Amazon Overcharging Publishers For Tax 184
00_NOP writes "Amazon is taking fire in the UK for insisting that publishers pay them for 20% VAT (sales tax) when in fact the online retailer is only paying 3% VAT. 'The firm is able to wield such power over publishers because it has a near monopoly of the UK digital book publishing market. According to reliable estimates, it sells nine out of 10 ebooks in the UK, while using its Luxembourg tax status to wring more profitable terms from publishers. ... In private, British authors and publishers express fears that Amazon's dominance will send the industry into further decline.' Given that the Kindle is rubbish at displaying maths and science and that Amazon is as dangerous a monopoly as Microsoft ever was, is it not time that regulators and consumers stood up to them?"
Amazon is also facing criticism right now for allegedly shutting down a woman's account and remotely wiping her Kindle, then refusing to provide information about why it did so.
Never attribute to malice... (Score:2, Insightful)
that which can be adequately explained by stupidity.
Re:Never attribute to malice... (Score:4, Insightful)
So Amazon has completely cornered the market because of stupidity? how does not make any sense?
Re:Never attribute to malice... (Score:5, Insightful)
Publishers insisting on DRM, engaging in infighting, and pushing multiple incompatible standards have given Amazon a device monopoly just like music publishers gave Apple. It's stupidity because they had five years to see what was coming. It's publishers monopolistic greed that enabled Amazon's position, and Jeff Bezos is laughing all the way to the bank.
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Perhaps now people will realize the balance that must be maintained... but I doubt it.
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So bad it is great.
Of course The Princess Bride held the title for many years before.
Re:Never attribute to malice... (Score:5, Insightful)
Never attribute to malice that which can be adequately explained by stupidity
I have heard this saying before. But I have never understood why I should consider it to be correct. Don't the malicious often feign ignorance?
Re:Never attribute to malice... (Score:5, Funny)
Never attribute to malice that which can be adequately explained by stupidity
I have heard this saying before. But I have never understood why I should consider it to be correct.
It shouldn't be considered correct. This saying is promulgated by malicious people in a conspiracy to conceal their actions. There is no way that common acceptance of such a broad generalization could be explained by mere stupidity.
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So you believe that 10 times out of 10 every time you are shortchanged at a cash register it's deliberate an intentional and not because the dumb ass can't count?
That saying is generally true when involving individuals, because in general most people are honest and reputable in their dealings but people do stupid shit all the time by accident. If the saying wasn't correct then you should assume the guy at the register is a thief, that the guy that rear ended you was attempting to kill you and that when you
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So you believe that 10 times out of 10 every time you are shortchanged at a cash register it's deliberate an intentional and not because the dumb ass can't count?
If this were true, for every 10 times you are shortchanged, you should have another 10 times when you receive too much money. How often does that happen?
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I think that I have been given excess money comparably often to being short-changed in retail, at a till or bar for example.
And even commercially, goofs have often been in my favour.
I do point out the errors in either direction generally, and thus keep my karma balanced!
Yes, malice is around, but is usually fairly clearly separable from accident/cock-up IMHO.
Rgds
Damon
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If this were true, for every 10 times you are shortchanged, you should have another 10 times when you receive too much money. How often does that happen?
Actually this happens a lot. Stores tend to lose money on cash transaction errors every day, simply because people always complain if they are short-changed, but often don't when they receive too much change. I think that deliberate short-changing for the purpose of pocketing the surplus is rare, as the employer tends to watch people handling cash very closely.
The behaviour of one local corner-shop was strange; they gave me correct change, but consistently dialed up a larger amount on the register, which wa
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Normally it's the other way round as a tax evasion measure.
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The problem is that many slashdotters seem to jump to conspiracy theory conclusions about *everything*, even if totally ridiculous.
The next counterargument is usually that some conspiracy theories ultimately pan out, therefore all conspiracy theories are true. Or they'll justify extreme conspiracy theories if and only if they are against: the Government, the Corporations, Big X where X is an industry, Microsoft, Apple, Google, or what have you, in approximately that order, without considering that these o
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The problem is that many slashdotters seem to jump to conspiracy theory conclusions about *everything*, even if totally ridiculous.
How much are THEY paying you to say that?
Re:Never attribute to malice... (Score:4, Insightful)
mcgrew's razor: never attribute to stupidity that which can be explained by greedy self-interest.
