Slashdot Mirror
Italy Approves 'Google Tax' On Internet Companies
recoiledsnake sends this news from Bloomberg:
"Italy's Parliament today passed a new measure on web advertising, the so-called 'Google tax,' which will require Italian companies to purchase their Internet ads from locally registered companies, instead of from units based in havens such as Ireland, Luxembourg and Bermuda. Google, for example, says that it sells nearly all its advertising in Europe from an Irish unit, leaving little taxable profits in the countries where its customers are based. That unit in turn pays royalties to a second Irish subsidiary, which says its headquarters are in Bermuda. Google last year moved nearly $12 billion to the Bermuda unit, the majority of its worldwide income, cutting more than $2 billion off its global income tax bill. Google's Italian unit last year reported total income taxes of just 1.8 million euros, corporate filings show."
Given the global fiscal debacle, I wonder what took so long. Countries simply cannot afford to leave that kind of money on the table when they have massive debt and double-digit unemployment.
Pain is merely failure leaving the body
When Google sells some ads to an Italian company, it is not really a Bermuda company conducting business. Deeming the transactions to take place in the location of the customer isn't the only possible rule you could come up with, but it's a vaguely sensible one, and at least more sensible than the status quo.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
I expect sociopathic behavior out of corporations, who seek to optimize their income in a shallow way (building up the countries they're in will increase income too, but corporate monetary thinking is very short-sighted) and take advantage of any system that they're in. So governments need to pass laws to prevent that kind of behavior.
My only concern is that when the laws get too complex, endless loopholes will be found. They need to have a very streamlined definition of corporate income that doesn't leave much room for the kind of semantic wiggling that Google and others are using in these situations.
The problem, however, is that it may run afoul of European law by discriminating between national and European registered companies. It will depend heavily on the exact wording and application of the law whether the EU will allow it. /that/ is a hard thing to do with all the lobbying going on. Maybe it is time that the tax-systems get better harmonised between EU countries and sanity can be implemented (I know, utopian thoughts, but still).
The loophole should be closed on EU level, but
Perhaps companies that want to do business in country X end up paying taxes in country X instead of trying to scam their way out of it? Government is not free, and nor is it superfluous.
You were so busy stuffing words in that guys mouth I wonder where you got the spare time to build a strawman.
If taxes were zero, many corps would still look to see who will give them the largest corporate welfare package.
If people in Italy are paying money for something, then the income comes from Italy and should be taxed in Italy as income. If Italian products are being advertised to Italians, then the service tax on the adds should be paid to the Italian government. We need to very carefully define where things are happening on the internet, there is a lot at stake for the world. Also it should not be legal for companies to put a clause in their EULA selecting a legal jurisdiction of their choice, when neither the customer nor the company are actually doing anything in that jurisdiction.
A better solution would be for Italy to simply lower their taxes until it did NOT make business sense to go through such contortions to avoid them anymore.
Because the race to the bottom has been demonstrated to be such a great idea in all other areas, yes? Healthcare, social security, heck anything with humans in it.
No, states should not have to compete. When you make business in a country you ought to pay its taxes, period. Tax evasion like this should be illegal, and if Google or anyone else doesn't like it - well, nobody forces them to sell ads in Italy.
Assorted stuff I do sometimes: Lemuria.org
look man I'd agree with that ONLY IF GOOGLE DIDN'T HAVE FUCKING SALESMEN WALKING AROUND IN ITALY.
but they do. that's all what the local offices basically do, selling advertisements and finding customers for the ads.
if the sillyness doesn't stop then soon enough I while in europe I won't be buying from my swedish/finnish/german/whatever grocery store even if I go into the store.. they'll just technically make the business of buying happen in Ireland... and the store is just a "showroom" and a "delivery cache".
world was created 5 seconds before this post as it is.
If Italian products are being advertised to Italians, then the service tax on the adds should be paid to the Italian government.
Why is that so, if all of the equipment the ads are served from is not in Italy?
Are you saying (and you are) that someone in Italy who wanted to advertise on a popular blog hosted in the U.S., should not be able to do so? Or that the blog owner should be required to pay taxes in Italy even though all costs are incurred in the U.S.?
It's not like the person in Italy it not already paying taxes on his internet connection. It's not like they would not pay taxes if they bought something from the ad. It's not like the company who bought the ad is not paying Italy corporate income tax anyway.
It makes no sense that someone operating in a totally different state should have to pay any taxes at all based only on where someone is browsing from, or who buys services from them.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Are you trying to say Google is the result of low US taxes? That is such a load. Californian taxes are HIGH. If next you come back telling me "but Bermuda..." I'll have to point to what you said and ask how Bermuda tax rates have anything to do with the tax policy of the country the company is in?
Next go and watch this video about the history of the Silicon Valley and go away with your propaganda: http://www.youtube.com/watch?v=ZTC_RxWN_xo
Isn't it against European Union laws on freedom of cross-border trade or what's it called properly?
