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Four EU Countries Seek Higher Taxes On Google and Amazon (reuters.com)
An anonymous reader quotes Reuters:
France, Germany, Italy and Spain want digital multinationals like Amazon and Google to be taxed in Europe based on their revenues, rather than only profits as now, their finance ministers said in a joint letter. France is leading a push to clamp down on the taxation of such companies, but has found support from other countries also frustrated at the low tax they receive under current international rules. Currently such companies are often taxed on profits booked by subsidiaries in low-tax countries like Ireland even though the revenue originated from other EU countries. "We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries," the four ministers wrote in a letter seen by Reuters.
everything
They aren't taxed in the US. They avoid taxes everywhere.
Anyway, the EU has a right to collect taxes on business done in the EU. If the US taxes that business as well then Google needs to take it up with the US government.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
So you are assuming these companies are being taxed adequately in the US. Interesting.
Winning at racing to the bottom isn't exactly innovation. Free trade should really be about trade, not services, not company taxation and certainly not foreign investment.
Unfortunately it isn't, free trade is about destroying national sovereignty and reimplementing feudalism.
The most ironic thing is that the US taxman actually goes after american citizens that live outside the US for purposes of collecting taxes. It's the only country (with Ethiopia if I'm not mistaken) to do that. But it doesn't go after American companies that stash money outside the US and that should pay the taxes in their own damn country.
Because it makes it completely clear who is actually paying the taxes - the customers. A tax on revenue is otherwise known as a sales tax.
Companies don't pay corporate taxes. It gets passed on to customers as higher prices, to employees as lower wages, and to owners/stockholders as reduced dividends. You see, companies are just paper entities - they don't really exist. They're just a line a bunch of people (owners/stockholders and employees) draw around themselves so they can declare "we are working together." All the productivity, all the innovation, all the decisions are made by those people, not "the company". The company is just an inanimate banner, a flag they hold over their operations.
So you can't really tax a company. That's like impounding a car for assisting in a bank robbery, or sentencing a PC to prison for being used in a hack. Losing those items just turns into an additional financial expense for the people who used to own them. Likewise, corporate taxes are just additional financial expenses for the people involved with a company - owners/stockholders, employees, and customers.
Once you realize this, you realize how stupid it is to have a million different taxes for a million different things. It's a horribly inefficient way to collect tax revenue. The most efficient method would be to have a single tax which you assess against all people. If you believe in progressive taxation, then the obvious tax to keep is the income tax. Pretty much all other taxes* can be eliminated with no effect on the economy or tax revenue, other than vastly reducing the amount of money wasted on collecting taxes and forcing people/businesses to keep track of a million different taxes.
* (Behavior-modifying taxes would still be useful since their primary goal is not to collect revenue for the government. e.g. Fuel taxes to encourage energy efficiency, property taxes to prevent speculators from holding on to fallow land which could otherwise be put to much better use.)
This also avoids the hypocrisy of saying you believe in no taxation without representation, then simultaneously wanting to tax corporations while believing they should have no role in government.
Since you're from Italy you should know that's it been years since buying through the internet is no way to get a rebate on the tax rate.
When you buy through the internet let's say an article from the UK, or France, or Belgium you're taxed at the rate of the country you're residing in (not the country from which you're buying). If you haven't realised that I'm not sure what to say.
There was a time around 2000-2001 when the tax rate applied to internet purchases was that of country you were buying from, but that loophole was closed pretty quickly in the EU.
I am , but the company is not. and effective tax rate on company earnings here is 60%, while in Ireland is 12.5%, i believe. sooooo....... where does that 44% go?
"If a boss demands loyalty, give him integrity. But if he demands integrity, give him loyalty." (John Boyd, 1927-1997)
The international constructions current in place in the EU and outside allow these multinationals to legally not pay taxes. That gives them an unfair advantage to a market, that should be open to all with good ideas and willing to work hard. I can't believe they will succeed in changing this since the E.C. is walking on the leach of the multinationals. Nevertheless it is noting but fair that every citizen of a society contributes their share to taxes. And wealthy citizens doing business here in europe, are no exception to that.
