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Google Shifted $23 Billion To Tax Haven Bermuda in 2017, Filing Shows (reuters.com)
schwit1 shares a report: Google moved 19.9 billion euros ($22.7 billion) through a Dutch shell company to Bermuda in 2017, as part of an arrangement that allows it to reduce its foreign tax bill, according to documents filed at the Dutch Chamber of Commerce. The amount channeled through Google Netherlands Holdings BV was around 4 billion euros more than in 2016, the documents, filed on Dec. 21, showed. For more than a decade the arrangement has allowed Google owner Alphabet to enjoy an effective tax rate in the single digits on its non-U.S. profits, around a quarter the average tax rate in its overseas markets. The subsidiary in the Netherlands is used to shift revenue from royalties earned outside the United States to Google Ireland Holdings, an affiliate based in Bermuda, where companies pay no income tax.
guess that youthful idealism turned into middle-aged "I got mine, do no good"
You can't call it fraud when the tax laws in the various countries involved allow it. Don't like it? Change the laws. I think they should change the various tax laws to eliminate this instead of just complaining about it every few months. Google, Apple, etc. are just doing the same thing a person filing their personal income tax does: not paying anything that they don't have to. They can afford more accountants and can afford to create businesses and mail drops in different countries and all - but at the end of the day it is legal.
Yay, corporate fraud is Presidential behavior! NOBEL! NOBEL! Google 2020, cheat those taxes and make Mexico pay for it!
Well, given the standard Obama set, Trump had nowhere to go but up.
Trump at least has started North Korea talking seriously with its neighbors. Given the standards of Obama's Nobel-for-nothing, that should pretty much ensure Trump wins the Nobel Peace Prize for just about the next century or so.
As for who gets to pay for the wall? Well, that hasn't been settled yet.
But speaking of Google (and Apple, for that matter...), did you notice that the FCC has shut down with the 1/4 of the government that isn't funded (and 99% of voters don't give a flying fuck about - "Awww, gee, you mean there are no IRS auditors! That's TERRIBLE!!!"...), which means no new 5G phones getting FCC approval this year? Google and Apple want to pick political sides and fund "progressive" political causes? Well, now they're getting horse fucked. Gee, and Apple stock has already started to tank. How long will those shareholders go with the "be woke, go broke" theme? (ESPN caved to reality and shitcanned all their SJW "reporters", in case you missed it. FWIW, Jamelle Hill will not be missed.)
I wonder how long Google and Apple will let the Democrats representatives in their pockets hold up funding for Trump's wall, given that without things like the FCC getting funded Google and Apple won't have any shiny new toys to sell this year - and lose billions and billions of dollars of revenue...
Call me when Trump pays billions of dollars to bribe medieval fanatics bent on getting nuclear weapons based on the mere promise from those same nutjobs that they'll pass on getting nuclear weapons. Yeah, I know, it was a pinkie promise, so it's all good, right?
For the avoidance of any doubt I do not condone arson, larceny or other illegal/antisocial actions.
That said, I would dearly love the following scenarios to play out:
A major fire to break out at an Amazon warehouse or Google office. When they call the (taxpayer funded) fire services they get told "oh we only operate the phones here - you'll have to source the water from Ireland, the crews from Luxembourg, the appliances from Bermuda... after all that's where you operate isn't it? You don't want to get involved with civil society - well provide your own protection through self funding then!"
Similarly for break-ins/vandalisation at Facebook's offices ... "here's a crime number for your insurers... we'll get back to you when we've dealt with incidents affecting those who do engage with civil society and contribute to the common good".
Or roadworks right outside the offices of Vodafone, Oracle, Microsoft - started and then de-prioritised to serve ordinary folk who pay their way - "yes, we'll get back to fixing your road in due course...".
After all disrupting these organisations wouldn't be a big loss because they don't pay much into society now anyway.
The "I'll keep whatever I can and get everyone else to cover externalities and emergencies" rejection of paying the same taxes as others do should come back to bite them when they discover they're neither all powerful nor an island sufficient unto themselves.
Now, whether the government provides good levels of service for the taxation raised is a separate debate; certainly there are many areas where it could do better. Enriching yourselves by demanding the same benefits as everyone whilst doing everything to avoid the common obligations is the behaviour of an antisocial bully.
Ignore chatter. Here is the end game: if they paid more taxes, this would not reduce borrowing one iota, as this would give politicians a few more billion to spend.