Agreed, as another example:
Google Argentina S.R.L. is an actual company. You can see their data here:
http://www.cuitonline.com/detalle/33709585229/google-argentina-s.r.l.html
Their credit status:
GOOGLE ARGENTINA S.R.L. CITIBANK N.A. 10/13 1 1733,6 N/A -
(means Google took a loan from Citi for ARS 1.73M or USD 300,000)
AFIP (federal tax agency) reports Google Argentina SRL has a few tens of employees.
So. Why should they NOT pay taxes in Argentina, if they are a registered company, with employees, who enjoy the benefits of being a company here (for example, they can take a loan). And they make their profits here and send them abroad completely untaxed.
I hate paying taxes as much as anyone else. But what google does is not fair game. It doesn't allow companies to develop within the country: I'm pretty sure the first ting Larry and Sergei did wasn't exactly to register their company in the Cayman Islands. That was later, when millions already poured in, and creative accountants took over. They are simply exploiting a loophole.
Lots of comments come here from americans, who are very loud about anti taxing, and yes, I fully agree that paying taxes sucks, but you have to understand this: the US prints the world's money. Italy doesn't. All international transactions are made in USD. Italy (and any other non-US country) loses money from their reserves to pay google. Google takes this money offshore. They do the same in the US, but it doesn't matter, as the US simply keeps printing more and more money to compensate (why do you think the USD is so devaluated?). Another thing to notice is that in most of the world, "technicalities", the really nitpicky details you see in police procedural dramas, don't apply. In most of the world, a cop doesn't have to read your rights. And laws are thorough and redundant, leaving little room for argument. And no, lawyers don't have a sexy job of sweet talking a judge. It seems most of you understand that judges rule according to how nicely a lawyer puts his arguments. That's complete bullshit, at least outside the US. A judge won't accept crap like "the suspect crossed the state line as he was firing so technically he fired from another state and his trial is null here".
Making really stupid observations such as "the physical servers aren't in Italy" is incredibly shortsighted. Google is providing a service, and making money. They should pay taxes *LIKE EVERYONE ELSE*. By no means i say google should pay more, or less. I'm simply saying they should. Along with amazon, and any other company that makes not millions, but billions a year and pays ridiculous sums. They get to subvert the system, make a country lose millions every year in both reserves and lost tax money, unemployment from local companies that go broke because of the unfair competition,etc.
This is just the beginning. Most countries will start applying restrictions like this to international companies once the volume becomes big enough. It's not a problem if a few thousand people across the country make purchases. But it is when millions do every day.
> If Italian products are being advertised to Italians, then the service tax on the adds should be paid to the Italian government
A contemporary, but yet outmoded thought, in my opinion. The internet really shows exactly how old
fashioned this line of thinking is.
What is italy ? The idea that a patch of land and history forms a magical entity which give a small group
of people the right to tax and control the people living therein seems entirely arbitrary to me.
People both within, and without italy, can access servers both within and without of italy's current ground boundaries.
The goods and services and even idle chatter moving over the internet can be in any language, sold in any currency
or other unit of account, or even be given away for free.
Why should the italian government have any special purview over what is bought and sold over the internet ?
Who's to say whether a specific ad targets italians or not, the language ? What if the ad is in english, would it still
be considered to target italians? What is the advertized product is not sold in Euro's, would it still be taxable and
subject to these regulations ?
How about a product, made in china, sold to an italian speaking community living in london, hosted by a server .info domain name; how many of these variables
which physically resides in sweden, and has a
have to change to make it subject to these new rules?
Careful with your words... as you are accusing the lot of them of crimes.
Tax evasion is illegal in most locals... tax avoidance is not.
There is a difference, look it up.
This law simply makes tax avoidance a little harder for some in certain circumstances.
Help Brendan pay off his student loans
You do realize that most countries tax a corporation on its profits, not on its turnover, right? So, it is not the $5000 price per good that is taxed, but the $1000 of profits. And that the corporate tax rate is quite low, compared to income tax. Where I live, corporate tax has been reduced from 50% to 25% over the last 30 years. And guess what? 30 years ago corporations did turn a profit!
The truth may be out there, but lies are inside your head
Your initial statement was a bit more important than you may have thought. At a 0% profit rate, ANY business would have to do something or face being driven out of business. And at a 100% tax rate, well, it would be close to impossible to run a modern business, so the point is moot.
You argue that any tax increase on profits will be sent directly to the consumer. This, however, carries a number of implicit assumptions:
1) Increasing the price will not impact sales: Increasing the price by x% may make fewer consumers buy the product, decreasing the sales by y%. This could easily lead to lower total profits for the corporation.
2) No competition: Competing companies may opt not to increase prices and be able to undercut prices. This allows them to build a larger market share by attracting the customers of those corporations that increased prices.
Regarding your arguments on cutting cost, this will happen regardless of taxation. Any corporation in a Capitalist economy will look for ways to minimize costs in order to become more competitive and drive out competition.
The truth may be out there, but lies are inside your head