No, no, really, it is all Harold Wilson’s fault.
Here’s the double taxation treaty between the UK and Luxembourg:
(1) For the purposes of this Convention, the term `permanent establishment` means a fixed place of business in which the business of the enterprise is wholly or partly carried on.
(2) The term `permanent establishment` shall include especially:
(a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, quarry or other place of extraction of natural resources; (g) a building site or construction or assembly project which exists for more than six months.
(3) The term `permanent establishment` shall not be deemed to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
That pretty much covers whether Amazon has a permanent establishment in the UK or not. And if it doesn’t then it don’t pay corporation tax.
And no, it’s not even tax avoidance. For here we’ve got a specific clause in the law that outlines exactly that in Amazon’s situation no tax is payable.
But why Harold Wilson then?
DT12250 – Luxembourg: Agreement
The comprehensive agreement (SI1968/1100) came into force on 12 July 1968 and has effect
a) In the United Kingdom for
i) Income Tax from 1966-67,
ii) Capital Gains Tax from 1966-67,
iii) Corporation Tax from 1 April 1966.
This is old, old stuff. Nowt to do with any politician currently in power.
6 responses so far ↓
1 Martin Davies // Dec 6, 2012 at 4:49 pm
The media won’t accept it.
2 John Galt // Dec 6, 2012 at 7:43 pm
Didn’t you here that stupid bint from UKundercooked or whatever its called on Newsnight?
“blah blah Not Fair! blah blah Skoolz N Ozbitalz blah blah”
That’s what we’re up against, it’s tax law versus the moral outrage of Millie Tant
http://en.wikipedia.org/wiki/Millie_Tant
3 Martin Davies // Dec 6, 2012 at 11:03 pm
Mob rule….sad.
4 bloke in france // Dec 6, 2012 at 11:34 pm
So Starbucks coffee shops are warehouses?
Now I come to think of it, yes.
5 Martin Davies // Dec 7, 2012 at 8:27 am
The one I use most often is inside the NEC. Not what I would call a warehouse.
6 Richard // Dec 8, 2012 at 6:53 pm
Isn’t it more likely to be the Chancellor who is responsible?
Signed 24 May 1967, so that would be Callaghan. (www.hmrc.gov.uk/taxtreaties/in-force/l.htm)
Unless you want to blame the foreign secretary, but George Brown was unlikely to have been able to grasp the finer points of a tax treaty (especially if it were presented to him after lunch).
But I wonder who actually signed it? Recent ones have been by various people (from Foreign Secretary down to the Exchequer Secretary to the Treasury). I can’t seem to find the original online.
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