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

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

#161

Post by pjc50 »

runeks wrote: post #118
lovich wrote: post #101

Why are a large amount of people treaing access to other nations markets as a human right? I can see the argument behind saying you should have access to your local market be realtively free, you have to live somewhere, and you and your local societies interests are relatively aligned. However,when it comes to foreign markets many people here seems to want the best of both worlds. It's a paraphrase but it seems like…

> Why are a large amount of people treaing access to other nations markets as a human right? Why would you want to restrict (economic) interaction between two parties just because they’re far away from each other? I’m sure some of the local companies in my area would love to prevent me from buying goods elsewhere, but why would I want to buy goods elsewhere unless they are either cheaper and/or of better quality? In…

Usually only one of the parties is a human being and the other is an international megacorp.

https://www.theguardian.com/technology/2015/jun/24/amazons-u...

If I'm in the UK and choose to buy something from Amazon, it will be shipped from a warehouse in the UK owned by Amazon.co.uk Limited.

However, I pay my money to Amazon EU Sarl which is based in Luxemburg. This company is a tax shell, it contracts back to amazon.co.uk for the fulfilment. The Sarl keeps all the profit.

According to this https://beta.companieshouse.gov.uk/company/FC032354/filing-h... (see full accounts, which ironically are served from AWS), the SARL made profits of €481m in 2016. Futher down the PDF we see they are involved in a number of tax disputes about this.

Fundamentally if I buy goods from a .co.uk website that are shipped from a UK warehouse, it is very hard to argue that the profit should be counted in Luxemburg.

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

#162

Post by barry-cotter »

asdfaoeu wrote: post #156
barry-cotter wrote: post #152

Earlier quoted context omitted.

That’s not true and if you can believe that after taking several economics courses it speaks poorly of your teachers. The main benefits of free trade are in specialisation. People specialise in what they’re good in and trade for other goods and services. Specialisation leads to greater efficiency, meaning you can do the same with less, or more with the same amount. Notice the complete lack of the words domestic produ…

He is admitting those benefits. His point is that with different tax rates and regulations the market is distorted and if anything imposing tariffs / revenue taxes is just equalising the market. I don't think he's talking literally about units.

If other people do stupid things you don’t have to do stupid things too. Market distortions, different tax rates and regulations do not change how returns to specialisation and gains from trade work.

Anti-dumping tariffs are stupid because it not notnto your benefit to punish people for giving you cheap stuff that should be expensive. Being able to have different tax rates is part of the power to tax, which is part of being sovereign. Equalising the market is a fool’s game. The market is what it is. If you want to help some people or groups by all means do it, but tariffs are a very inefficient way to do it. Transfer payments ftw!

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

#163

Post by jackvalentine »

jimmywanger wrote: post #77
jackvalentine wrote: post #76

Earlier quoted context omitted.

What is the business purpose of using amazon.co.uk rather than Amazon US if you're warehousing in the US and shipping worldwide?

I can think of a few off the top of my head. Bouncycastle (a crypto library) is hosted in Australia because I think the US crypt laws want to ban the export (download) of military grade munitions. Great Gatsby (the novel) is free to download if hosted in Australia. In the US, the copyright laws forbid the download of Great Gatsby mainly because of Disney. Ever wonder why Mickey Mouse isn't in public domain? Also, if…

So if you're using the legal or perceptional advantages of trading "out" of Australia (or the UK, or wherever)... why shouldn't you be subject to laws, including tax laws, there?

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

#164

Post by andosa »

barry-cotter wrote: post #159
cgag wrote: post #154

Earlier quoted context omitted.

I notice that domestic production seems to be implicitly valued at zero which seems likely to be wrong to me.

The case for free trade does not care about borders. It cares about consumption, which there will be more of if things can be produced most efficiently. Things can be produced most efficiently with maximum specialisation, which is likeliest with free trade. Domestic production can be consumed more easily than foreign production so it is more valued because transport costs are lower. The border between San Francisco i…

Overrating domestic value creation is how you end up being a third world country. I think you are oversimplifying free market dynamics. Free market doesn't magically create optimal results for consumers (see monopolies and the resulting lack of competition and suboptimal results for consumers as one example). Similarly it doesn't magically create optimal results for maximising the well being of a country.

