EU Unveils Plan To Force Facebook, Google and Amazon To Pay Their Fair Share of Tax (independent.co.uk)

An anonymous reader quotes a report from The Independent: The European Commission is bringing forward plans to make major multinationals such as Google, Amazon and Facebook disclose exactly where and how much tax they pay across the continent. The plan was expected to include rules requiring businesses earning more than 600 million euros a year (nearly $700 USD) to open up their tax affairs to public scrutiny, revealing their profits and accounts in every country in which they operate within the EU. Since the Panama Papers, a new clause has reportedly been added to require the companies to say how much money they make in so-called "tax havens." A final, more general statement would reveal profits in the rest of the world, treated as a single item. The plans will be presented by Britain's EU Commissioner, Lord Hill, who told the BBC: "This is a carefully thought through but ambitious proposal for more transparency on tax. While our proposal on [country-by-country reporting] is not of course focused principally on the response to the Panama Papers, there is an important connection between our continuing work on tax transparency and tax havens that we are building into the proposal."

Comments

Won't solve anything

[DNS-and-BIND]

There is this fallacious, persistent belief that if somehow the EU could get hold of more money, all their problems would be solved. This is not the case. When a government, at any level from local to supra-national, gets more money, what happens? They blow it immediately on stupid crap, or use it to fortify their own power. Then, the money is gone and it will never come back. However now that they are used to the higher income level, the quest for more money begins anew.

There is a wonderful short story, called The Rocking Horse Winner, about just this situation. I urge all of you to read it, it's only 5-10 minutes and is well worth the time. More money doesn't fix anything, it just generates demand for even more money.

Re:Won't solve anything

[Anonymous Coward]

Name problems that have been solved by offshore billiionaires skipping on taxes.

Re:Won't solve anything

[silentcoder]

One local libertarian author cited Estonia as the reason we should ONLY care about those the Panama papers implicated in huge atrocities and actively help people dodge taxes. Estonia he says, has built their post-cold-war economy on being a tax-haven which has attracted lots of "investment" as foreign companies headquartered there to pay the low tax, and given the government lots of money to inject into the local economy which then thrived (a very unlibertarian idea that last part but libertarians have never been known for their consistency they'll break every rule they claim to believe in when the beneficiaries are already rich and libertarianism should be more properly known as neo-aristocratism).

Here's the thing he did not, however, consider. At the last G8 meeting, the African Union made a representation in which they said that Africa would gladly forgo all foreign aid - if the G8 agreed to pass harmonious laws to prevent their companies from avoiding taxes when doing business in Africa. It was a smart thing to say too - the taxes lost from taxable business in Africa every year through avoidance is almost 40 times what the continent receives in aid. If every African country cut it's corporate tax rate in half (and most are already among the lowest in the world - here in South Africa the corporate tax rate is less than 3rd of the individual income tax rate) and gave up all foreign aid - but those taxes were actually paid, Africa would be debt free in a year - and every African country would at LEAST tripple it's GDP even if it was so corrupt that 90% of the money was misspent (the actual levels are nowhere near THAT bad) - the remaining 10% invested would all but eradicate poverty on the continent.

So that changes the picture: Estonia has not had a "sound and clever economic policy" - they've enriched themselves not by producing anything, not by selling any resources of value - but by stealing the taxes due to the governments charged with caring for the poorest people on the planet. Every dollar Estonia make in foreign tax, is an African child going to sleep hungry tonight.

There is no reason this should be encouraged, supported or legal.

Re: Won't solve anything

[Half-pint HAL]

Corporations earning money and paying other countries for the services and infrastructure that THOSE countries provide at lower prices - that is, like, SO unfair! You may say that "taxes are theft" as a general attitude is extreme, but this particular tax initiative is most definitely theft and nothing more.

May I direct your attention to Starbucks? Starbucks have traditionally paid practically nothing in taxes in any country in the EU. They achieved this by putting all the profit onto their beans -- all Starbucks Whatevercountryorother LLC/Ltd/GmBH subsidiaries have to buy official Starbucks coffee, which is a 100% closed market. Starbucks coffee for Europe is sold via Switzerland, but the coffee never even enters the country. Starbucks' operation in Switzerland is just an office that subcontracts most of the work out. The actual operations of the company are not built on Swiss services or infrastructure.

