Amazon and eBay Sellers' VAT Fraud Rife Despite Crackdown (theguardian.com) 81
Huge numbers of VAT fraudsters are illegally selling goods tax-free to British shoppers on Amazon and eBay, despite new government efforts to crack down on this ballooning 1bn pound VAT evasion crisis, reports the Guardian. From the article: A Guardian investigation found a wide variety of popular goods being illegally sold without VAT on Britain's leading shopping sites. They range from cheap Christmas tree lights, electric toothbrushes and thermal socks to expensive laptops, iPads, music keyboards, violins and pingpong tables. In some cases, VAT fraudsters offer unbeatable prices. Mostly, however, their prices remain in line with law-abiding competitors and the proceeds of evasion disappear overseas, often to China. Guardian investigations found many tax-evading sellers were trading without displaying VAT numbers on Amazon or eBay. Others were showing made up numbers, or numbers cloned, without authorisation, from unsuspecting legitimate businesses.
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Note: Sales/Use tax are NOT the same as Value Added Tax.
My professional (accountant) opinion: Sales tax is more reliable and more efficient at collecting revenue than VAT.
Re:VAT? (Score:5, Interesting)
To be honest VAT has always been a disaster waiting to happen, and inside the European Union it is an unmitigated nuisance to enforce.
VAT, you see, isn't a sales tax. When one company sells stuff to another one, it charges VAT on the deal which the other company can then claim back. In a chain of businesses, this carries on until the end user gets stung with the final VAT charge. This therefore lends its self to a criminal activity called Carousel Fraud, whereby VAT-liable goods are moved around, with VAT being fraudulently claimed back repeatedly. Carbon credits are the current favourite target here, since they are intangible and thus shipping costs are minimal.
Carousel fraud costs the EU thousands of millions of Euros per annum in lost revenue, and probably the same again in administration costs. As taxes go, it is a fraudster's wet-dream and a tax enforcer's nightmare and yet, as with much of the EU, it is a bad idea that is effectively here to stay.
Simply ignoring VAT, as is going on here, is another downside to it; it is simply near-impossible to catch all the fraudsters doing this, since almost no customers will trouble to report people for giving them a good cheap deal.
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VAT was first introduced in France as an alternative to income tax. It was introduced in the UK after WWII to fund war reparations. That debt has now been settled - why the fuck UK taxpayers as opposed to Hitlers bankers had to pick up the tab is anyone's guess.
Charging VAT for EU sales is a nightmare. For B2B sales, you need a valid EU VAT number to zero rate for reverse
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It was introduced in the UK after WWII to fund war reparations
No it wasn't. It was introduced in 1973 as one of the conditions for the UK joining the EU. There is no connection to war reparations, which were paid by the Axis powers who lost the war, not the Allied powers. The UK had to pay the US off for war loans, but that is a different thing entirely.
Anyway, the main feature of VAT is that, likes any sales tax, it is a regressive tax, impacting the poor more than the rich. Whether that is a good or bad thing depends on your political viewpoint.
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The whole point of a VAT (charged at every part in the chain) as opposed to a sales tax (charged only to the final consumer) is that there's a limit to how much you can increase the sales tax rate without rampant fraud at that one single point of sale. Serves 'em right that the VAT opens up new avenues for fraud as well.
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Cognitive dissonance. Democracies have taxes, voted on democratically by the people. Which part of that don't you understand?
Let me guess.. Freshman in college?
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And I live in Texas where I don't pay ANY income tax... (Just don't get me started on PROPERTY taxes)
Thank You, now get off my lawn, out of my county and don't choose to live in my state...
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The problem is if the seller is in one jurisdiction and the buyer is in another, whose job is it to handle tax? Even within the United States this is a problem, someone in one state buying something from someone in another state is supposed to play sales tax to their state for the transaction. In practice, unless this transaction is sufficiently government-documented (like vehicle titles for vehicles purchased from out-of-state dealerships)
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Good luck enforcing it.
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In addition, this is all clearly defined by HMRC.
VAT registration. [www.gov.uk] Basically you must collect VAT on behalf of the UK government if you sell in excess of £83,000 per year.
There is also a very helpful page [www.gov.uk] that outlines what to do if you are selling goods into the UK from outside, which is called "distance selling". Basically, if you sell under £70,000 of goods per year into the UK then you don't have to do anything.
Note that VAT is not duty and is a separate tax. Duty is payable on many items, a
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I should have added: in addition to paying duty on imported goods, you may also have to pay "import VAT". This page [www.gov.uk] explains it all.
PS: In my experience while their online documentation isn't too bad, HMRC are completely fucking useless to talk to. I once had a personal semi-complex tax query for them and rang them up, after being on hold for an hour I was connected to a staff member who was completely unable to answer the question in any way, and the only path to resolution was for me to put it in writing,
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Have you tried the IRS here in the USA lately? Shesh, I'm sure they give the Brits a run for their money in the bureaucracy of collecting tax department..
But you have got to admit, that the Brits know how to fashion a useless bureaucracy because they've been doing it longer than most of the modern world, dating back from when they really did have an absolute monarch as a ruler, who invented parliament as a useless "keep the masses from rebellion" gesture of zero actual import...Second, perhaps, only to th
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I always thought the ultimate threat was that due to the wide ranging powers of HMRC they have the ability to impound the merchandise, as well as the payment.
