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Former Soviet Republic of Georgia To Become IT Tax Haven
A few days ago we noted how Ukraine is driving out its software freelancers with the threat of onerous taxation. Now comes news that another former Soviet republic, Georgia, will become a tax-free zone for IT companies. It might be the Google translation, but it seems that officials there are somewhat worried about how to categorize the IT segment: "[T]he main difficulty ... is to determine which organization is the IT company, and what is not: 'While from a formal point of view it is impossible to distinguish between software developers from the oil.'"
heh
Damping absorbs vibrations. Dampening is caused by moisture.
So now our jobs go to Georgia?
It won't be good news for the US unless we lower taxes to Georgia's levels. While it is the low taxes that attract them, lower labor costs also are beneficial. Few US companies really want to outsource, but lower taxes + lower labor = profit. Many companies are willing to turn a blind eye to higher labor costs due to perceived quality benefits, but taxes simply harm successful companies so a successful company would want to move to someplace to lower taxes in order to get ahead.
Taxation is legalized theft, no more, no less.
While from a formal point of view it is impossible to distinguish between software developers from the oil.
When software developers screw up, they don't leave a billion barrels of their product on the shores of Louisiana.
Funny may not give karma, but +5 Informative never made anyone snort coffee out their nose.
At least with federal taxes. Georgia's limited state's rights can't usurp federal institutions like the IRS, so I don't think this will even work.
Perhaps it would be less confusing if translated into Swedish Chef.
I'm well aware that most outsourcing projects end up being huge disasters. It's obvious why that happens.
But even assuming it was possible for these third-worlders to develop software well (which, of course, it isn't), how can I be sure they'll respect the privacy of my source code? Will a contract alone really be enough to ensure that they don't deliver the code to me, and then turn around the deliver it to my competitors, for a fee?
Will I have to perform a complete audit of all code they create, just to ensure they haven't slipped in any back doors, for instance?
At least in America, there are laws and a somewhat-reliable justice system that can help enforce the contractual terms that the parties have agreed to. But do such institutions exist in places like India and Georgia? Not that I'm aware of. We always hear about corruption associated with such places.
So I'll continue to develop my code in America, even if it is slightly more expensive.
Suffer cyberattack from Russia, and potential real attack! Two for the price of none!
Yeah, you have lower quality work, but in many cases it is easily offset by taxes.
Taxes are a big deal but I've worked pretty closely with a lot of global sourcing and taxes are usually pretty far down the list of why companies outsource. Labor cost is by FAR the biggest reason in most cases. Labor for most companies greatly outweighs any tax burden no matter how profitable the company becomes. Some companies locate their headquarters outside the US for tax reasons (Tyco for example) but this is getting harder.
The main thing about taxes is it punishes you for being successful. The more successful you are the higher you have to pay in taxes.
The "main thing"? Taxes are nothing more than a punishment for success? Seriously? I don't think you've ever tried to start or run a company because the REAL punishment is a company that loses money. Having to pay tax because my company is successful is a problem I welcome with open arms.
The foreign workforce is usually decently educated, cheap and willing to work long hours because the standard of living is lower.
Educated? Generally yes. Cheap? Sometimes if it can be managed efficiently (not always possible) from a long distance. Long hours? Not in the top 20 and apparently not as long as those in the US.
Someone being paid US minimum wage in the US can hardly even afford rent, the same pay gives a person "middle class" status in third-world or developing countries.
Technically true but you need to learn about purchasing price parity. Goods don't cost the same everywhere. Also there are people who are equivalently poor in any country you care to name.
Is it a bad sign for my sanity that, when I read this in the RSS feed as "Former Soviet Republic of Georgia To Become I..." my first thought was "Former Soviet Republic of Georgia To Become Iowa"?
Sorry, but I couldn't let this pass because it's just entirely wrong. Successful companies are the ones who get tax breaks when deciding where to move or stay. They are the ones that grease the wheels in government to make sure they don't pay taxes, while less successful companies often still have to.
http://www.nytimes.com/2000/10/20/business/study-finds-that-many-large-companies-pay-no-taxes.html
http://sanders.senate.gov/newsroom/news/?id=712ae8a2-20d2-4334-abef-3191dd63fb59
http://www.actwv.org/press/Firms_Avoid_Tax.mx
True, probably not good news for IT workers in the US.
