining to me in simple terms.. A guy once taught me the off side rule using handbsgs as an example..

I have not been the cleverist type of girl. I have subjects I know a lot about and I don't know things about other subjects..

I don't get the tax and the Starbucks thing.. Is it that they are not paying enough tax? Do they not think they should be paying the amount that is owed..

I'm not up on the whole politics of handbags... now if someone could just equate all this to shoes "

Lol. I had the offside rule explained in shoes once. Much easier to understand x

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By (user no longer on site)
over a year ago

they wouldn't just pack up and close all it's stores down even if they did change the tax laws.

simple reason is they make too much money here to just turn their backs I the income they would get, even at a reduced rate.

Ford threatened the very same thing in the seventies, when women striking art the daggenham plant due to wanting equal play. Ultimately ford backed down whicg then brought about fairer wages across the board.

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By *atisfy janeWoman
over a year ago

Torquay

The problem with Fair Trade is that the licences handed out to Fair Trade commodity source companies and exporters have been watered down in most countries now.

Whereas it was always deemed difficult to obtain a Fair Trade license in say Columbia or Costa Rica it is now often down to how much of a bribe you can pay a local government official to get said license.

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By (user no longer on site) OP   
over a year ago


"

It's not harsh at all. You shouldn't be surprised that you don't understand some specific in depth piece of tax law if you don't know anything about tax law in the first place."

Oh I'm not in the least bit surprised by my not understanding!

Thanks to everyone who has taken the time to break things down for me, really appreciate your patience, I certainly don't fully understand it all, obviously! But feel much less frustrated on this particular subject now.

...having said that, please don't set me any exams on what I've learned!

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By (user no longer on site)
over a year ago


"

It's not harsh at all. You shouldn't be surprised that you don't understand some specific in depth piece of tax law if you don't know anything about tax law in the first place.

Oh I'm not in the least bit surprised by my not understanding!

Thanks to everyone who has taken the time to break things down for me, really appreciate your patience, I certainly don't fully understand it all, obviously! But feel much less frustrated on this particular subject now.

...having said that, please don't set me any exams on what I've learned! "

Ok, it just strikes me as being a bit like opening a quantum mechanics textbook at page 673 and asking if someone can help you with the third paragraph. It's never going to make any real sense unless you start at the beginning.

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