There is no "fair share" since that presumes some fixed level of spending. But spending is tied to what they can get away with to buy votes. It will always increase even as times get better and better.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
Don't blame the company, blame the politicians who carve out these arcane exemptions to benefit their campaign contributors. If one company can use the exemption then it won't be long before others follow suit.
You can call it fraud. Some fraud slips through loopholes, that doesn't change the nature of it. Playing countries off eachother to undermine their tax laws is simply a recently-accepted fraud, in some circles. It's still intending to defraud.
Are there still /. users today who remember the time when Google was created, with their famous "Don't be evil" catch phrase ? Remember when Google was seen by the entire /. community as basically the second coming of Christ, and anyone who dared even hint at anything remotely negative about this company was instantly dowmodded into this abyss ?
Remember those who predicted that this new, innovative, enthousiastic and idealistic enterprise would soon be corrupted by the gangrene of corporate filth, and how they were instanteniously scolded by hords of pitchfork-weilding rabid downmodders from Hell ?
I do.
Where are you today, Ô ancient Google apologists ? Why have you suddenly turned silent ?
Proving that they're progressive about your life and your money and the choices you should be allowed/denied. When it comes to what's good for Google, all that progressive dogma falls away and they might as well be a bank or a drug company or an oil driller. All that progressive dogma is just a show to trick the rubes. Hope none of you were gullible enough to take it seriously.
Why does anyone care about this? Does anyone care? If so, why?
It is your duty to avoid all possible taxes, period.
I object to power without constructive purpose. --Spock
And they de-monitized my $90/yr YouTube account. Sheesh.
You’re almost making an argument for even greater cuts. Wouldn’t it be great if the U.S. were the tax haven where the rest of the world funneled all of their money?
If the cheating is that great and everyone is doing it to some degree, it makes far more sense to lower the tax rate and collect a smaller percentage of everything being dodged than it does to keep on the current course. If you’ve got exact numbers this just becomes a simple math problem.
Because people have this mistaken belief that taxing corporations means you're not taxing people, and so it somehow decreases the tax burden on people if you tax corporations.
Corporate profit is taxed. The remaining profit is then distributed to shareholders as distributions. If you increase corporate taxes, the shareholders get less money as distributions. If you decrease corporate taxes, the shareholders get more money as distributions. So a tax on corporate profit is the same a tax on shareholder distributions. Likewise, a tax on corporate revenue is the same as a tax on sales to customers or wages to employees.
The problem with tax enforcement comes about because corporations can exist in multiple locations simultaneously. This makes it trivial for them to shift money from one tax jurisdiction to another to evade taxes, and you end up playing a game of whack-a-mole. People can't do that - they can only exist in one country at a time, so can't shift money around as freely between countries. Once you realize the fallacy of the notion that taxing corporations is somehow "better" than taxing people, the solution is simple. Eliminate corporate taxes and convert them into taxes on shareholder distributions instead. If you're worried that the shareholders mostly reside in a different company from where the company is doing most of its sales, then just use sales and income taxes instead - that extracts money from the corporation at the point of sale or from employees working for the corporation in your country.
When you tax a financial transaction, it doesn't matter which side of the transaction you tax it. Whether you tax the giver or the recipient of the money, the net result is the same. The giver (be it a customer or corporation) gives x dollars. y% of it becomes tax revenue. The recipient (whether it be a corporation, shareholder, or employee) gets to keep x dollars minus y%.
Isn’t it more or less the case already?
Tax dodging. Define it as incorporating (directly or indirectly via a parent/holding/etc. corporation) in a nation in which the CxOs, board members, etc. and their immediate families do not physically reside for at least 51% of the year or in which they do not claim citizenship, or in a nation whose individual (citizen) and incorporated investors do not control a plurality of voting shares of the company.
Thus, to incorporate in a country you must have all the higher ups and their families LIVING in that country as CITIZENS for most of the year, and all voting stock must be held within that country. No shell games either. Google gets the most restrictive set of rules and highest tax rates that would apply to Google OR Alphabet OR any of its "holding companies" OR anything like Google China.
You know, the same kind of shit a regular person working/living across state/national borders has to deal with.
Disallow such actions, and tax them on their true holdings and earnings. If they resist, dissolve the corporation and jail the execs for 500 years each.
-- Tigger warning: This post may contain tiggers! --
And arrest who? remember corporations are people ... sort of. who do you haul off to jail?