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

#166

Post by dtech »

nothrabannosir wrote: post #132
sjg007 wrote: post #58

Earlier quoted context omitted.

It's pretty clear. You are selling in the UK so the revenue would be taxed there. Post-brexit the French customer will pay customs duty. The Google ad revenue will be paid by Google based on the market. So the ad run in France generates EU revenue. Doesn't matter if the payor was an American or anyone else. If you are US citizen then you pay world wide income tax. You can deduct foreign taxes paid up to a limit. Bett…

> Post-brexit the French customer will pay customs duty. Out of interest: Would they? This is an EU law, so that would assume UK kept it after brexit , either specifically or through some wholesale “fork all the trade laws”. But it would also imply a lack of inter-European treaties, i.e. fork the laws but don’t keep the treaties. I haven’t kept fully up to date with the latest brexit developments , are we far enough…

The default on EU imports is customs duty. Certain countries (iirc Switserland, Norway and a few others) have trade agreements that waive the fees both ways.

I assume at time of brexit UK will have such a treaty, but it isn't guaranteed.

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

#167

Post by iuoershg »

mankash666 wrote: post #85

Incorporate your business outside the EU. It will protect you from unreasonable taxes and regulations. The internet has no boundaries or residency or citizenship. Especially if you are a software-as-a-service business, ignore everything about the EU and domicile outside it.

Agreed.

Do you or someone else have a good idea on where to incorporate? I'm a EU citizen finishing my software based service, and while I can comply with all the EU rules after having cash flow, while bootstrapping I just can't take that risk alone.

Are there any good resources to read up on these things? Books, blogs? What kind of lawyer should one consult in the country where you incorporate?

Would opening a Delaware LLC be possible/preferable for a non-US-citizen? Or are we talking carribean

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

#168

Post by saas_co_de »

ganeshkrishnan wrote: post #149
tonyedgecombe wrote: post #114

Earlier quoted context omitted.

The problem they are trying to resolve is companies shifting the profit to another country with lower corporation tax.

Profits are always shifted legally. For example Google Australia is separate entity from Google Ireland. What Google au might do is 'lease' trademarks, copyrights, logo etc from Google Ireland and pay them for it. The amount paid varies year to year but all of it is legal and money this changes countries legally. This is Google au expense that's tax deductible. Also, I chose Ireland as an example because it offers ta…

> Profits are always shifted legally

That is highly debatable. Companies and wealthy individuals obtain "legal opinions" from lawyers stating that these schemes are legal, but that is just cover from criminal prosecution.

Any government can declare any of these schemes invalid at will and impose any tax they want. Taxation at this level is a complicated business though. These corporations are larger than most of the world's governments and their owners are permanent not elected.

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

#169

Post by TheAdamAndChe »

barry-cotter wrote: post #159
cgag wrote: post #154

Earlier quoted context omitted.

I notice that domestic production seems to be implicitly valued at zero which seems likely to be wrong to me.

The case for free trade does not care about borders. It cares about consumption, which there will be more of if things can be produced most efficiently. Things can be produced most efficiently with maximum specialisation, which is likeliest with free trade. Domestic production can be consumed more easily than foreign production so it is more valued because transport costs are lower. The border between San Francisco i…

> It cares about consumption, which there will be more of if things can be produced most efficiently.

This is part of the problem. Production doesn't occur in a vacuum, and the most efficient methods of production are often either terrible for the workers, terrible for the environment, or terrible for society.

Pure, unfettered globalization would be ideal if the goal was production and wealth generation maximization because it maximizes the labor pool and capital allocation efficiency, but those shouldn't be the only things that governments and economists worry about.

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

#170

Post by tonyedgecombe »

ganeshkrishnan wrote: post #149
tonyedgecombe wrote: post #114

Earlier quoted context omitted.

The problem they are trying to resolve is companies shifting the profit to another country with lower corporation tax.

Profits are always shifted legally. For example Google Australia is separate entity from Google Ireland. What Google au might do is 'lease' trademarks, copyrights, logo etc from Google Ireland and pay them for it. The amount paid varies year to year but all of it is legal and money this changes countries legally. This is Google au expense that's tax deductible. Also, I chose Ireland as an example because it offers ta…

>Profits are always shifted legally.

That doesn't mean it isn't a problem.

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