Tech Giants Set to Face 3% Tax on Revenue Under New EU Plan

> Taxing revenues derived from users in your own country is not extra-territorial taxation.

They are taxing on revenues that Google/Facebook/Twitter make on US citizens, advertising to US users, from US sales offices. That's extraterritorial taxation.

If they merely taxed % of global revenues made on EU citizens, I wouldn't object. Let's say you estimate a company makes $10 per yearly active user per year, so if you have 300 million active EU citizens, and you made $3 billion in revenues, then apply 3% tax to that.

But that's not what this proposal does. Perhaps you need to read it.

The customer is always the one who pays. Btw I would say put a 50% tax on ads.

>Do we make the word a better place of we cause the destruction of many life-style businesses that provide jobs, a public service, and aren't rapacious and create an environment where only the most aggressive and profitable companies can survive at all, but you get to exact a 3% tax on them?

The 3% tax isn't being implemented because it's the best system. It's being done because tech giants have consistently weaseled their way around the normal way of taxing businesses by fiddling with transfer prices and corrupting governments.

>Now what? US Internet services still makes money, EU citizens still have access, but there's no corporate footprint. Do you really think with such huge traffic, if Google and Facebook and Twitter shutdown local offices and entities that businesses still won't advertise with them? Advertisers go where the audience is.

In this hypothetical scenario Google/Facebook/Twitter lose all their actual European clients, the advertisers. It's easy for the European states to just block the few relevant financial flows, there's no need for a Great Firewall for the users.

>I think many people who came to the internet decades later perhaps don't have that sense of awe I do, that sense of its specialness. And this continual chipping away at that original Utopian dream with nationalistic, provincial concerns, is to me the unacceptable collateral damage.

Are you also arguing for either an internet government to do internet wide taxation, or a ban on commercial use of the internet? Because otherwise what you're arguing is that tech giants should be able to use the independence of cyberspace that we both cherish to do a run around of the absolutely normal practice of taxing businesses that operate in specific geographies. If we let them keep doing that then states will end up having to put up more and more draconion barriers to the internet well beyond your worst case scenario of a Great Firewall of Europe.

> The 3% tax isn't being implemented because it's the best system. It's being done because tech giants have consistently weaseled their way around the normal way of taxing businesses by fiddling with transfer prices and corrupting governments.

No, they admit it's not the best system, that's why they claim it is short-term only. The best system would be an international treaty to harmonize corporate taxes.

>Are you also arguing for either an internet government to do internet wide taxation, or a ban on commercial use of the internet?

I'm arguing you should be taxed for the actual business you do. If I make a dollar because I sold an ad to a local company in the EU because they wanted to reach a customer in the EU, fine. That's a rational tax law. It's not rational to tax for business done elsewhere, sold to people elsewhere, for customers elsewhere, to be counted. Spotify is an EU company, do you think the US should tax them based on global European subscriber revenue?

Is internet wide taxation a bad idea? Not necessarily, but it's impractical because whose going to vote on how to distribute the revenues? Who's going to collect, ICANN/ISOC? At best you could come with a cross-regional harmonization of tax regions and agreed upon treaty on how those rates are calculated, but it is up to localities to impose and collect them.

> In this hypothetical scenario Google/Facebook/Twitter lose all their actual European clients, the advertisers. It's easy for the European states to just block the few relevant financial flows, there's no need for a Great Firewall for the users.

Really? How would they do that. It's easy to block purchasing physical goods online and have customs block it. How do you block virtual goods? Block payment processing systems? Foreign bank transfers? Bitcoin? Does the EU prosecute a local business for buying ads on Google or Facebook using a foreign bank account?

I mean, the barrier to buying stuff online, especially purely digital goods, is very low.

If companies with hundreds of billions on the line can figure out how to restructure themselves to avoid taxes, you don't think they can figure out how to restructure themselves to avoid this tax? Google and FB might just decide to pay it, but firms with less EU profits might decide it's not worth it and look for mechanisms around it.