These companies trade service for eyeballs and clicks for cash
The Germans are still looking at WWII bunkers that are too expensive to remove.
IIRC the spent millions cutting windows into the one in downtown Hamburg. But it's still an obvious 'highrise bunker'.
Just one of the downsides of building everything to last forever. Costs a fortune to build, cost another when you need something different after 20 years.
Plywood? You haven't seen recent American construction. They hardly use chipboard anymore. Too expensive. Just use zig zaged plastic strapping, cover that in chicken wire and stucco over that. Good enough.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
I know, breaking shipping out to its own column is stupid and some vendors on Amazon and eBay set it to different values including free. I aggressively shop for the lowest total value on both sites.
Maybe the whole EU thing wasn't such a great idea?
I've got an alternative solution, get your government to lower its tax rate to a reasonable level or go broke. If they refuse, move to Ireland, vote with your feet.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
We have lots of museums strewn all over. We can even tour our government buildings. Some plants arrange tours. So, Ha!
Either get rid of income tax(and tax other stuff more), or tax income in the country where it is made. Allowing a company to transfer their income to a tax haven is madness.
Also - taxing revenue would essentially remove all profit from their balance sheets. Essentially dooming them as functioning companies.
Taxing revenue at the same rate as profit would bankrupt them but because revenue is usually significantly higher than profit, you would likely tax it at a different rate. The only problem I see with this is that different industries have drastically different amounts of profit for the same amount of revenue. I think a better solution might be to tax profits of international companies based on the percentage of business done in that country. So if a company has a profit of 20M and 20% of their revenue is from France then 20% of their profit should be taxed in France.
That's not how amazon works. Amazon gives the seller a "credit" for the amount of shipping regardless of what the actual shipping is. That credit is sometimes more and sometimes less than what it costs to ship it. If it's less, the seller just has to eat it. If the credit is more (and it likely would be for multiple items shipped together), then amazon doesn't keep that, amazon gives that to the seller who may or may not decide to ship the items in the same box. Strangely, the credit the seller gets is not always the same as the amount of shipping charged to the customer and the seller has very little control over what the shipping charges or credits are. I agree it's a strange system though. It would work much better if the seller could actually set the shipping rate and give discounts for multiple items shipped together like you can on ebay.
Yes, taxing on revenue can be accomplished by sales tax. What's the problem? Or do these countries want to charge sales tax AND also double tax the corporation again for the same sale as an additional "revenue tax"? First would be ok. The second clearly not.
The entire world, including America, has the exact same issues. Basically, as long as we all make laws/tax rules that allow them to manufacture goods/services elsewhere and then ship cheaply to western nations, they will continue this.
The best way is to drop all corporate taxes for a company that makes/produces local goods. And then put on a subtractive VAT on nearly everything, except create an additive VAT for imported parts. With this approach, it means that anything that is moved from wholesale to retail, OR is sold in the nation from out of the nation, will then be subject to this VAT. As it is, many nations, such as Mexico and CHina charge 17 % VATs. And disregard the fact that both also have some MAJOR tariffs on imports.
The real interesting part is how to get the VAT on goods/services shipped into another nation. I think that the best way, is to simply require that the shipping company pick up the tax and pay to the nation in which delivered. If somebody buys a good for $100 and they have a $17 VAT, then that is added on. With the service, it should be VATed at the rate in which it would happen in the original nation.
And most of Europe already charge a VAT. What is needed is for the VAT to be charged on shipped goods as well.
I prefer the "u" in honour as it seems to be missing these days.
The big problem here is Facebook EU (using a spurious example) pays Facebook Ireland a huge fee for licensing certain proprietary technologies. Facebook EU therefore makes no profit, while Facebook Ireland makes a huge profit, but Ireland has low taxation so they pay far less overall.
You can substitute Microsoft, Google or whatever company you want here. This is how they play the game. The international company makes no profit whatsoever, so you can't tax the profit of that international company. You also can't tax Facebook Ireland because its only business is to license intellectual properties to other corporations with an Ireland presence, meaning they don't do business in France, Germany etc.
So EU countries want to charge taxes on revenue, not on profits, so they get what they see as their due of the tax bill. This is one option. The other option is to pierce the corporate veil to decide when a corporation exists solely to divert profits for tax evasion.