Read TFS or TFA; this isn't domestic revenue, this is overseas revenue - revenue never taxed in the US in either case.
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If they are cheating, they'll be prosecuted and fined. They're doing what they can to lower their tax bills; I assume you take every deduction you're legally allowed to take? Why shouldn't someone else get the same grace you expect?
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Sure it can. It's trivial to set up a corporation in Hong Kong, Seychelles, or Bermuda. it costs less than $10,000 per year to do so, and to operate (provide for an annual audit, typically). If you're a company doing more than $250,000 a year in profit from overseas, you'd definitely want to look at these kinds of options for all your overseas profit.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Tax dodging. Define it as incorporating (directly or indirectly via a parent/holding/etc. corporation) in a nation in which the CxOs, board members, etc. and their immediate families do not physically reside for at least 51% of the year or in which they do not claim citizenship
No matter how smart you are in thinking you can close up the loopholes there are armies of accountants and lawyers who are WAAAY smarter and can figure out a way around it.
Meet Joe Islander. He has lived on the island his entire life where he is an aspiring surfer. He is our new CEO and his salary is a company-paid-for beachside house and fishing boat. Please address all high level corporate decision making to our former CEO and new executive ultra president Mr Big back in New York.
Etc, etc.
Yes it will. And Bermuda will all of a sudden have a lot of headquarters comprised of a secretary and a telephone.
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba
Two changes to the American tax code would stop most of this behavior.
1. Do not allow monies paid to wholly owned subsidiaries based in other countries to be claimed as expenses (e.g. Nike paying licensing fees to a subsidiary to use the Nike 'swoosh'). This is by far the most egregiously unfair provision of the US tax code.
2. Put a sharp time limit on allowable deferments for capital held overseas, possibly with a small rate that runs constantly or maybe a staged series of payments until they have paid the current corporate rate. You have to balance the legitimate needs of companies that hold monies overseas for operations or expansions with the legitimate requirement that American companies will pay their taxes.
NOTE: Neither of these things will EVER happen. WAY too many stock prices depend on current conditions to prop up their numbers for this to be messed with. Sorry.
If a wall won't do anything to discourage crossing, then why do you have a fucking LOCK on your front door?
It may only keep out the honest thieves, but that is still quite a few of them.
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba
Not even close to comparable, for an individual this is closer to family trust arrangements.
Me? No I don't make any money, my family trust charges for my time and pays me a modest salary of 20% of the charge rate, the remaining 80% is paid to my wife and three children, after the trusts expenses of paying for the mortgage, utilities, etc. All perfectly legal and above board.
Yeah, they worked out how to shut that down pretty fast once it was used for a lot less than billions a year.
If they are cheating, they'll be prosecuted and fined. They're doing what they can to lower their tax bills; I assume you take every deduction you're legally allowed to take? Why shouldn't someone else get the same grace you expect?
If they're cheating they likely will not be prosecuted or fined. The overwhelming amount of violations of laws (tax, traffic, securities, etc.) are never prosecuted, let alone punished. Punishment requires the will and means to indict, prosecute, convict, and execute judgment. A lack in any of part of the chain precludes punishment. The big companies recognize the weakness of the punishment chain, especially in the global context where no single legal authority exists and where individual national interests can be played off each other. Furthermore, in the worst case, a financial punishment of a one-time fine regardless of the amount has no impact on executive bonuses based on future stock appreciation. The only way to curb these abuses is to make the punishment prison time for executives. Then, the risk-to-reward function changes.
I take some of the deductions that I'm entitled to. I specifically avoid deductions that I think will raise a red flag with the IRS. I'm sure I'm not the only one who does this. Then again, if I were to push the limit with deductions, I might get back a few extra hundred or low thousands of dollars. That's not a good risk-to-reward ratio. Now, if I the benefit were in the 10 to 11-figure range, then I might be tempted to push the envelope, like the big companies.
I canâ(TM)t tell if youâ(TM)re a big statist or a rabid Libertarian.
It's easy to tell! I'll give you a general guide.
If they are advocating a course of action that hurts others, they are statists.
If they are telling everyone to leave someone alone, they are libertarians.
I'd say telling everyone to set fire to Google and Amazon properties falls pretty clearly in the "Fascist Statist" camp.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
International tax haven tax avoidance schemes are not what "globalism" refers to.
Yes, it is, your cherry picking notwithstanding. "Oh you silly trumplets, globalism is all these good things over here, none of that bad things over there..."