New criteria for government action (Score:5, Insightful)
Overcharging, potentially illegal actions? Pfft, who cares.
Whats that, you say its bad at displaying maths and science? Someone get the firing squad.
Seriously, what on earth do its shortcomings have to do with whether the government needs to take action?
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Because they are actively selling goods they must know to be unfit for purpose.
What if a retailer sold you something they said was wine when it was simply water? Would you not think that was an issue even if they did it thousands of times and refused to stop when the problem was pointed out to them?
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I don't recall seeing the Kindle being advertised as a maths/science textbook replacement anywhere.
Kindles don't support footnotes, which is also a pain but equally irrelevant to the issue of how much or little tax Amazon pay.
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I don't recall seeing the Kindle being advertised as a maths/science textbook replacement anywhere.
"Amazon" didn't create the book, the publisher did. It's not up to Amazon to audit every text book they sell to see if it's correct. The publisher should have proofread it -- it's pretty simple to do, on the Kindle emulator that Amazon supplies for exactly that purpose. Kindle itself uses a subset of HTML in a specific font to display text. If that doesn't work, you have to use images. It does support GIF, JPEG, PNG.
Probably the publisher just ran it through some automatic converter that couldn't handle
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Kindles don't support footnotes, which is also a pain but equally irrelevant to the issue of how much or little tax Amazon pay.
It supports hyperlinked end-notes and has a back-button, so unlike a real book its convenient to read the end-note and then return to your original position.
Foot notes dont make much sense when a page is dynamically formatted to the size of the screen - if you had a foot note marker at the bottom of the screen then there would be no room on the screen for the actual foot note, which means the foot note would need to appear at the bottom of the following page, which is confusing at best.
Re:New criteria for government action (Score:5, Informative)
Yep, they sold me a book about the evolution of storytelling. The paper version contained some figures that they just left out in the Kindle version. And that made the book unreadable. Thank you Amazon, I will certainly buy Kindle books from you again.
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Yep, they sold me a book about the evolution of storytelling. The paper version contained some figures that they just left out in the Kindle version. And that made the book unreadable. Thank you Amazon, I will certainly buy Kindle books from you again.
I fail to see how this is Amazons fault. The publisher is responsible for converting books to Mobi and submitting them to Amazon. Blaming Amazon for an eBook that was missing figures would be like blaming them for spelling errors in a print book.
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Re:New criteria for government action (Score:5, Insightful)
Because they are actively selling goods they must know to be unfit for purpose. What if a retailer sold you something they said was wine when it was simply water? Would you not think that was an issue even if they did it thousands of times and refused to stop when the problem was pointed out to them?
Personally, I'd be far more concerned when they came to repo the "wine" they sold me, not for non-payment, but for some arbitrary reason they made up to justify said repossession without refund.
Seriously, why is that not the bigger focus here? Amazon can repossess your digital stuff without refund or recourse!
See, shit like this is why I only spend money on tangible goods.
Re:New criteria for government action (Score:5, Insightful)
Seriously, what on earth do its shortcomings have to do with whether the government needs to take action?
The fact that a company can take something that you paid for from you, without just cause or fiscal reciprocity, is something the government should definitely take action against.
If you or I did that to someone, we would be called "thieves;" why would Amazon be considered any differently?
Easy? (Score:3)
Surely this is merely a matter of tax laws that lawyers and judges are perfectly well equiped to solve?
If Amazon is a Luxembourg company, than this should be no different from any other Luxembourg company buying and selling products outside Luxembourg borders. Europe has tax laws in place regarding intra-community trade; neither Amazon nor the publisher's opinions matter.
Re:Easy? (Score:5, Informative)
Surely this is merely a matter of tax laws that lawyers and judges are perfectly well equiped to solve?
If Amazon is a Luxembourg company, than this should be no different from any other Luxembourg company buying and selling products outside Luxembourg borders. Europe has tax laws in place regarding intra-community trade; neither Amazon nor the publisher's opinions matter.
The summary, once again, is not very clear. In fact the Guardian article isn't 100% clear either, but what appears to be the case is that for a product with an intended retail price of £10 in the UK where VAT is 20%, the base UK price would be £10 / (120%) = £8.33. Amazon allegedly insists on negotiating with UK publishers starting with a base price of £8.33. However, in Europe, Amazon is a Luxembourg company and the VAT rate there is 3% for these products. The base price for a retail price of £10 would be £10 / (103%) = £9.71.