But (and I may be modded troll for this), we have it too fat and easy in the US. Whine about $3/gallon gas when we should pay what it really costs, which is much more. Most of Europe pays double that, or more. Higher oil prices won't wreck our economy, any more than piracy threatens art. Quite the contrary. Do us good. Maybe we'd never have drilled in the deep areas of the Gulf of Mexico. Recall how US tastes in vehicles shifted dramatically when gas briefly went over $4/gallon. Honda was the only automaker that did well. We have huge houses which seemingly serve only to enable us to pile up more stuff that we really do not need, not even in a peripheral way, unless impressing the neighbors with peacock like displays counts. Costs a lot to heat, cool, and clean all that space. The bursting of the housing bubble helped, but more is needed. I fear our competitiveness isn't what it needs to be, hobbled as we are with the incredibly high costs of our ongoing American pissing contest over who's richer and more influential.
I used to think that it would be good if the whole world was unified under one democratic government. No more borders or exchange rates, freely trade, travel, and work anywhere. Lots of benefits. But it was divided and fragmented Europe that advanced the most in the last millennium, not the far more populous, mightier, and unified empires of China, India, or the Islamic world. No European government could unilaterally choke off all trade, or impose crushing taxes, or squelch progress that might threaten established businesses. Whenever any did, they soon found themselves abandoned by whatever interests their policies hurt as there were many other places to do business, and quickly became weaker and poorer than their neighbors, and ripe for a takeover or revolution. Europe was way too competitive an environment for any one state to get away with gross stupidity for long. Unfortunately, since WWII the US can get away with rather more of that sort of thing than is healthy for anyone. We have these crazy regulations that have driven much security research out of the US. Our intellectual property laws are among the worst in the world. Many would-be tourists have good reason to stay away, and choose to go elsewhere. We can and do pursue harmful, market distorting policies.
Intellectual Property is a monopolistic, selfish, and defective concept. It is "tyranny over the mind of man"
Is it a bad sign for my sanity that, when I read this in the RSS feed as "Former Soviet Republic of Georgia To Become I..." my first thought was "Former Soviet Republic of Georgia To Become Iowa"?
I'm very sorry but you have a brain tumor, and it's terminal so smoke if you got'em...
Also depends on where in the US you are. We're in a smaller college town and we can pay developers about 2/3 rd's as much as the nearest "big city" and developers still make pretty good lives because cost of living is relatively cheap.
"The problem with socialism is eventually you run out of other people's money" - Thatcher.
Like we've seen time and time again with India, no, they cannot write software as well as Americans, Europeans, the Japanese, and Australians can.
Your nationality has little to do with the quality of code you can write.
I guess you also believe that the Chinese cannot manufacture products as well as Americans can. I'd argue that they definitely can, but if they did that, then your kids wouldn't have fewer toys to play with because they would cost you more. As long as you buy cheap, poorly manufactured goods from China, they will sell it to you.
Similarly, when you are willing to pay what you would pay an Australian, European or a Japanese programmer, let me know. I will find you an Indian who is as competent.
Cheers!
Atheist: Buddhist in a Prius
your kids wouldn't have fewer toys
The should be "would have fewer".
Cheers!
Atheist: Buddhist in a Prius
The news article is about Georgia becoming a tax haven for IT and also about taxation problems IT companies in Russia are facing. The quote is from Russian officials speaking about the IT industry in Russia, not in Georgia.
Apple has "Mac vs PC", Microsoft has "Laptop Hunters", Linux has recession
I don't know if it is just that, as talking to an Indian coder who moved here (really nice lady BTW) she said a lot of the shitty code problems with India have to do with the culture. There she said you NEVER question a higher up, ever. It doesn't matter if you know what you are doing will never work, that it is just a huge money sink, nobody will say anything because you just don't question authority there.