Maw! Fire up the karma burner!
You're really comparing a measure against a burglar looking for the easiest house to someone who's traveled hundreds of miles to relocate their entire life and sometimes family grabbing a ladder? Well, fits right in Republicans inability to live in reality at least.
Yellow Vest protesters in France forced president Macron to speed up the introduction of the GAFA tax (hitting the tech goliaths Google, Apple, Facebook and Amazon). The EU version of this tax was being opposed by Ireland, where a lot of tech giants operate.
The GAFA tax started 1 jan 2019 in France only, but other country's yellow vests activists will demand the same tax in their country.
how about instead we just elect politicians who aren't corrupt and who will close tax loopholes and shelters? It's not even hard, just make it a point to vote for candidates who refuse corporate PAC money.
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Let he who doesn't try to reduce his tax bill cast the first stone.
Google are what are often called politely "New Democrats" and not so politely "Clinton Democrats". They're Progressive on Social Issues, meaning they don't mind gays, especially since gays tend to be higher income earners and thus good customers (or product in google's case, since they're basically an ad agency). When it comes to matters of money they're hard, hard right.
The American media is like this too. Folks talk about the "Liberal Media Bias" because the media pushes climate change, abortion rights and civil rights. But those are social issues. Watch them on economics. Watch the coverage on Medicare for All, for example. Watch Brett Hume try to get negative sound bites out of Alexandria Orcasio-Cortez for a half hour on MSNBC (the supposed left wing Fox News).
Corporations are in it for money. Always, always, always follow the money.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
More money for salaries, less for government.
question: do you have these in a text file ready for a quick copy and paste? do you read them? or just pass the information from you cell-leader?
Lookit; if it takes a cadre of high priced lawyers, accountants, PR spokesmen, lobbyists and bought and paid for politications to justify it, along with needing a flowchart to explain it -- it's more than certainly vile and immoral behavior.
This.. "well it's not technically against the letter of the law.. so it's okay.." mentality is just enabling shit behavior from corporations.
Sorry, I'm with gp. I don't believe in giving-up just because it's difficult to close the loopholes. The government can hire the very same "armies of accountants and lawyers" to close the loopholes. Or at least reduce them. Significantly.
Example:
We deride government attempts to force companies to break encryption, citing open source alternatives. Yet the government still passes SOMETHING. They'll take whatever they can. (c.f. recently passed privacy invading laws in Australia)
Another measure: governments can declare they won't purchase goods / services from organisations that are bad corporate citizens.
Unfortunately they're heart (if they have one) isn't devoted to minimising tax evasion for the top-end of town.
Whose signature is on the financial transactions? That person.
Depends. I am not familiar with this new tax game involving Bermuda, but the game companies were playing with Netherlands and Ireland a few years was undoubtedly tax evasion, but the IRS conveniently ignored it. Some European countries did something about it and were able to get a judgement against this practice, but the U.S. Government remains silent.
(a) 23 billion is actually quite big
(b) 23 billion x 50 companies* ~= 1 trillion ... does this get your attention?
* Most other companies wouldn't be 23 billion. ... thousands do.
Then again, 50 companies don't use tax havens
If that income is above $38,600 then you have to pay at least 15%, and up to 20% taxes on that income, or the "in kind" donation of assets. And yes, paying a mortgage for you, or letting you live in a house "rent free" qualifies as an in-kind donation of assets.
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Sure, sure, and do you think that was how the tax code always was or .... ?
It's a moral failing by Google and a Neglect of Duty by government to let it continue. The present day legality of it is completely beside the point.
They are called entitlements because we've already paid for them.
It's time for President Trump to get out his trust-busting stick. Break up Alphabet!
Android - separate company
Chrome - separate company
YouTube - separate company
Gmail - separate company
Search - separate company
Advertising - separate company
Maps - separate company
Arrest Sundar Pichai. Shut down the dangerous mad science projects. Arrest the nazi mad scientists. Shut down the wannabe-Skynet AI. Arrest those mad scientists too.
Break up Alphabet now! Stop Google before it's too late!
No matter how smart you are in thinking you can close up the loopholes there are armies of accountants and lawyers who are WAAAY smarter and can figure out a way around it.
Sick of this quote. It is easy to close the loopholes. It is just not a good move politically as you would be painted as introducing something "unfair" (or some other smear campaign).