I don't think it is really the case that Amazon is "charging them VAT" so tax law doesn't really matter - it would be more accurate to say that they are allegedly insisting on at least an extra 17% discount, and hoping that the publishers don't notice that this is not in fact part of the VAT adjustment. Or alternatively, Amazon is accused of keeping all the tax savings it makes by setting up in the EU's lowest VAT area, Luxembourg, and not sharing them with the publishers.
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Surely this is merely a matter of tax laws that lawyers and judges are perfectly well equiped to solve?
If Amazon is a Luxembourg company, than this should be no different from any other Luxembourg company buying and selling products outside Luxembourg borders. Europe has tax laws in place regarding intra-community trade; neither Amazon nor the publisher's opinions matter.
The summary, once again, is not very clear. In fact the Guardian article isn't 100% clear either, but what appears to be the case is that for a product with an intended retail price of £10 in the UK where VAT is 20%, the base UK price would be £10 / (120%) = £8.33. Amazon allegedly insists on negotiating with UK publishers starting with a base price of £8.33. However, in Europe, Amazon is a Luxembourg company and the VAT rate there is 3% for these products. The base price for a retail price of £10 would be £10 / (103%) = £9.71.
I don't think it is really the case that Amazon is "charging them VAT" so tax law doesn't really matter - it would be more accurate to say that they are allegedly insisting on at least an extra 17% discount, and hoping that the publishers don't notice that this is not in fact part of the VAT adjustment. Or alternatively, Amazon is accused of keeping all the tax savings it makes by setting up in the EU's lowest VAT area, Luxembourg, and not sharing them with the publishers.
That makes a great deal more sense. I was thinking that I'm pretty sure there are laws in just about every country in the world that money collected as a tax must be delivered to the government, which means that Amazon would not benefit from this approach.
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However, since Amazon is a large retailer, it does not pay VAT in Luxembourg, but in the buyer's country. I would venture to say that most of Amazon's EU customers do not live in Luxembourg so the tax rates there do not mean much.
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Since I'm from Luxemburg, you can imagine I'm not surprised, lots of companies have their site here.
Anyway, those tricks will be over soon, the EU has already done its thing.
But I _am_ surprised, that eBooks have actually a 20% VAT in England, that's the REAL shame IMHO.
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If it's liable for 3% Luxemberg VAT the 20% UK VAT isn't due, so nobody paid it. I reckon it's just a coincidence, they could equally have hcosen 15 or 25% off as their baseline.
Also, I fail to see why being based in Luxemberg has any effect on their suppliers at all.
Summary is a bag of shit, but then so is the Groaniad article.
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Piling on? (Score:5, Insightful)
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Its basically what you could talk about as a E ink cartel. For some obscure reason, uknown to the common man, nobody has actually made a decent competitor to the current E Ink readers. As far as we consumers know, the marked only current color E Ink readers are made by a chinese company called Hanvon running Windows CE, and a overpriced product by a company called Ectaco which is markeded to students at a selling price of 500$.
Why is that? B&N and Amazon have these low PPI monochrome ereaders, and yet n
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And you really think Amazon wouldn't want to have a color e-ink reader? I guess they don't have one yet because a) the screen looks crap, or b) it's far too expensive to complete their existing monochrome e-reader line.
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Beats me, but its still amusing that there is no E Ink reader competiton. Even handhelds such as the Gameboy had competition, even if most of it fell flat because they failed to copy the good parts of the gameboy.
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Beats me, but its still amusing that there is no E Ink reader competiton.
As I understand it, they all get their screens from the same company, and the tech is probably patented so no-one else can make them.
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Thank you very much for well timed tip. (Score:3, Informative)
I am almost-buyer of Kindle and practically all I need from it is science and math... Thanks for tips, and I hope this is read widely. Maybe next year, or decade... But not before all devices are updated to normal-math, acceptable-tables and acceptable-pdf.
There is another problem I was already aware of - PDF display is, by default, _awful_. I understand why's but I think it is not acceptable at all.
Re:Thank you very much for well timed tip. (Score:5, Insightful)
What I want to know is where the http://pixelqi.com/ [pixelqi.com] guys are hiding... They had a workable device, shipping in nontrivial volume with the OLPC XO-1, and then seemingly dropped off the map.
