Leading article: Offshore tax deals - legal but wrong

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How about a "Double Luxembourg", or perhaps a "Double Irish", or even a "Double Irish Dutch Sandwich"? When it comes to avoiding corporation tax, there is certainly no shortage of options. The scandal, therefore, is not so much that Amazon pays barely anything to the British exchequer in relation to its £3bn-plus UK operations; the scandal is that such elegant accounting two-steps are entirely legal.

Lawful they may be; but they are also wrong. Amazon explains its structure on the grounds that its European headquarters in low-tax Luxembourg oversees Continent-wide operations, while individual national subsidiaries are simple "order fulfilment" functions. Fine. But the fact remains that the profits from the UK business – which is run through a .co.uk website, staffed by more than 2,000 British workers, dependent on British infrastructure, and built on the purchasing power of the British consumer – are thereby siphoned overseas.

More damaging still, the arrangement gives Amazon an appreciable – and unfair – advantage over its UK corporation tax-paying high street competitors, no small number of which are struggling to survive.

Amazon is not alone. Vodafone, Boots, and Philip Green's Arcadia group are just a few of the big names that have faced criticism over their advantageous international structures. And Google not only has a European headquarters in low-tax Ireland but channels the vast majority of the division's profits to another subsidiary, in almost-no-tax Bermuda.

The Chancellor is right that Britain's future prosperity relies on the continuing success of our world-class services sector, that only by fighting tooth and nail for international business will our economy rise on the wave of globalisation rather than be swamped by it.

But tax rules that effectively subsidise mega-corporations are not the way to go about it, even if they are an incentive to create UK jobs. George Osborne has, quite rightly, made a big noise about clamping down on avoidance. Top of the list must be changing the rules to ensure that profits made in Britain are subject to British tax. No more Double Luxembourgs, please.

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