She said she'd take American coders over her countrymen any day because they will be more than happy to point out the bad ideas, and often will come up with better ones to replace the bad ones. She said the only problem she had with American coders were the "cowboys" that did everything by the seat of their pants and wrote lousy comments in their code, which made them hell to deal with when they moved on.
But never underestimate the effect of culture on the work, you can't just expect to go to some country and get a "cheaper American" which is what all these companies that jumped on the outsourcing bandwagon seemed to expected.
ACs don't waste your time replying, your posts are never seen by me.
You're a moron.
The reason outsourcing development has little to do with whether or not people in third world countries 'can' write good code, and everything to do with the fact that paying someone for each line of code, without any relationship to if the code actually works or solves the problem, is just incredibly stupid.
It results in companies hiring people to code straight out of a book, and producing nonsense. It's cookie cutter shit, the sort of stuff you'd get if you kidnapped a bunch of freshmen CS students and forced them to write programs.
You cannot have unskilled software development, and that's what the offshoring coding houses are doing, with a few skilled guys to actually communicate with everyone else.
There's probably, statistically speaking, as many skilled coders in Indian...but they're working for actual Indian software development places that develop their own software. But Indian has managed to invent the equivalent of fast-food jobs in software, and Americans are dumb enough to buy the results. That doesn't mean that Indians can't actually cook....it means stop ordering from McDonalds if, you know, you want actual normal quality food.
If corporations are people, aren't stockholders guilty of slavery?
Same way you can speak English with an accent, stupid. Think, even in the USA you have many accents on the SAME language. A New Yorker accent, Brooklyn accent, country-hick style accent, southern drawl accent, California surfer accent...
Attention... all grammer nazi"s! Is they're anything; wrong with: my post,
No, you're thinking of the airport in the south of the US.
This is over in Europe. Or Asia. Or, possibly, both, or neither.
If corporations are people, aren't stockholders guilty of slavery?
He speaks perfect russian with no accent
Yes, but can he speak French... in Russian?
Attention... all grammer nazi"s! Is they're anything; wrong with: my post,
That doesn't explain how you can speak Russian with no accent. It's impossible to speak any language without an accent. It doesn't matter what language you're speaking, the only people who think you haven't got an accent are the ones who speak with the same accent.
When your speaking with 'no accent' it means your speaking in the local style accent which no one there will notice. It helps you blend in and feel more like 'one of us'. And to the locals, your speaking with 'no accent'.
Attention... all grammer nazi"s! Is they're anything; wrong with: my post,
When you eliminate the impossible, whatever remains, however improbable must be the truth. Since you know "no accent" is impossible, but "no foreign accent" is possible, then why assume the impossible and ridicule it, rather than taking the reasonable reading of it where "foreign" is assumed?
Learn to love Alaska
When you eliminate the impossible, whatever remains, however improbable must be the truth.
No it mustn't. Whatever remains must just be possible - which isn't the same thing as "the truth" at all!
Since you know "no accent" is impossible, but "no foreign accent" is possible, then why assume the impossible and ridicule it, rather than taking the reasonable reading of it where "foreign" is assumed?
Because "no accent" is what was said, not "no foreign accent". If we're not discussing what's actually written, why not why not assume it meant "no Russian accent"?
That's mostly because of taxes, not because it's for some noble green goal. In a way it's somewhat beneficial since some of that money flows back to improving or creating infrastructure where needed and people take mileage into account more than sheer size and weight, but the number of BMW X5s and other steel "compensation" fortresses I see on a daily basis is still pretty depressing, and it's not clear that the money for gas goes towards that goal.
On the other hand, it also means electric vehicles aren't being developed as fast as they could've been; because of the better average mileage, there's less need to upgrade.
The Netherlands, where I live, would be an ideal test bed for "commuter" vehicles; light-weight 2 person cars with great styling and streamlining. All small cars with good mileage look like pugs that smacked into a wall, all streamlined cars guzzle, and people dislike public transportation but drag the weight of the extra seats in the back with 'm. It's too bad the Volkswagen 1L isn't on the market yet; while not looking like a sports car, its mileage alone would probably already win a lot of hearts and minds.