All the refresh rate of an LCD panel(because it is one); but, in transreflective mode, looks more like e-ink than any LCD I've ever seen and has the option to do color if you crank the backlight....
We know(because all but the nastiest LCD tablets running Android or iOS can and do do it) that contemporary low-power ARM chipsets are up to the challenge of crunching PDFs; but e-ink displays are mostly too small to display 8.5x11 or A4 pages, too slow for panning/zooming/etc, and PDF reflow is crap. If they would just start existing, the Pixel Qi screens would fairly efficiently solve this problem, at lower cost and lower power than standard LCD panels; but nobody seems to have heard a peep from them.
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Quite so. I have the Adam tablet with Pixel Qi display, and it is indeed crap in reflective mode - the contrast is so low it's pretty much unusable indoors, even in daylight. We're talking worse contrast than the very first e-ink readers here.
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I understand my car can't fly but I think that is not acceptable at all either. Never again will I buy a car.
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The Kindle Swindle (Score:5, Informative)
* http://www.defectivebydesign.org/amazon-kindle-swindle [defectivebydesign.org]
* http://www.gnu.org/philosophy/the-danger-of-ebooks.html [gnu.org]
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Thankfully, it is axiomatic that Stallman Is An Extremist, so we needn't listen to his(often strident, as often correct) warnings!
The awesome thing about the emerging DRM economy is that it combines the economic relations of feudalism with the efficient, data-driven surveillance that East Germany was too low-tech to achieve...
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Well yes Stallman is an extremist, and is often over the top. Perhaps as often as not.
But there are less strident voices that have been warning about DRM for a while. Like the one in my head.
That's why I buy physical media, or at the worst DRM free media for anything I know I will want to keep long term.
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DRM is indeed a problem. It removes control from the user and places it totally in the hands of the distributor. Ie, Amazon's first notorious example here was recalling a book that they didn't really have permission to sell. Yes granted this was a problem, users should not have been able to have gotten this book. However had this been a print book the deed would have been done and it would have been up to the publisher to pay all damages, no one would have sent agents out to ever reader's home to repo t
Re:The Kindle Swindle (Score:4, Interesting)
Thankfully, it is axiomatic that Stallman Is An Extremist,
DRM is bad http://www.defectivebydesign.org/ [defectivebydesign.org] "Digital Restrictions Management is technology that controls what you can do with the digital media and devices you own. When a program doesn't let you share a song, read an ebook on another device, or play a game without an internet connection, you are being restricted by DRM." most users would argue wanting to do those things isn't extreme.
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What Stallman and his zealots miss is that all those companies with DRM usually also provide some useful service; and, often, the utility of said service more than compensates for the inconvenience (and potential risk) of DRM. Examples include Steam, and, yes, Kindle. Which is why people will keep using them and ignore the doom-and-gloom warnings.
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I think this is because some of the customers are "fans". Fans will stick up for whatever a company does.
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You can just strip the DRM off your Kindle purchases and then back them up.
Sure, it's trivial, and where I live it's very likely also legal to do so in order to read on the hardware of your choice. It's not been tested in court for ebooks, but a similar case was lost regarding DVD playback in a reasonably high-profile case involving a certain "DVD Jon". Sadly Big Content's lackeys backed off before we got a "proper" legal precedent in our highest court instance, but the results in lesser courts were pretty damning for them. Experiences like the one Linn had is a reminder that lib
Better devices? (Score:2)
Having been this close to buying a Kindle, I'm glad I saw this warning first.
Can anyone suggest a device with better PDF support?
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Addendum: I meant support for math symbol display, though PDF support is obviously also a fairly essential feature.
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Having owned two tablets, used an iPad for extensive periods and owning an ereader (kobo touch), the difference in quality for reading is worlds apart.
e-Ink, despite it's low refresh speed, lack of color, flaws and high price, is much better for reading text than any active display technology I've ever seen.
More on topic though; is there any test PDF or epub file I could try on my reader to check how well (or badly) it renders math equations?
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I don't know of a reference file for testing math, but you could probably just find a free-access math paper online, or even cobble something together in Latex.
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I could, but I'm not a math expert. I don't really know the extent of what is possible in mathematical notation nor do I know how to quickly see whether the notation is correct for the more complex formula's. Perhaps somebody knows how to get the example files the developers of the PDF and epub math specifications undoubtedly used to test the specification itself?