First easy solution: You pay the greater of X% on profit with existing rules OR Y% on gross revenue.
This puts a hard floor on how much they can avoid. Companies only are in control of shifting costs creatively. The sale must always happen, so the revenue will always happen. You only need to make it 2% or something to be effective. You will be shouted down that "[some imaginary store] operates on razor thin margins in bulk and will go out of business"... but if they aren't profitable enough to pay their fair share of taxes - they shouldn't continue to exist on government subsidy (which is what tax evasion is... as they benefit from roads, police, etc without paying for them).
No matter how smart you are in thinking you can close up the loopholes there are armies of accountants and lawyers who are WAAAY smarter and can figure out a way around it.
Sick of this quote. It is easy to close the loopholes. It is just not a good move politically as you would be painted as introducing something "unfair" (or some other smear campaign).
Remember Dodd-Frank? It was one of those attempts to close a bunch of loopholes in the banking industry, and to an extent it worked and made the financial sector less risky.
It also made the big banks bigger and the small banks smaller.
The problem is to close loopholes you need lots of rules, and if you have lots of rules then businesses need lots of people to ensure they're following those rules, and the bigger the business the more people you can afford.
One of the reasons that Google and Apple are so dominant is there are a lot of rules meant to prevent companies exploiting loopholes, and it's the biggest companies who are best able to invest in circumventing those rules.
Try to close more loopholes and you might end up giving Apple and Google even bigger shares of the economy.
First easy solution: You pay the greater of X% on profit with existing rules OR Y% on gross revenue.
Gross revenue of what? A company from the Netherlands makes a phone in China and sells it in the US for $500.
Which countries deserve to collect which taxes?
I stole this Sig
Sorry, I'm with gp. I don't believe in giving-up just because it's difficult to close the loopholes.
Close? Rarely are loopholes an oversight.. The bulk of the tax code, in the United States, are loopholes that are specifically written to favor a particular industry or company.
Case in point: Did you know that there are entire industries exempted from overtime laws? How do you think those exemptions got there? They weren't written into the bill when it was originally passed...
If you think that the government is going to close those loopholes in the face of the army of lobbyists and campaign donors, you aren't all that bright....
It's not fraud/evasion/avoidance when it's legal.
When you finish your taxes, at the end of the year, do you tack on an extra zero? Why not? I mean, according to you, it's avoidance to not pay more than you are legally required.. Somehow I suspect you send a check in for what you owe and not for more... Most people I know are very careful at tax time to account for all legal deductions and credits so that when they sign their name on the check they are paying exactly what they legally owe and not a dime more. Quit acting like it's moral when you do it and somehow immoral when Google does it.
This.. "well it's not technically against the letter of the law.. so it's okay.." mentality is just enabling shit behavior from corporations.
And how the fuck do you propose to fix that? You want laws where a person/company can follow them to the letter and still be charged with a crime? Thousands of years of civilization and I'm not aware of any country that had laws that could be broken by following them..
And this "I don't like it do something about it and FUCK what the law says I want them punished!" mentality is just enabling shit behavior from governments.
Precisely... Always amazing how these morons think that companies made up of humans are evil but governments made up of humans are good...
It's not fraud/evasion/avoidance when it's legal.
Here in the UK, 'avoidance' is legal (minimising your tax bill) and 'evasion' is illegal (not paying tax you should).
The criticism of companies like Google or Apple is that their actions are immoral, rather than illegal.
To have a right to do a thing is not at all the same as to be right in doing it
A company from the Netherlands makes a phone in China and sells it in the US for $500.
Which countries deserve to collect which taxes?
I think the point is that if you have company A in the the Netherlands which makes a phone in China and sells it in the US for $500, and company B in the Netherlands which makes a phone in China and sells it in the US for $500, then they should both pay the same amount of tax overall (other things being equal).
There is no good logical or economic reason for company A to pay (proportionately) less tax just because they're much bigger and richer and can hire more tax lawyers.
To have a right to do a thing is not at all the same as to be right in doing it
In the 80s we called 'em "limousine liberals".
Oh, you thought the high taxes, "fair share", "progressive" stuff applied to us, Google? Ah, no, lol, that's just for you.
Now shut up and pay us to install a surveillance device in your house. (Oh, and go shout at Ajit Pai some more, your two minutes hate isn't over yet.)