Oil floats on water.
What also floats on water? Witches!
Software developers are invariably male (just look at slashdot).
Men are not witches.
Thus software developers do not float.
So, to determine whether to tax it (non-IT) or not tax it (IT), throw it in the ocean (or Black Sea).
If it drowns, it is IT, so don't tax it. If it floats, clean it up and send the bill to BP.
QED.
About 4
At first Georgia is fast gworing with economy, out of corruption, ZERO mafia (some in here sad that russian mafia is in georgia, i guess georgian mafia is in russia :) ):
From 2003 to 2010, after rose revolution georgia get:
1. GDP grow from 12%
2. Industry income grow for a 1200%
3. Building industry product grow for a 800%
4. Overall grow of trading 600%
5. Communication sector grow - 400%
6. External turnover grow - 900%
7. Import grow - 900%
8. Export grow - 500%
9. xternal debt rose by only 10%, in 2003 was 600 of common income, now is less
10. Average salary grow - 600%
11. Unempoyment grow - 14% from 12%, even after 2008
12. Corruption ranking - from 133th (near russia) to 58th
Literacy Level - 100% (only one and #1 in ranking)
Ease of doing business Ranking:
2009 rank - 16th
2010 rank - 11th
1. Infrastructure
2. Workforce availability
3. Culture of working
#4. Political stability
5. Religious stability
6. Social stability
7. Corruption
8. Legal system
Georgia is missing only political stability because of attacks of instable neighbours, but according to US military bases establishment - now it should be ok. Regarding others - Georgia is trying to get very close to the EU, so country is changing its legal system and standarts according to EU requests.
Mentality - out of USSR, hating USSR, hating Staling, working, learning, management, clean, literal, educated, traditionally guests are best friends, beer :)
IT/telecom access technology grow (@home result you can feel):
Y2002:
Dial-up, 1 hour = ca. 0,4 USD, 56k
Mobile: 2G, ca. 0,2 USD per minute
Y2010: :)
ADSL/ADSL2+ (one of the first countries implemented, available even in villages) = unlimited, 50 USD per month
Fiber to the home (available almost everywhere in big cities) = unlimited traffic, 100mbps to gbps local connection, 10bmps - 100mbps global, 50 USD per month
4G WiMax Mobile = unlimited traffic & speed, 50 USD per month, closing due other technology evolution
3.75G EV-DO CDMA Mobile = unlimited traffic, up to 3mbps speed, 30 USD per month, ca 70% coverage
3.75G UMTS Mobile = ca 50% coverage, 100% in cities, 0,02-0,3 USD per MB
2.5G GSM EDGE = ca 90% coverage (available everywhere), 0,02-0,3 USD per MB
Dialup - not available
Someone said something for labor cost, ok, if you believe that IT guy cost is big in georgia (actually its both - there is a scaled price range), then you can get additional workers from neighbour countries like armenia and azerbaijan, or even take indian guys in there...
Some ad videos:
http://www.youtube.com/watch?v=ynihqPoG0Wk
Capital:
http://www.tbilisi.gov.ge/index.php?lang_id=ENG&sec_id=1
http://www.youtube.com/watch?v=ax5xPZ5BZOA
Batumi (second growing city), was in communistic ruines, now growing:
http://www.youtube.com/watch?v=3HOa15Inzr0
Banking grow - oh, don't tell me about that, you can even compare to EU, especially in social needs like searching for ATM, absolutely no problem
"It feels like I'm at the Zoo when reading this thread - I'm frightened, but it's interesting" (c)
[T]he-a meeen deefffficoolty... is tu determeene-a vheech oorguneezeshun is zee IT cumpuny, und vhet is nut: 'Vheele-a frum a furmel pueent ooff feeoo it is impusseeble-a tu deestingooish betveee sufftvere-a defelupers frum zee ooeel.
Do I have to actually live there?
SJW: Someone who has run out of real oppression, and has to fake it.