Or how about Amazon? For most of Europe, we buy our goods from Amazon's Luxembourg operation, and they subcontract "fulfilment" to a local Amazon subsidiary who then ship it out. The goods are never in the physical possession of the Luxembourg company, and never ever visit Luxembourg. I could order a product that was designed and made entirely in Scotland from Amazon, have it delivered to me here in Scotland from an Amazon UK site in Scotland; the item would never have left Scotland at all, and yet I've allegedly bought it from a Luxembourg-based company. Again, the services and infrastructure that the business relies on are not merely based in Luxembourg -- the majority of it is not. And yet the UK tax evaporates.

Part of the point of laws like this is to level the playing field -- small specialist webshops are constantly being crushed by the likes of Amazon. Not only because of Amazon's natural economies of scale, but because of the manufactured economy of profit exporting.

Re:Won't solve anything

[JaredOfEuropa]

It's not (only) about getting more money for the EU or member states' governments. It's also about making them pay their "fair share" so others will have to pay less.

Now in almost any context I abhor that phrase "fair share", usually there is nothing fair about it. But in this case we're also talking about fair competition. Evading taxes is an expensive game that requires expert knowledge and a fair amount of money to set everything up, but it is also something that benefits enormously from economies of scale: it may cost $5.000 to hide $10.000 in profits, but only $50.000 to hide $1 billion. That puts tax evasion out of reach of small and medium enterprises, who will have an even harder time competing with the multinational giants if they are forced to pay the taxes thet the big boys can evade.

Re:All tax is immoral

[Anonymous Coward]

if you are not required to pay your part, then the gov't has no obligations to serve you. none whatsoever.
it's really that simple.

no tax= no infrastructure, health, schooling, law enforcement or anything really. want that backroad fixed? pay up. you're having problems with burglars? tough. hire a guard service.
broke a leg? pay up! ... oh wait, you already do.

Re:Ironic

[muffen]

This was up for debate in EU a while back, and it was the british who blocked it. However, with the panamapapers being leaked, and Cameron's own involvment, it might not be so easy to block it this time.

The timing isn't an accident, and the british commissioner leading it isnt an accident either, its all designed to maximize the chances of it going through.

I think this is a good start, you pay taxes where you earn the money...

Missing the point

[EmperorOfCanada]

I keep hearing about the various governments being out this number of billions or that number of billions. But where I see the big problem is competition. How can local companies compete with these non-tax paying companies when they are forced to pay taxes.

Capitalism is quite simply the reinvestment in the means of production. With tech companies this can be a complicated relationship with both reinvesting in the actual product, and having the cash available to go around buying out similar companies. Another layer in that involves both issuing new shares to buy companies, and issuing shares to attract investors.

As an example, if a local UK company wants to compete with Google in the ad space in the UK, they will end up paying full taxes on any profits; while google won't. Thus google will be able to return a higher profit to their investors, have more cash to buy out competitors, and will be able to issue more valuable shares as part of those buyouts. The UK company will simply have much of its value continuously eroded by taxes that are annually removed from its balance.

Obviously using google as a comparison to some little ad company is a bit unbalanced, but the same applies to any homegrown company that legally exists only in the European country. Cutting edge drones, robotics, 3D printing, or pretty much anything along those lines will not be able to match the growth curve of a company paying a tiny fraction in taxes.

Those sort of companies that could otherwise become international players are what drives a country's economy. To allow certain countries to always have the upper hand is just going to be a long term bad plan.

So I wouldn't be so much worrying about the handful of missing billions but the long term missing trillions.

So quite simply, make sure that these international companies are under the exact same tax burden as a local company when it involves any business within Europe.

So if a local company were to make an apple priced smart phone and would end up paying $80 in taxes. Make sure that Apple selling the same phone is paying $80 in taxes regardless of what paper shenanigans they try.

Re:Setting the bar a bit low

[Harlequin80]

If you are trying to hide money in the delaware and you are a US citizen you are nuts. The IRS has access to the data of those bank accounts. They will data match and you will be found out.

Re:Actually this is the problem

[emorning]

It comes from a supreme court case in 1910 when a corporation decided to pay it's workers a decent living wage, and cut margins a bit to afford that.

There is no legal duty to maximize corporate profits and 'shareholder value'.

And what supreme court case are you talking about? Dodge v. Ford Motor Co?
That was a Michigan Supreme Court case, not a US Supreme Court case. And even that case really has nothing to do with shareholder value.