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Comment by fear91 | Hacker News Reader

It's wrong thinking.

Google is ought to pay taxes like everyone else. Without the UK infrastructure, there would be no businesses to advertise through their service.

Taxes fund healthcare and security. Without healthcare, people would die and Google would have less customers. With no police and justice system someone could just go and bomb Google's UK datacenters.

Trying to rationalize why one company should not pay taxes while others do is bad.

Google extracts profits from UK economy and doesn't pay anything in taxes. It's bad for every UK resident.

If there was no Google, people would use directories/yelps/UK-based search engines which would pay taxes. In this case, from the economic point of view, Google is simply a parasite.

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"Trying to rationalize why one company should not pay taxes while others do is bad."

It is not particularly bad if you take into account where they actually make their money.

Would you levy UK taxes on every penny Google makes, simply because their sites are accessible in the UK and used by UK residents? That would make no sense.

Google should be taxed fairly on the business they do in the UK, sure, but nothing more. I think that was the grandparent's point: Google likely does less business in the UK than Starbucks or Amazon, and even then the business that they do perform is more immaterial and it's harder to identify the source.

Thus it makes some sense that Google's evasion is "less surprising" in a way, because it is on a smaller scale. No one is saying that Google should not have to pay taxes on the business it does in the UK; we are simply quantifying what it means to do business and in what way.

This is, in fact, quite logical thinking, and there's no need to be alarmed.

> Would you levy UK taxes on every penny Google makes, simply because their sites are accessible in the UK and used by UK residents? That would make no sense.

You check they're not using weird accounting to set up a (tiny) business in a low tax regime, and then syphoning money out of the high tax regime into that low tax regime.

Google has customers in the UK buying ads, and people in the UK viewing ads - it seems reasonable that they should pay UK tax on those bits.

If they are not making money in the UK - why won't they disband their UK sales team or stop offering their service to the UK customers?

After all they make their money in the Bahamas.

Google IS paying taxes like everyone else. Most large corporations do not pay taxes locally, in case you do not know. If they were paying locally, they would be at disadvantage versus other organizations who know how to lower their taxes, and lose out in the end. Why focus on these three companies only when ALL other large corporations are doing the same without being threatened?

There's difference between paying 19% of your income in UK vs paying 1% of your income somewhere in the Bahamas.

Over 90% of companies pay 19% of income tax + over 20% VAT tax. They often times coexist in the markets with the corporations paying 1%.

It's not important whether it's Google or Apple or BP - they should all pay the same taxes the small/medium business owners pay. Corporations use the same infrastructure that small/medium business owners pay for. Meanwhile they say "fuck you!" to said people and pay their 1% in the Bahamas. Additionally, they get enormous competetive advantage through lower taxes while medium or small companies need to gain it through superior products.

I see this misunderstanding over VAT in this and other posts on this subject.

To be clear, VAT registered entities do not pay VAT in the fashion you imply. VAT is due on a VAT invoice. Companies usually do not do business with sources that are not VAT registered. It is a round robin scheme for VAT registered entities.

Simple example.

Month one, Google sells a tablet. Customer pays VAT. Google gives VAT income to HMRC ( once per quarter ).

Month two, Google sells a tablet. Google buys goods plus VAT. Google subtracts VAT out from VAT in. HRMC pays Google if amount is negative. Google pays HMRC if amount is positive. This month Company X paid more VAT on stationary than they collected from sales. In this case they get a refund from HMRC.

In no case does Google pay VAT. Nor does any other VAT registered entity.

The entities that pay VAT are those who are not VAT registered. Those that are VAT registered are collectors for HMRC.

Google, Starbucks, Amazon have never paid VAT. They have at most passed on VAT payments made by their customers.

I don't think anyone is proposing only ever targeting just these three companies. But their investigation helps everyone understand the problem. The ideal end result is, I suppose, that all tax is more fairly distributed globally.

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