mustang1
Guru
- Location
- London, UK
It is illegal because it violates transfer pricing rules because it violates the arm's length principle. It is usually not easy to police, however.
This is going beyond my understanding so I had to Google TPR and ALP (I still dont think I fully get it but...)
I saw TPR as a way for Amazon (as one example) to reduce the amount of tax it pays. If the UK govt (in this case) does not feel Amazon are paying the right tax, then Amazon is charged a penalty. I _assume_ this penalty is being, or has been, paid, but some ministers are still unhappy because they feel they can get even more from Amazon in taxes. So it still looks to me like Amazon are within the legalities of the law, otherwise instead of the newspapers running with the stories, the courts would be.
Again I googled this and dont fully get it, but ALP is when a subsidiary company benefits from the main company when the main company sells products to the subsidiary company at a price lower than any third company can supply the same product? If I understood that right, it seems ok to me. Incidentally if this is along the same lines as Microsoft bundling Internet Explorer within Windows, I was on MS's side (sorry OP to expand on your thread). If for example you are my friend (of course you could be) and I sold you a product cheaper than I would on the open market, I would see that as fair. Does ALP imply that is not the correct thing to do?
EDIT: 1. spelling mistakes, 2. Instead of Amazon, I meant to write eBay (I think there was an Amazon thread I was following and got mistaken with that one.