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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

#241

Post by conanbatt »

Buge wrote: post #127
conanbatt wrote: post #104

Earlier quoted context omitted.

> If the government says that for every dollar in revenue you have to pay 20 cents in taxes then Walmart will either raise prices by ~20% or require their suppliers to lower prices by ~20%. In no event do they go out of business, because their customers still need what their suppliers produce. You are assuming there is no elasticity here. People would stop working for walmart and go work for google, in this example,…

How would walmart raising their prices by 20% cause their employees to go work for google? Why would google even give them job offers?

If they raise their prices, people buy less, so profits are less, so its value as investment goes down, so it gets disinvested. Where would that money go? to any company with higher returns, in this case, Google.

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

#242

Post by kgwgk »

3pt14159 wrote: post #236
jfasi wrote: post #195

Personally, I like this proposal. I like that it's simple: any overly complex system will almost inevitably result in distortion and loopholes. A few points of my favorite points: * It's done on revenues and not profits. This avoids the impossible question of where profits are realized: if you make money in one country but displace that earning by costs somewhere else, it's practically impossible to determine where t…

I have yet to talk to someone that can explain to me why a VAT wouldn't be better. We already know how VATs work, they're already fair, they already handle low-margin companies very well. Why bother with a revenue tax? It heavily stilts the game in favour of bigger players because it encourages vertical integration. I agree that our largest tech companies are already too powerful and need to have a higher tax burden…

There is already a VAT! This will come on top of it.

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

#243

Post by anonymouz »

zerostar07 wrote: post #223
jfasi wrote: post #216

Earlier quoted context omitted.

> companies could create 2 resellers across europe, split the revenue and avoid the tax That's exactly the point of taxing revenue: under a profit-based taxation scheme you'd end up with a net profit of zero. Revenue taxation schemes would double-tax this setup.

but if the revenue is below the limit, they wont be taxed, and i guess they can play that cat and mouse game forever.

They would be just begging for the limit to be removed then though.

Like the current 'tax optimization' schemes have given rise to this proposal.

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

#244

Post by chronial »

throwaway77384 wrote: post #200
shady-lady wrote: post #187

Earlier quoted context omitted.

What was the point of the European Single Market then? Or was that just meant to benefit the larger industrial nations(cough, Germany, cough)? It would seem to be sour grapes on the parts of France & Germany that they weren't chosen to the main entrypoint to the EU for some US companies.

Well, I think you are making a very valid point. Germany and France sure like throwing their weight around and have earned plenty of appropriate criticism for their actions. They will most likely continue to do so. Just like with the US on a global level, large, influential economies will often bully smaller ones into situations favourable to their own goals. I do not know what the point of the European Single Market…

> I do not know what the point of the European Single Market was. In fact, I'd be interested to hear someone with the know-how tell me. Was it to create a trading zone where the same rules applied to everyone? Or was it just supposed to ease trade across borders by creating some kind of customs framework and abolishing tariffs, etc.?

Not that I have "the know-how" :), but my understanding is that the point was to ease trading. This is both done by abolishing tariffs as well as unifying regulations. If you can sell a product in your own country, there's a high chance that you can sell it anywhere in the EU – this promotes trade.

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

#245

Post by anonymouz »

felipeko wrote: post #239
adventured wrote: post #234

Earlier quoted context omitted.

> You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity. The reason this policy is being pushed, is because some nations have benefitted a lot from US tech companies, eg Ireland, while others eg France and Germany, are jealous that they're not getting their spoils (while simultaneously seeing no large domestic tech company creation). France and Germany have vast influenc…

Why don't Germany and France offer the same as Ireland?

1) It's a race to the bottom. If Germany or France lower their taxes, Ireland will go even lower.

2) It works for Ireland to have low taxes, because they are a small country collecting the tax for the entire profits in the EU. Even if their tax rate is low, they still get a sizable benefit. This can't work for the big countries.

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

#246

Post by namenotrequired »

3pt14159 wrote: post #236
jfasi wrote: post #195

Personally, I like this proposal. I like that it's simple: any overly complex system will almost inevitably result in distortion and loopholes. A few points of my favorite points: * It's done on revenues and not profits. This avoids the impossible question of where profits are realized: if you make money in one country but displace that earning by costs somewhere else, it's practically impossible to determine where t…

I have yet to talk to someone that can explain to me why a VAT wouldn't be better. We already know how VATs work, they're already fair, they already handle low-margin companies very well. Why bother with a revenue tax? It heavily stilts the game in favour of bigger players because it encourages vertical integration. I agree that our largest tech companies are already too powerful and need to have a higher tax burden…

> It heavily stilts the game in favour of bigger players

I drew the opposite conclusion, as the proposed tax applies only to big players.

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

#247

Post by Eridrus »

jfasi wrote: post #195

Personally, I like this proposal. I like that it's simple: any overly complex system will almost inevitably result in distortion and loopholes. A few points of my favorite points: * It's done on revenues and not profits. This avoids the impossible question of where profits are realized: if you make money in one country but displace that earning by costs somewhere else, it's practically impossible to determine where t…

> meaning they have a strong incentive to increase usage of digital services and a disincentive to put in place regulatory measures that would decrease adoption and harm growth.

They have an incentive to increase revenue; you can do this by increasing the rate much more easily than promoting growth. The only thing working against this outcome is EU institutional inertia.

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

#248

Post by zerostar07 »

anonymouz wrote: post #243
zerostar07 wrote: post #223

Earlier quoted context omitted.

but if the revenue is below the limit, they wont be taxed, and i guess they can play that cat and mouse game forever.

They would be just begging for the limit to be removed then though. Like the current 'tax optimization' schemes have given rise to this proposal.

so how is this an improvement then

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

#249

Post by prepend »

Eridrus wrote: post #232
jfasi wrote: post #204

Earlier quoted context omitted.

You comment doesn't make sense to me. Face it: some form of taxation was going to appear no matter what. It's inevitable. You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity. As tax proposals go, this one is pretty reasonable. This isn't a punitive measure because it sets no one apart for any past behavior. It also isn't a "shield from competition" because all companie…

> Face it: some form of taxation was going to appear no matter what. It's inevitable. You don't just roll into a country, make billions of dollars, and expect to pay no tax in perpetuity. This is basically how exports work, why should tech be different?

Actually, this is what “free trade” is exactly. No import tariffs between most EU/US trade.

Similarly to what OP said, since this tax disproportionately affects US companies doing business in EU, the US is likely to add a torrid to EU exports to the US. And the argument “You don’t just roll into a country, export billions of dollars of cars (or whatever), and expect...”

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

#250

Post by felipeko »

anonymouz wrote: post #245
felipeko wrote: post #239

Earlier quoted context omitted.

Why don't Germany and France offer the same as Ireland?

1) It's a race to the bottom. If Germany or France lower their taxes, Ireland will go even lower. 2) It works for Ireland to have low taxes, because they are a small country collecting the tax for the entire profits in the EU. Even if their tax rate is low, they still get a sizable benefit. This can't work for the big countries.

1) Why would Germany and France care? They have not been collecting taxes anyway, race to the bottom until Ireland can't anymore.

2) It works for Ireland because other countries prefer not to engage. If Germany had the same tax rate it wouldn't work for Ireland anymore right? As what is now Ireland only revenue would be split between the two or more countries.

When this happen wouldn't Ireland have to raise taxes if it wanted to keep the same money?

It appears to me that this would achieve an stable and healthier equilibrium after some time.

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