Slashdot Mirror
UK Chancellor Confirms Introduction of 'Google Tax'
mrspoonsi sends this report from the BBC:
Companies that move their profits overseas to avoid tax will be subject to a "diverted profits tax" from April, the chancellor has said. In his final Budget before the election, George Osborne said firms that aid tax evasion will also face new penalties and criminal prosecutions. The so-called "Google Tax" is designed to discourage large companies diverting profits out of the the UK to avoid tax. "Let the message go out: this country's tolerance for those who will not pay their fair share of taxes has come to an end," Mr. Osborne said. In 2012 it emerged that internet giant Google avoided tax on £10bn UK revenue in 2011 by doubling the amount of money put into a shell company in Bermuda. Doing so helped it avoid £1bn in corporation tax. Under the new tax regime, companies with an annual turnover of £10m will have to tell HM Revenue & Customs (HMRC) if they think their company structure could make them liable for diverted profit tax. Once HMRC has assessed the structures, and decided how much profit has been artificially diverted from the UK, multinationals will have only 30 days to object to the 25% tax.
But is the 25% tax lower than what they'd pay if they hadn't diverted profits? Equal? More?
To actually discourage diversion of profit, wouldn't the penalty have to be higher, or at least equal to, what they're avoiding?
And does anyone not think that this will lead to tech companies having field trips to Hollywood to learn their style of creative accounting?
I like you, Stuart. You're not like everyone else, here, at Slashdot.
You realize that almost always the reason there's only one cable company is because of regulation, don't you?
That is not even close to true. Regulation is partly responsible for why there are so few companies laying wires, but lack of regulation is what is holding back more companies from selling services which use those wires.
The United States is almost the only country in the OECD which does not require the owners of broadband physical infrastructure to sell access to independent providers on a regulated wholesale market. This is almost the only reason our broadband speeds are so much worse and our costs are so much higher than other OECD countries. If we treated our broadband line like we do our telephone, electric, and gas lines, there would be plenty of competition. And using dozens of European countries as an example, the quality of our physical infrastructure would not suffer if this changed.
Local governments do enact regulations and fees which make building our physical infrastructure more expensive, but that would be even worse if the local governments didn't exist. Having to deal with hundreds of individual property owners per neighborhood instead of one local government per township would make it near impossible to build our infrastructure. We can at least try to reign in corrupt government.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
Those things those other EU countries are doing to attract business are ILLEGAL under EU rules. The double Irish violates some pretty major EU rules and what Luxemburg was doing was grounds to throw them out of the EU.
What the EU has discovered is that a united monetary and economic union doesn't work when individual states get to set tax and spending policy. Something that people have been warning about since it was founded. Almost all the EU's fiscal problems can be tied to this problem. Greece violated EU rules (and lied about it) while spending far more than they were allowed to. Ireland allowed companies to setup business and declare themselves not tax resident anywhere. The overspending in Portugal, Spain, Ireland and others that caused the huge bailout and austerity was precisely because of this problem.
The funny thing is that none of the solutions they've taken are actually solutions. They are band-aids over the problem. Until the individual nations are willing to hand over some significant banking and monetary control to the EU they are going to continue to have these problems. A system where Greece can basically create debt for German citizens isn't a workable solution in the long run and you see the problems it creates right now, which is a deep resentment between member nations.
Unlike Starbucks, who, at the very least need outlets in the UK to sell coffee here, Google could run everything from a single location anywhere in the world, yet still trade with any other country.
Except Starbucks UK Ltd can presumably buy their coffee from Sunbucks Bermuda Ltd (no relation, honest), and make a loss in the UK.
The fundamental problem with taxing corporations is that corporations are much smarter than governments. After all, if you were smart enough to make a lot of money in business, why would you become a politician?