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

bloomberg.com

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

#251

Post by marcosdumay »

lovich wrote: post #121
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…

As a response to several people stating that free trade is better for everyone. I've taken economics courses, I understand how free trade is better overall. However, those calculations only work when both sides follow the same rules. Once you have different groups of people with different values, whether it's the EU valuing privacy, China valuing domestic production, or the US valuing intellectual property, absloute…

The more diverse are the people trading, the better trade works for improving everybody's life.

Where it fails is when there are market failures. Like when you have a naturally the winner takes all dynamic, asymmetric information, and some shady government intervention.

And, of course, the communications market is full of all of those.

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

#252

Post by MarkMc »

jfasi wrote: post #204
adventured wrote: post #197

Earlier quoted context omitted.

> The best thing about this proposal is that it sets up a harmonious relationship It does the exact opposite. It spurs a further acrimonious relationship between the major economies of the EU and the US. Particularly France and Germany, which are a combined outsized share of the EU economy and represent ~80% of the trade deficit that the US has with the EU. This new tariff exists solely because the EU can't compete o…

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…

There is already some form of taxation - VAT in the UK is 20%.

Why does the UK deserve more than 20%, given that the vast majority of Google and Facebook's engineers and managers are in the US?

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

#253

Post by dmoo »

adventured wrote: post #234
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…

> 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…

Not sure how Ireland is getting richer and richer on the back of this given there is very little tax.

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

#254

Post by whb07 »

lovich wrote: post #121
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…

As a response to several people stating that free trade is better for everyone. I've taken economics courses, I understand how free trade is better overall. However, those calculations only work when both sides follow the same rules. Once you have different groups of people with different values, whether it's the EU valuing privacy, China valuing domestic production, or the US valuing intellectual property, absloute…

No it never breaks down. Milton Friedman commented some 30 years back to the typical "we should have higher tariffs on steel, because its unfair that the japanese are subsidizing their exports".

His response? "Well that benefits the American consumer tremendously... we are sending them pieces of paper(dollar) and we are getting hard goods in return at a significant discount". If you think in in the absolute terms, wouldn't you want to trade a silly paper for steeel/cars/whatever?

Also, where does the Chinese go with these dollars? Definitely not the Chinese store, they take Yuan. How about Japan? Nope, they take Yen. So...who takes dollars? At some point they have to come back and spend it either directly(investing/purchasing american goods) or indirectly(trading dollars -> random currency) which then leads the other party holding dollars to go out and buy American goods.

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

#255

Post by mattmanser »

MarkMc wrote: post #252
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…

There is already some form of taxation - VAT in the UK is 20%. Why does the UK deserve more than 20%, given that the vast majority of Google and Facebook's engineers and managers are in the US?

You don't understand how VAT works.

If I spend £100 on AdWords as a company, the £20 VAT comes off my VAT bill. I pay £20 less.

So Google's VAT bill is utterly inconsequential and meaningless.

VAT is only paid once by consumers for products, advertising is a company expense that simply shifts the VAT one level down the chain. It doesn't get applied at every level on the supply chain, it gets passed down.

So if Amy's Amazing Tours sells a £100000 tour round London, without any advertising, it generates £20000 VAT paid by Amy.

If the same tour is sold by Mike, for the same price of a 100k, but with £50000 worth of Google adverts, Mike pays only £10000 VAT with Google paying £10000 too. Still adds up to £20000.

Fact is, Google are using the UK's infrastructure, our commons, our laws, our police force, our army, our NHS, our roads, our telecommunications, etc. to do business. And need to contribute to it. Plus we tax economic activity to support our welfare systems for our society and Google/Facebook/etc. are circumventing that.

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

#256

Post by rmah »

TheCoelacanth wrote: post #83
cromwellian wrote: post #10

Earlier quoted context omitted.

> Every right. Their government, their citizens, their laws. If a company doesn't have offices in your country, it's not yours. >These companies exist globally Well, maybe the net result is to get out of the EU then, if the costs of 3% of global revenues exceed profits. If you don't think a company that is mostly non-profit (Twitter) shouldn't exist, I feel that's a pretty pathetic position. So you're either a very g…

This is not a tax on global revenues. It is a tax on EU revenues. This article does not make that clear but other articles about the subject[1][2] include that important detail. [1] http://www.dw.com/en/eu-prepares-revenue-based-tax-on-us-tec... [2] https://www.bloomberg.com/view/articles/2018-03-16/eu-digita...

It really is a tax on global revenues. It's a tax on global revenues that is enabled by the fact that EU residents get services for free, which enable the global revenues. But the companies are also paying a VAT/GST/sales tax on some of those revenues in nations that charge them.

Let's use lumber as an analogy. Let's say the trees are in nation A. And a company from nation B is cutting them them down to make lumber (and is paying appropriate taxes in A for licenses, employees, land, etc). Lumber which is sold to companies in nations C, D and E. And appropriate taxes are paid on those sales. The company also pays income tax in nation B. The EU tax is like nation A saying, "you're using our trees to make even more money in nations C, D and E -- pay us a share of those sales!" In this analogy, the users are the trees.

To use another analogy, it's like demanding farmers pay taxes on the revenues that McDonalds makes. It's just silly.

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

#257

Post by rmah »

crispyporkbites wrote: post #17
cromwellian wrote: post #10

Earlier quoted context omitted.

> Every right. Their government, their citizens, their laws. If a company doesn't have offices in your country, it's not yours. >These companies exist globally Well, maybe the net result is to get out of the EU then, if the costs of 3% of global revenues exceed profits. If you don't think a company that is mostly non-profit (Twitter) shouldn't exist, I feel that's a pretty pathetic position. So you're either a very g…

Twitter is not a non profit by any stretch of the imagination. If a company sells a product (ad space in this instance) in a geography they are doing business there and should pay taxes there.

They do already. The EU proposal is that Twitter also pays taxes on that ad revenue, on a pro-rated basis, where the users reside. This is very different.

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

#258

Post by electricEmu »

prepend wrote: post #249
Eridrus wrote: post #232

Earlier quoted context omitted.

> 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...”

The accounting is setup to selectively avoid paying taxes in certain countries.

That's free trade. It's also shady and selective to avoid paying taxes for infrastructure the company uses. That's kind of screwed up.

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

#259

Post by jccooper »

dmoo wrote: post #253
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…

Not sure how Ireland is getting richer and richer on the back of this given there is very little tax.

Ireland is more than its tax revenues.

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

#260

Post by Joeri »

felipeko wrote: post #250
anonymouz wrote: post #245

Earlier quoted context omitted.

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…

If all tax rates are lowered to ireland’s rate then there won’t be enough tax revenue to fund the existing social infrastructure.

If lower taxes were always better why have any taxes at all?

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