Blackberry Playbook (Score:2)
It is also possible to minimise documents while doing calculations, for instance, and switch quickly between spreadsheets, calculator and documents. And ther
Re:Better devices? (Score:5, Funny)
...You do realize that PDF is meant for printing. The P in the acronym kinda gives it away....
So, the 'P' in PDF, which stands for 'Portable Document Format', is supposed to remind us, somehow, of printing?
Does the 'G' in Gif somehow remind us of giraffes?
How do I subscribe to your newsletter?
cheers,
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Back up a second; are you saying GIF doesn't stand for Giraffe Image Format? All this time I just assumed everyone else was using it wrong.
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Not Paranoid (Score:4, Informative)
And I thought I was just being paranoid about this sort of thing.
When Amazon first went around deleting books off of people's Kindles I vowed I'd never buy one. Now it appears my apprehension was all too justified.
I hear the Nexus 7 does a better job with pdfs than the Kindle. It appears to me that's the way I am headed.
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If you want to read PDFs on a device of that kind, you really want it to be able to render legible text in fit-page-to-screen mode. Which means a reasonably high DPI - the higher, the better, in fact. So, right now, the best device for reading PDFs is actually the "retina" iPad; but if I were you, I'd wait for Google to announce that anticipated Nexus 10" with 300 dpi.
Off line storage (Score:5, Informative)
"Amazon is also facing criticism right now for allegedly shutting down a woman's account and remotely wiping her Kindle, then refusing to provide information about why it did so."
This is the exact reason why I strip the DRM from every Kindle book I buy and then store them in my own offline repository. Should Amazon ever decide to wipe my account I'll still have the books I purchased. The other advantage is I can use any e-reader I want w/o being locked to a Kindle.
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How do you do this?
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No no no. You have to print them out, take photos of them with a 35mm SLR camera, get the photos developed, scan the photos, use an OCR program to convert the photos to text, paste the text in a page layout program, crop the images from the photos and insert them into the proper places in the text, then save the whole thing as a PDF file, then use Calibre to convert the PDF file to a MOBI file.
Comment removed (Score:5, Informative)
Just one question: (Score:3)
How do we know that this story is actually true, and not just some BS made up by someone who has an axe to grind with Amazon?
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We don't, but if you read the linked article the sort of replies she was getting sound pretty legit. There are two Michael Murphys on LinkedIn working for Amazon in some kind of customer relations role, so that also lends credence.
I work in anti-abuse at Google. This sort of thing happens from time to time. They clearly believe she is an abuser of some kind and for all we know she might be, I've seen plenty of very obviously bad users write public stories before, often about closed AdSense accounts. In fact
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What surprises me about this story is that the account termination results in wiping of her Kindle.
They did not wipe her Kindle. That was a misunderstanding in TFA.
https://twitter.com/webmink/statuses/260432600814981120 [twitter.com]
http://translate.google.com/translate?sl=auto&tl=en&u=http%3A%2F%2Fwww.digi.no%2F904658%2Fhun-ble-kastet-ut-av-amazon [google.com]
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Because - what lends credence is that they name names ... so all this is very easy to verify internally at Amazon as either true or false, and if it's false, this blogger will be hit with so much legal crap so quickly that he will be financially ruined for life.
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Don't forget Class A Federal Violations of your Constitutional Shit and Junk.
TFA notes that the broad lives in Norway, got her Kindle from Amazon UK and agreed to their T&C, and and was paying her kroner to Amazon US. So, sue who, where, and for what?
Sometimes the answer is not "Ready-Aim-Lawsuit". A bit of pressure applied via the anger of a million neckbeards might be more effective.
This is not how VAT works (Score:5, Insightful)
Having been totally baffled by the summery. Which is incredibly confusing. Nothing has changed, VAT works like it always does the final customer pays it ALL thats the books buyer paying 20% http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=502578 [amazon.co.uk].
This is purely about dodgy maths. Amazon make deals on percentage of Gross Price with the publishers the UK full retail price of the book [net price+20%vat], not on the net price + [Vat in Luxenbourg] 3%. where publishers would get a slightly larger piece of pie . Neither Amazon or the Publishers pay a penny in tax so I fail to see why this is an issue. A better argument would be to standardise of Amazon taking a percentage of the net price as opposed to gross price, but all this should not matter, its really whatever they have negotiated between themselves.