A third option, I'd imagine, is to charge taxes against the licensing revenue. If Facebook Ireland had to pay taxes to the EU for profits earned by licensing technologies used in the EU, that would solve the 'fair share' issue. But this would likely be impractical, if not in violation of actual treaties.
The problem is that you're trying to legislate what you intend, but that isn't very effective as companies (or people) will always find ways to minimize tax liability when it is economical for them to do so. One easy example is that companies will set up another company which they license their own IP from, which allows them to make the entire transaction a payment. If the payment is large enough, they no longer have any income to tax in the country where the revenue was earned and will instead by taxed at a lower rate in the company where the IP is being held.
That's a complicated problem to solve as there likely are legitimate cases of IP being licensed from foreign companies or third parties. One could try to argue that said company would need a presence in the U.S. in order to have the protection of its IP laws, but it gets incredibly complicated if you don't want to annoy other countries and have them disregard the IP of companies in our country. I think the easiest solution is to simply lower the corporate tax rate in the United States and remove all exemptions or subsidies, such that it becomes more economical for companies to pay taxes in the U.S. rather than to play clever accounting games and try to hide money off shore.
Just make a flat tax rate for both individuals and corporations, ideally with the individual tax rate being slightly less which would incentivize corporations to return more of their profits to shareholders or to increase wages to bid for the best employees. Yes, I understand that such isn't perfect, but it's far better than the convoluted mess that we currently have and all of the insane or counter-productive incentives that it creates.
I think VAT is supposed to be charged at the point of sale. I say supposed because at least Amazon exploited some loophole at least a couple years ago where they basically charged customers the VAT in their area but actually paid a much lower rate. Which is not supposed to be how it happens.
The way it should happen would be to simply eliminate "imaginary property" altogether. But I bet they would still figure out some other way of performing this "Hollywood accounting". Probably much like Hollywood itself does, they claim "marketing expenses" which are curiously always enough to erase any profit they made.
The big problem here is Facebook EU (using a spurious example) pays Facebook Ireland a huge fee for licensing certain proprietary technologies. Facebook EU therefore makes no profit, while Facebook Ireland makes a huge profit, but Ireland has low taxation so they pay far less overall.
You can substitute Microsoft, Google or whatever company you want here. This is how they play the game.
Which is why you short circuit the game. Take whichever entity of Facebook that is actually making the profit to court for tax invasion and say because 10% of their customers are in the France that they are required to pay taxes on 10% of that profit or they stop operating in France. It doesn't matter if that profit is from server farms, Intellectual Property, or some other made up BS. Everyone knows what the profit is. They are a publicly traded company and there aren't shares of Ireland Facebook and France Facebook and USA Facebook. It's all one company and everyone knows it. Pass some laws making these shell games illegal and be done with it.
Amazon pays sales tax on total revenue, not profit, in all 50 United States. And presumably (correct me if I'm wrong) pay the applicable VAT on all items sold in Europe. This, by the way, is one major way to stop companies from playing silly games. Let's compare for a moment:
(1) Tax consumption: reasonably straightforwards. If an item is sold for X, the tax is some rate time X, perhaps depending the category of goods. A VAT is almost as simple and can be considered in the same category. There is less[1] scope to be creative about numbers because the tax is derived straight from the purchase price. There is much less scope to be creative about geography because the location of consumption is usually super-evident.
(2) Tax profits: horrendously complicated because you don't know how to attribute the total profits of the company to each input and output. I think it's fairly clear, for instance, that there is no "scientific" way to figure out how much of the profit on (e.g.) an iPhone is due to the various inputs: software engineering, hardware engineering, IP, marketing, copyright, brand loyalty, etc. I don't even think it's a meaningful question, to be honest. The subjectivity allows for creativity in answering it, both in the numerical and geographic sense.
It's also complicated because for companies with an ecosystem of many integrated products, the total profit is more than the contribution of each individual parts because they are meant to work together. The profit from buying an IBM storage solution might be partially attributable to their success in the HPC division if customers of the latter have an easy path to adopting the former.
