No right to reply: Etsy

With the second regular series after Get in the bin, I’m going to be applying a little truth filter on the public statements that companies make in response to criticism (because they’re often bullshit).

Today’s victim perpetrator (let’s get it right, everyone), is Etsy.

This week, The Guardian published an article about how Etsy, which describes itself as “a community doing good”, paid only £128,000 in corporation tax on sales of £160,000,000, thanks to booking most of their UK sales through their Irish subsidiary.

For more information on their tax avoidance mechanism and how much tax they would otherwise have been liable for, the article is a great read. But I’m interested in the right to reply that usually appears at the end of these things. So let’s take a look.

An Etsy spokesperson said the company had “paid or accrued for any known and material tax obligations in compliance with current cross-border tax laws.”

This just means they physically pay the tax bills they are presented with. Which, if they didn’t, they would be sued in court. So it’s a moot point, really.

“Cross-border corporate tax law is extremely complex and Etsy is committed to paying our fair share”.

This line introduces an abstract concept: fair share. Fair in whose eyes? Are they saying that they think the tax rate is too high in the UK? I mean, why else would they funnel their UK sales to their Irish entity? (Obviously I think they could be a little more committed).

“Ireland is the location of our international headquarters, where we employ dozens of people who support our international community across many critical business functions, like software and product engineers, payments operations, technical project managers, and member support.”

Wow, did you hear that everyone? They employ literally dozens of people in Ireland. I work for a business that employs hundreds of people and let me tell you, its revenue is significantly less than £160,000,000 a year. The fact that Etsy employs some corporate staff in Ireland has nothing to do with it.

“Etsy said it endorsed the OECD’s attempt to “create a more equitable and simple model” for cross-border taxation and added: “We are very supportive of a global consensus on how to tax the digital economy even if our tax bill increases.”

This is the second time they make the implication that cross-border tax in its current state is complicated. Which, I mean, is sort of true. But if it’s a simple tax scheme you’re after, you could just…pay the tax…in the same country where you make the sale…? Duh?

Anyway, time to apply the truth filter to the spokesperson’s words:

Fixed your statement:
We do not break the law. We incur tax in Ireland because it’s got a lower tax rate than the UK, even though that’s where we make most of our sales. We do this because it’s our fiduciary (but not ethical) duty to increase value for shareholders by paying the lowest amount of tax through legal tax avoidance schemes. Because we sometimes get criticised for this, we’d like to remind you that we have some staff in Ireland. Naturally, if regulators come up with different tax rules and force us to follow them, we will follow them, because we do not break the law.