This is a ridiculous Anti-Amazon article, I suspect to distract from the disgusting behaviour that Apple and 5 Publishers are involved in
Re:This is not how VAT works (Score:4, Interesting)
Indeed you are right that VAT is a consumer tax. Transactions between companies are not VAT-rated (unless they themselves are the consumers). However...
Due to a loophole, Amazon pay VAT for books sold in the UK to the Luxembourg Government (at 3%). I am no VAT expert and it is a stupidly complicated tax but it may well be that Amazon is forced to pay UK VAT on ebooks it buys from UK publishers because they are the end of the chain and seen as the consumer for UK tax purposes. In fact Amazon UK is classed simply as a distributor. The real business is in Luxembourg
Amazon now class themselves as just a distributor in the UK with their main business located in Luxembourg. On UK sales of £3.3 billion last year they paid precisely no UK tax. Amazon in Luxembourg employ 134 people, who must work very hard indeed compared to the 2300 box pushers in the UK. Amazon also get a Federal tax credit in the US because they pay (ahem) tax abroad. This means they pay less than the standard rate (35%) companies would normally pay.
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Yeah I'm an accountant and was wondering WTF the problem is with the VAT.
Amazon does not charge the publishers 20% VAT, the publisher applies 20% VAT when it bills Amazon.
The issue appears to be - or I should say could be since the article is worded so poorly I am reluctant to give the benefit of the doubt - that when negotiating the publisher's royalty, they are firstly taking the gross selling price to the consumer and then assuming 20% of that goes to the tax man when actually it is 3%.
Thus, say we have
Problem for IRS-equivalent too (Score:2)
This is not only a problem for publishers (which pay 20% instead of 3%) but also for the equivalents of the IRS. Amazon is paying a lot less taxes than it should in other countries by leveraging that extra 17% in two ways: benefits, and gaming the input/output VAT.
Re:Problem for IRS-equivalent too (Score:4, Interesting)
This is not only a problem for publishers (which pay 20% instead of 3%) but also for the equivalents of the IRS. Amazon is paying a lot less taxes than it should in other countries by leveraging that extra 17% in two ways: benefits, and gaming the input/output VAT.
No that is not what is happening the Publishers pay Nothing; Zero; Zilch; Nada; Nothing. Amazon also pay Nothing; Zero; Zilch; Nada; Nothing. The *Final* customer pays the standard rate which is 20% in the UK and the Government gets it ALL.
VAT does not work like you think it does. Businesses do not Pay VAT.
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In other words, VAT is not levied on a seller, but a buyer. If Amazon charges 20% for the privilege of reselling your product then that isn't VAT as none of it is paid to the Govt. but a massive cash grab to the detriment of the producer. They also charge a download "tax" to the producer if the e-book costs less than £10.
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VAT does not work like you think it does. Businesses do not Pay VAT.
Sorry pal, but that's not how VAT works.
There is input VAT and output VAT.
Businesses do pay VAT, except for later they "cancel" it thanks to the input/output VAT compensation.
But that's only if input VAT and output VAT are at the same percentage. If you are paid 3% VAT by Amazon but you have to pay 20% VAT to IRS, then you are in trouble. That's exactly what publishers are complaining about.
Re:Problem for IRS-equivalent too (Score:4, Informative)
VAT does not work like you think it does. Businesses do not Pay VAT.
Sorry pal, but that's not how VAT works.
There is input VAT and output VAT.
Businesses do pay VAT, except for later they "cancel" it thanks to the input/output VAT compensation.
But that's only if input VAT and output VAT are at the same percentage. If you are paid 3% VAT by Amazon but you have to pay 20% VAT to IRS, then you are in trouble. That's exactly what publishers are complaining about.
I'm not your PAL. Your absolutely right that that there is "output vat" and "input vat", the business gives the *difference* to the government. The Final Customer Pays ALL the VAT!!! The other businesses just collect chunks of it along the way :) hence the *Added* bit. VAT does not work like you think it does.
The Publishers are complaining they are getting a smaller piece of the pie after discounts have been negotiated, as they are worked out on 120% of the net price not 103% of the net price. Try the maths yourself. Again neither the publishers nor Amazon pay a bean in VAT. Its about dividing the net cost!!
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Businesses do pay VAT, except for later they "cancel" it thanks to the input/output VAT compensation.
