[wfaler]

The rule generally applied, which I think is a sensible one, is that you pay tax in a country on profits derived from it IF you have a permanent place of establishment there (branch office, sales office, retail outlets etc). This means a company that has no physical presence in a country but sells products digitally there has no taxes due (except sales tax/VAT in the EU in some cases if over a certain threshold).

The issue in the case of Amazon, Starbucks et all in the UK right now is that these companies DO have a local permanent establishment, but manage to minimize their corporate tax through a mechanism called "transfer pricing", whereby they pay their sister branches in lower tax jurisdictions license fees etc for using brand, IP, software systems etc, thus increasing their tax deductible expenses in the high tax jurisdiction (UK).

What's useful to note is that none of this would be possible without double taxation agreements and the EU, both which successive UK govts and tax authorities have painstakingly and explicitly negotiated and agreed to. If there are no double taxation treaties, taxes for cross-border payments would in fact be quite punitive (withholding taxes etc).

It seems to me the UK govt thought they would benefit from these agreements when they where originally negotiated, but it has not turned out to be the case. The whole "moral outrage" is just the government passing the buck on a ball they themselves dropped.

As a side note, I don't believe moral outrage is conducive to the rule of law. These multinationals follow the letter of the law and have no further obligations. If the government thinks otherwise, they should renegotiate their positions and stop pointing fingers at others for a ball they dropped.