We've got to reform our tax systems to adopt the kind of rules that simply don't allow for creative accounting. In the meantime, we pretty much actively encourage this sort of nonsense (and doubled down in many cases) by insisting on this structure.
[1] And amusing discussions about whether Jaffa cakes are biscuits or cookies or whether a Snuggie is a blanket or a robe.
Yet you just posted this in the World Wide Web didn't you? Guess where THAT was invented.
I believe this is EU member countries seeking to change their tax laws, not a tax imposed by the EU.
Your first two paragraphs are really about transfer pricing used for tax avoidance. That would be fixable if there were sufficient political will, but there isn't. Most transfer pricing used for this is immediately apparent when you examine common ownership of the licensor and licensee. This is not hidden because it is not illegal, in fact it is usually listed on the 10k forms public corps file with SEC in the US. This is why stock prices do not reflect the low profit levels of companies using this tactic (I'm looking at you, Nike).
Changing the tax structure to lure companies to repatriate their money is absolutely the wrong answer. Period. The government either has authority over those companies, or it doesn't. If it does, they should pay the tax demanded. If it doesn't, why should they pay any tax at all?
If the tax rate is fair, then the companies dodging it are wrong to do so. If the tax rate is unfair, then the appropriate answer is to change it, not cheat.
Importantly, the corporations are not the ones to determine if it is fair, that is the province of the elected representatives of the PEOPLE. Unfortunately, our legislatures are far more responsive to corporate input than the people right now, mostly because the people do not pay sufficient attention and have little patience with subtle factors. We respond to complex situations based on soundbites that resonate with us.
Finally, I hate the flat tax idea. Because of the law of diminishing marginal utility (too much to go into here) flat taxes are very regressive in outcome. This is just a fancy way of saying that x% tax hits a poor person harder than a rich person. It may slow the rate of growth of a rich person but will actually degrade a poor person's standard of living.
Beyond that, as far as simplifying the tax system, I'm with you. It is a mess.
The big problem here is Facebook EU (using a spurious example) pays Facebook Ireland a huge fee for licensing certain proprietary technologies. Facebook EU therefore makes no profit, while Facebook Ireland makes a huge profit, but Ireland has low taxation so they pay far less overall.
Spot on. There are always problems with any kind of tax system. Whatever you tax, you'll get less of. And the taxpayers will willingly spend $100 million in legal fees creating goofy corporate structures to avoid $1 billion in taxes.
As near as I can tell, the fine finance ministers don't actually care about whether taxing profit or revenue is ethically right, or causes less distortion of the economy. They just want more money. They could just raise the tax rate on profits or muddle the issue by talking about profit vs. revenue. My belief is we should always first talk about how much money we want the government to collect and spend, then start talking about how to best collect it. I think it's often disingenuous to mix the two conversations. This is just like buying a car: first agree on the price, then start talking about financing.
As far as I know the CUSTOMER pays VAT not Amazon. Also businesses can reclaim VAT on any business-related goods or services. This is the case in the UK at least. Based on that VAT should have little effect on Amazon or any other business, apart from raising the cost to consumers of their product or service.
Their employees just get hit twice from income tax and then VAT when they spend their salary!
If sales tax in the US is applied to business-to-business transactions then that has a much greater effect than VAT.
Wannabe nerd.
If there is a trade war nothing of value will be lost. The only thing you Americans produce are mass murder weapons. You can keep them.
Yes, which are pretty much the only thing that prevent Putin from doing the same to EU as he did with Crimea.
Food ? Don't need, we have our own (real genuine, not hormone or genetically modified shit).
Yes, let me quote the NY Times:
Without a trace of embarrassment, a spokeswoman for Nicola Sturgeon, the leader of the Scottish National Party, admitted that the first ministerâ(TM)s science adviser had not been consulted because the decision âoewasnâ(TM)t based on scientific evidence.â
Who are you screwing with?
Luxury items ? Don't need, we have our own.
European TV, American TV, all made in China.
Tourism ? You have nothing to offer besides The Grand Canyon and Yellowstone Park. Museums ?
Right. Oviously never been to the U.S.
Europe shits all over the US. Cars ? No thanks, we have our own.