So yes, I see what you're saying, but they could certainly shut down your operation.
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While VAT has some similarities to sales taxes, it also has some fundamental differences. With a VAT scheme, the total tax on something that is sold at a retail outlet is collected at every stage at which "value" is added. With a sales tax, the total tax is collected when something is sold. By collected, I mean actually sent to the relevant tax authority (in a VAT scheme, the taxes collected from the customer at the point of sale and the taxe
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This.
"Value Added Tax [wikipedia.org]" would have taken up few characters and added a LOAV (Lot Of Added Value).
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Super high tax for Europe. Around 20%. Can't understand why anyone would want to skirt that...
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"Europe" has no taxation
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Article summary should define what this is..??
If there's anything to the Sapir-Whorf hypothesis, Europeans should have at least 400 different words for 'tax'.
Nexus (Score:1)
As ought to be with sales tax, the nexus of a sale for a VAT transation should be the seller's location, not the buyer's. Every seller has only one location or a small set of locations; in every event, the location is well known according to local laws. The task when trying to make the buyer's location the nexus of the sale for an internet transaction is extremely hard not just for ensuring that the taxing authority is the correct one but also for the bookkeeping of sending remittances the right way. It
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What about imports / duties? (Score:2)
Under that system you still need to deal with stuff like that selling over seas.
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Yeah, that whole "sellers, not buyers location" thing? We did away with that a few years ago here. And trust me, as someone who writes ecommerce software, this has been one of the largest fucking pains in the asses ever since. http://dor.wa.gov/content/find... [wa.gov]
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I get the impression that you don't know what VAT is.
Let's say that you have a widget shop in the US and a widget shop in the UK, and they both would turn a profit selling their widgets at $5 each. The UK decides that they need 20% tax money from the sales. Let's look at the different possible tax scenarios (US seller US buyer : UK seller US buyer / US seller UK buyer : UK seller UK buyer):
1) Seller's location, only on UK companies: $5 : $6 / $5 : $6
2) Seller's location, both US and UK companies: $5 : $6
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Actually, if the tax is based on the buyer's location, the responsibility for PAYING said tax to the necessary authorities should rest on the buyer, not the seller. So in this case, the UK resident buying stuff from overseas should be responsible for reporting and paying any local VAT to their government.
Of course, Given my location (in the USA) and our long ago settled issue with the Brits over Taxes (among other things), I feel strongly that I should be paying the Brits' VAT, unless I happen to be visit
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Maybe the responsibility should rest on the buyer, but legally they are not. It's the responsibility of Her Majesty's Revenue and Customs to collect VAT on imported goods, and the responsibility of the the seller if they are anywhere inside the E.U. Quite what happens if a good destined for the UK enters the EU at a port outside the UK is anybodies guess.
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Yeah we tried that.
The EU thought it would be a good idea. Small companies don't have the faff of dealing with lots of different vat rules, and large companies have regional sales offices do sales would be local. Turns out the didn't account for massive dickheads, i.e. Amazon.
Amazon thought it would be marvelous to book all sales though the lowest VAT region giving them a considerable tax advantage over bricks and mortar stores. Eventually and rightly, everyone got pissed off at their incessant freeloading
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in the EU in only gets to be the buyers location once a stores annual sale to a country exceeds some amount, i.e. small companies doesn't have to deal
with tax in multiple locations and big companies can't dodge tax by shipping everything from a low tax location
Kinda-ish.
In the UK, you don't have to register for VAT if you book less than 81,000 pounds of VATtable income (including things zero rated for VAT, but not of course non VATtable). That's not a small business, that's a *tiny* business.
As it happens I
Tax evasion is popular...News at 11. (Score:4, Insightful)
Wait, you mean to tell me those who don't like paying obscene taxes on goods the rest of the world enjoys VAT-free, try and find ways around it?
I'm shocked. Shocked, I tell you.
In related news, I wonder how many of those high-level regulators who are super-pissed about this problem also enjoy tax loopholes on a personal level.
Speaking of loopholes, any chance regulators from the Tax Haven of the Universe (Ireland) are super-pissed? They shouldn't be, since they harbor tax evasion on a scale most can't even dream of.
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I don't say "evasion". I say "avoision".
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It's a perfectly cromulent word.
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One just requires more planning?
Evasion = Oh look, if I buy this from there I can get it without taxes because the seller is out of country and doesn't know what to charge, sweet!
Avoidance = If I structure my life/business a certain way and move mailing and or physical addresses I can avoid taxes on all these transactions.
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both are legitimate tools to reduce government oppression of the individual.
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Wait, you mean to tell me those who don't like paying obscene taxes on goods the rest of the world enjoys VAT-free, try and find ways around it?
I'm shocked. Shocked, I tell you.
In related news, I wonder how many of those high-level regulators who are super-pissed about this problem also enjoy tax loopholes on a personal level.
Speaking of loopholes, any chance regulators from the Tax Haven of the Universe (Ireland) are super-pissed? They shouldn't be, since they harbor tax evasion on a scale most can't even dream of.
Oh if only you could have bothered to read the summary.
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making their total tax burden very high indeed.
We also get the NHS, free schooling up to 18, an old age pension and benefits to stop us dying of cold or hunger if we lose our jobs.
Oddly, these aren't free.
European consumers (Score:2)
They love to talk about their free social programs, but they hate paying for it.