The tax code has always considered "in kind" donations as taxable income. And again - this is NOT about Google's domestic income - this is foreign income, earned overseas. Do you realize the US is the only developed country that wants to tax individuals on income earned anywhere in the world? None of the EU does it, none of Asia does it. The US is quite tax hungry, even to the point of wanting a cut of foreign income earned by foreign companies outside the US...
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The criticism of companies like Google or Apple is that their actions are immoral, rather than illegal.
By whom? Leftists? How is it immoral to only pay the taxes you are required to pay? Nobody, statistically, pays more taxes than they owe. Not people and not corporations... So where's the immorality? How would they become moral? Guessing at a fair amount and paying that? Only taking some deductions? Which ones? Is it immoral for a regular person to be careful when calculating the tax they owe and only paying that? If your neighbor simply fills out the 1040-EZ and doesn't bother with any deductions at all is he a better person?
Once you get past the laws on theft / rape / murder / fraud / etc, you'll find that morality and legality rarely intersect.
They are not guaranteed, meaning you have no entitlement to them.
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An entity trying to rake in as much money as it can. What a shocker!
Or is it a shocker because all y'all commoners were bullshitted into thinking how everybody is or is supposed to be an angel/fairy when it comes to morality, and then every now and again you hear news such as this (don't worry, next month you'll read about amazon or whatever other company, football player, or politician) ?
You go and be moral, pay up. They'll take that money, and run to Bermuda with it. And be sure to teach your offsprings to give as much as they can too, so their kids can go to Bermuda as well.
The tax code has always considered "in kind" donations as taxable income.
Always is a long time, and I would suggest in this case it's definitely bullshit. But the kind of Family Trust shenanigans that I was thinking of were exploited here for a long time, and there's still some exceptions built into the US law to make things convenient for the wealthy; like live-in nannys don't have to pay tax on their "free" room since they need access to the kids.
And again - this is NOT about Google's domestic income - this is foreign income, earned overseas..
Not sure how I care about the difference between where Google is dodging tax, is morality exclusively applicable in the US?
For the taxing gross revenue, a sale of $500 in US would result in paying tax on that $500 in the US. That would close the US loophole. It opens questions about the multi-lateral agreements between many countries about avoiding double taxation, but like all agreements that could also be walked away from. Short answer is that it is a solvable problem for someone with adequate political spine.
A company from the Netherlands makes a phone in China and sells it in the US for $500.
Which countries deserve to collect which taxes?
I think the point is that if you have company A in the the Netherlands which makes a phone in China and sells it in the US for $500, and company B in the Netherlands which makes a phone in China and sells it in the US for $500, then they should both pay the same amount of tax overall (other things being equal).
There is no good logical or economic reason for company A to pay (proportionately) less tax just because they're much bigger and richer and can hire more tax lawyers.
Except how much of company A is really in the Netherlands and how much is in the US or China? And is that bit of the company there because of tax policy or valid business reasons? You can point to obvious tax avoidance, but it's hard to encode tax avoidance in a bill.
Plus, suppose the Netherlands wants to encourage some behaviour like recycling or parental leave and does it with tax breaks. Company A might be bigger and better able to do those things. At what point is it legit and what point avoidance?
I stole this Sig
For the taxing gross revenue, a sale of $500 in US would result in paying tax on that $500 in the US. That would close the US loophole. It opens questions about the multi-lateral agreements between many countries about avoiding double taxation, but like all agreements that could also be walked away from. Short answer is that it is a solvable problem for someone with adequate political spine.
So if the phone is bought from a foreign subsidiary for $400 then do you charge tax on the $500 or the $100? If you charge the full $500 then consumers will be unhappy as their prices skyrocket. I don't actually know the situation right now since that's retail. But what about this scenario?
The company is owned in the Netherlands, made in China, sold in the UK, but are the R&D was done in the US.
How do you get an appropriate cut of the sale into the US?
I stole this Sig
This is tiresome. As I said it is easy to solve, just unpopular. And harder to solve with slightly less unfair systems.
For this example, it doesn't matter what it cost, where it was made. If it sold in US for $500 tax the $500. Yes prices will rise. However that is just an acknowledgement that currently the business is not paying its tax. Now it has to, so it has to either be less profitable or pass it on.
The key point was you pay under the normal systems if you are not tax dodging. You pay under this "unfair" system if you aren't, and that is done by saying this "unfair" system is an unaviodable floor being put underneath the tax dodge. There will always be a corner case that seems unfair, but allowing that is what opens the lovely loopholes that they use.