Lol .. so in other words, they don't pay that VAT, which is what tuppe said.
It is even right in the name of "VAT" that businesses (intermediaries) do not pay it - "Value Added Tax" - i.e. it's a tax on the end-points of the value chain. Businesses "collect" VAT.
It's just a matter of accounting that the two effectively partly cancel one another out.
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Small companies are generally not VAT-registered, and therefore have to pay the tax.
But in general you are correct; businesses on the whole avoid paying VAT even when they provide no discernable "value addition" to the product or service. Perhaps if each intermediate business had to pay 1% VAT we'd see a reduction on the number of middlemen and shell companies.
No Small companies are almost always VAT registered, you have to have a turnover of less than £77,000 which excludes all but sole-traders, and even then they have a tendency to be vat registered if they do work for businesses.
http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm [hmrc.gov.uk]
Re: (Score:2, Interesting)
It would have to be a very small company then. I run a one-man-band ltd company in the UK, and it is VAT registered. Having a VAT registration is very often a requirement from customers, and it is needed if I would want to reclaim VAT paid on goods purchased (which I dearly want to, otherwise it would come straight out of my margin).
There is nothing strange or new here:
* VAT works as it is supposed to do (you pass it on to your customer).
* A (near) monopolist is taking advantage of their strong hand. Could
Uhhh, why not "collect" 70% tax rate? (Score:2)
Isn't it fraud to charge somebody for a tax then not pay the money to the government? This is true whether they really owe 20% and pay 3% or owe 3% and lie to customers they need to collect 20%.
Re: (Score:3)
Isn't it fraud to charge somebody for a tax then not pay the money to the government? This is true whether they really owe 20% and pay 3% or owe 3% and lie to customers they need to collect 20%.
...but that is not what is happening. Its also not what this article is about. Its incredibly confusing its about the starting price for discount negotiations, neither Amazon or the Publishers pay VAT.
Comment removed (Score:5, Interesting)
Comment removed (Score:3)
Ha. (Score:2)
So how long until they fix this monopoly? (Score:2)
Re:VAT (Score:5, Informative)
The better question is why are ebooks subjected to VAT in the first place when printed books are not.
http://www.thebookseller.com/news/uk-government-holds-firm-e-book-vat.html [thebookseller.com]
in a written response reiterated the government's position "Under EU law, VAT on electronic books must be charged at the standard rate. A reduced rate cannot be applied to digital or electronic supplies, or supplies of text via the internet, as they are classed as supplies of services rather than physical goods. There is therefore no scope in the principal VAT directive to apply a reduced rate on e-books."
Re: (Score:2, Interesting)
So that is piracy of services what goes on the internet, not piracy of products as far as the EU is concerned. I wonder what would be the consequences of this definition..
Re: (Score:2)
Translated to plain language, "We're always looking for new sources of tax revenue and we saw an opportunity to declare that ebooks aren't equivalent to printed books, which allows us to tax them."
Re: (Score:2)
So what the government is basically doing is skimming the differential between average print book prices and average e-book prices .. it's smart, because the average tax victim doesn't perceive that he's being ripped off so badly, because they still think they're getting a reasonable deal overall.
Governments have been applying the same concept to airline tickets .... from the airline side, there have been a number of improvements in cost efficiencies and lowering of prices due to competition ... but every t
Re: (Score:2)
The better question is why are ebooks subjected to VAT in the first place when printed books are not.
Considering the linked article about the woman whose Kindle was remotely wiped and her ability to purchase new books forever disabled, I think the classification of Kindle e-books as "services" and not "goods" is accurate.
Re: (Score:2)
Re: (Score:3)
As another comment linked to an article: Vat by EU law is 20% for ebooks.
This is wrong. EU requires that VAT for ebooks is the same as the standard VAT, whatever that is in the particular country where the book is "published".
In 2015 the rules will change, and it will be the country of the buyer which determines VAT (as it is for everything else), and then it will all be academic.
Re: (Score:3)
Amazon is doing something shady and it'll get worked out in court now that it's know[n].
Oh yeah, just like Vodafone and the billions of pounds they avoided paying in tax. In the UK the politicians let big firms get away with crap like this and the Facebook tax dodge in the mistaken belief that it brings jobs to the country. All it does is line the pockets of a few at the cost of a huge amount of tax revenue taht could be used to finance real investment.