I'm always wary of figures for growth. Start from fuck all and growth is infinite.
I've seen the adverts for Georgia[1] on BBC World (or maybe it was CNN), and they go on about being "most improved" in some measures of honesty. All that means is that quite recently they were even worse.
[1] Yes, countries advertise on those channels. Don't get me started about "Malaysia, truly Asia!".
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Russian is my mothertongue and Google has an acceptable translation of the article (originally in Russian). The OP has got the citation in a wrong context. Second part of the article is almost completely dedicated to the situation in Russia and its dominant oil export industry.
FYI: Some are talking about the "oil damnation" of the country in Russia a.k.a. as Dutch disease. Good news is that current Russian President openly aknowleges it in a way. Shifting weight of the Russian export from natural resources to the innovative and industrial production is a topic for active discussion in Russian media. This is the context of that problem.
...a stunned silence fell upon the hall.
So if you'd need to impeach Obama, Georgia is a place to go to?
...a stunned silence fell upon the hall.
If there is only one past and you can eliminate all impossible pasts you end up with one and only one option; what actually happened.
I foresee a whole bunch of oil companies buying small IT companies in Giorgia and becoming their child companies :) What's that? We make billions of revenue from oil? So, we also make websites for medium and small businesses - see? :)
Bow before me, for I am root.
Disclosure: I'm a certified accountant.
Secondly, income taxes of employees have nothing to do with tax burden of the company. Company simply pays the employee's salary and that's a simple expense.
Not true. FICA taxes are shared between the employee and employer. Furthermore the only type of company that pays tax as a company is a C corporation. All other types of corporate tax are actually passed through to the shareholders and are paid as personal income tax. Also don't forget about the administrative cost of withholding and reporting all those taxes. That is a significant cost to the company as well.
Companies pay taxes on *profits*. If they have profits, they pay taxes. If they have loses, they get their taxes back from previous years.
Again, not correct. If a company can declare a capital loss in some cases they get a deferred tax credit which they can use to offset future tax obligations. They do not get a refund of any kind.
Only people that complain about corporate taxes are people that never actually run anything.
I can't begin to tell you how much complaining I've heard about corporate tax by management of corporations. It starts with the fact that owners of C corporations are effectively taxed twice on company profits - once at the corporate level and again at the personal level.
Because "no accent" is what was said, not "no foreign accent".
So?
If we're not discussing what's actually written, why not why not assume it meant "no Russian accent"?
Because that would be stupid. You are purposefully taking the absolute worst possible interpretation of the words possible, then asserting it to be the only one. "No accent" is impossible. So, what's the most likely meaning of that? "No foreign accent." If you have another plausible meaning, share it.
Just because someone says something you don't like doesn't mean it's wrong. Everyone else understood it but you choose not to, even when explained to you. So why? Are you of the camp that language is prescriptive and not descriptive? You choose to be an ass because you like to bash others when you are the one that's wrong and they aren't? I can't figure out why you are holding to your illogical argument.
What was actually written was that someone spoke a foreign language without an accent. That means (apparently to everyone but you) that they don't speak it with an accent that reveals that they are a foreigner. There is no ambiguity in that. There is no other plausible meaning of that. So I can't see your objection other than you are an asshole that gets joy from running around being a grammar nazi (and a wrong one at that).
Learn to love Alaska
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I definitely acknowledge the effect of culture on an individual's output. And I'd also say that from observation, Indians certainly are more hesitant than Americans are to question authority. However, I doubt that that changes whether they are competent or not.
As a counterexample, I'd claim that (again, from observation) that Koreans show a much greater tendency to defer to authority than Indians do. However, from a technology standpoint, that does not affect their productivity or quality of work.
Suits will find ways to mismanage any kind of employee. Even in India for example, the Mercedes Benz plant in Pune consistently ranks near the top in their quality tests (much higher than US plants). I suspect it has something to do with Mercs being sold for roughly the same price in both countries.
You certianly get what you pay for - with a little margin of error :)
Cheers!
Atheist: Buddhist in a Prius