Ah yes, Europe. Home to the Lada, Zastava and Yugo,
Books ? You don't read so you can't offer anything worthwhile.
Who needs books when you have TV? 95% of TV shows that you watch are Made In America.
Europe doesn't need the US. If we could we would send back your occupation troops (and nuclear weapons) and close all american bases on the continent.
Without the U.S all of Europe would be speaking German or Russian.
But all of that does not matter. Pretty soon Arab will be the default language.
I'm not a complete idiot... Some parts are missing.
Why don't they close these tax loopholes? Or are they only for euro countries?
Shouldn't shipping be free or at least some low nominal value?
The "low nominal value" is for economy shipping methods, such as Parcel Select or UPS Ground, assuming the total of items from a single seller meets a minimum size. An order that doesn't meet the minimum size incurs a fee because small orders are proportionally more expensive per item to ship. So does one for which a faster shipping method is selected without an annual subscription to faster shipping at that address.
If you buy from a brick and mortar retailer in your city, it has already paid for shipping from the distributor/manufacturer's city to your city.
But not to your door.
That's not how amazon works. Amazon gives the seller a "credit" for the amount of shipping regardless of what the actual shipping is.
Are you referring to media products (books, music CDs, DVDs, etc.) or non-media products?
It would work much better if the seller could actually set the shipping rate and give discounts for multiple items shipped together like you can on ebay.
Amazon works this way for professional sellers of non-media products. This R/C car dealer in Fort Wayne, Indiana, gave discounts for combined shipping last I checked.
If you think you can tax revenue, your smoking something good. What would your tax rate be?
A typical value added tax in a European country is in the neighborhood of 20 percent.
actually I am not "mixing up", but you are, a simple misunderstanding. Total tax rate measured on a company in Italy doing legitimate business with no political kickbacks, as measured as "what's left of sales after all costs and tax", comes out north of 50%. I may pay VAT depending on where I live since VAT is paid by the last in line, but corporate taxes depend on where I am established. Given the choice and knowing that you can net 10 million EUR before tax, and your client do not mind the country of incorporation, would you rather set up here, or in Louxembourg?
"If a boss demands loyalty, give him integrity. But if he demands integrity, give him loyalty." (John Boyd, 1927-1997)
Yeah fuck civilisation and fuck those who understand that civilisation isn't free.
SJW n. One who posts facts.
A federalized tax structure would reduce corporations leveraging the advantageous tax situations in select countries. But the EU seems far from that model -- no "United States of Europe." Ireland negotiated a treaty in the 1990s with the US for the express purpose of attracting employers for its well-educated and young workforce. Why shouldn't trans-nationals do what's best for their shareholders? That is what corporate democracy is all about, imho.
- Ubique, Tom Termini www.bluedog.net - WebObjects / J2EE SOA / iPhone solutions for knowledge workers
Well that was a fairly mindless and pointless anti-EU rant. This has got nothing to do with the EU budget nor Brussels levying taxes across the EU, but individual countries trying to claw back some money for their own coffers, so your silly angst should be aimed at Paris, Berlin, Rome and Madrid (and the rest).
IP should be taxed as inventory. If they are making money from it, it should be simple to assign a value.
Cheap storage VM.
Chicken wire makes a Faraday cage, I'd be surprised if they do much of that. It's stick lumber framed, then insulation, plastic wrap, and siding on the outside. Drywall goes on the inside.
You could enter most new homes with a utility knife.
Cheap storage VM.
That is how new stucco construction has been done for about 10+ years. No siding on the outside, just drywall and a layer of stucco on the outside of the stick wall. Supported by plastic strapping.
Chicken wire was part of the stucco process before they removed the plywood. Not a good faraday cage unless grounded and interconnected.
You also see aluminum radiant barriers on roof sheeting. It's amazing you can get any bars insides some structures.
You'd have to kick your way through the outer layer, but after that the utility knife is all you'd need.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
If it's a business... it can be and must be taxed. Thanks.
"It is no measure of health to be well adjusted to a profoundly sick society." - Jiddu Krishnamurti
How tragic that you think the 4th Reich contributes anything to civlization.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."