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France Plans 5% Digital Tax as Governments Chase Internet Giants

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Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#221
post #214
post #122

Earlier quoted context omitted.

> [...] and a part of it is due to bad policies being enacted by the EU - most notably the EU VAT on digital services, the GDPR and now the Copyright directive. These rules came into effect the last year or so, the "battle" for the tech industry was fought ten to twenty years ago. US companies all have had a huge advantage "only" being under the (at the time very criticized) DMCA while European companies had to abide…

The VAT directive on digital goods most certainly did not come into effect in the last year or so. > US companies all have had a huge advantage "only" being under the (at the time very criticized) DMCA while European companies had to abide by local laws, often in multiple jurisdictions. So we agree that Europe, in general, is a worse startup environment compared to the USA? Also, I think it's pretty disingenuous to c…

> Also, I think it's pretty disingenuous to claim that large companies like Apple or Microsoft got big because they didn't pay taxes in Europe.

I didn't, that is another story. I am saying that they had an easier time than they should have competing with and acquiring any European competition by effectively having a ~30% advantage and discount.

> They were big domestically. They were even significant internationally. Just not nearly enough to match US companies.

They all except Spotify got acquired before they could potentially become big companies. If you want to have large companies with thousands of employees in Europe they have to survive as domestic companies. Spotify had potential to become one, but at that point the Stockholm housing market was already in a bubble. https://www.ft.com/content/bdf04bc2-6a0f-11e6-a0b1-d87a9fea0...

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#223
post #216

Earlier quoted context omitted.

What do you mean "should they register for VAT"? You should be registering for VAT in your home country anyways. Or are you talking about additionally registering for VAT MOSS? The answer is no you don't have to, it's just convenient because it's less admin (as otherwise you should be registering for VAT in each EU country that you have customers). I knew all that from the previous 5 minutes I spent on it.

All this stuff is super confusing. https://www.austrade.gov.au/contact/faqs/i-want-to-export-my... says you need to register if: > your VAT taxable turnover is more than £85,000 (the 'threshold') in a 12 month period > you expect to go over the threshold in a single 30 day period WTF? How the hell would anyone know that? What if you never sell to the UK, but someone goes on a run because some product randomly becomes…

You can register after the fact. Why don't you people inform yourselves instead of being such whiny, clueless brats.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#224
post #216

Earlier quoted context omitted.

What do you mean "should they register for VAT"? You should be registering for VAT in your home country anyways. Or are you talking about additionally registering for VAT MOSS? The answer is no you don't have to, it's just convenient because it's less admin (as otherwise you should be registering for VAT in each EU country that you have customers). I knew all that from the previous 5 minutes I spent on it.

All this stuff is super confusing. https://www.austrade.gov.au/contact/faqs/i-want-to-export-my... says you need to register if: > your VAT taxable turnover is more than £85,000 (the 'threshold') in a 12 month period > you expect to go over the threshold in a single 30 day period WTF? How the hell would anyone know that? What if you never sell to the UK, but someone goes on a run because some product randomly becomes…

The bullet point right below the 2 you quoted literally answers you question. "If neither you nor your business is based in the UK. You must register as soon as you supply any goods and services to the UK (Same with EU)". Alternatively, don't do business in a country you consider to complex to deal with.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#225

Earlier quoted context omitted.

> This is what you choose to believe, to maintain your internal consistency in your own ideology. Dude, they're completely different. A corporation has to provide services people want to use of their own volition. A government takes money off people without asking. They are completely unalike and it shows in how the operate. Risking other people's money is something anyone can do. Risking your own money means you nee…

> A corporation has to provide services people want to use of their own volition. A government takes money off people without asking. [..] Ultimately, they rely on that monopoly of force [..] Distinguishing having a de-jure monopoly on force vs a de-facto monopoly on something else is not a useful practical difference to make. Other quantitative aspects of the relationship are more important to the analysis, and you…

> Distinguishing having a de-jure monopoly on force vs a de-facto monopoly on something else is not a useful practical difference to make.

It depends how the monopoly comes about. Many de-facto monopolies arise as a result of government intervention in the market. Some of it accidental (unintended consequences of other policies), and some of it intentional (enticed by lobbying money).

Natural monopolies which arise are not necessarily bad, but can be if they are essential and they're engaged in underhanded behavior like price fixing. In these cases, it is right that we have a legal system which can deal with such problems as they arise, but IMO, it's a mistake to try establish broad frameworks which try to deal the wrong causes of the problem (one of the causes of the unintended consequences mentioned above).

There are countless cases of government intervention in markets which ends up favoring big corporations and harming smaller businesses. I'm 100% in agreement that we should do what we can to prevent this kind of government-big-corp collusion. Reducing red tape for startups and ending government sanctioned monopolies (including a drastic restructuring of the patent system) are some examples. Another step towards this would be to greatly reduce the size of government, since the less they're responsible for, the less they can screw up.

> leading you to say things like "If you're just a lowly employee [..] you might think it doesn't matter to you" apparently without irony.

I use those words deliberately and with intentional irony. Employees simply see themselves that way because they feel in a position of powerlessness, even in some top jobs. For example, there are recent stories of game developers wanting to unionize. They apparently consider themselves to be "lowly" employees, if they can't take it upon themselves to demand better working conditions or salaries for skills which are in demand. What hope do we have if some the best paying jobs want to unionize? (Make no mistake, this will start with gaming, but spread to many areas of programming).

Unions have many problems and cause unintended consequences. They create red tape which leads to barriers of entry into the industry, and price fixing ends up becoming accidentally implicit in the market because of the union's interference. If game developers think their working conditions are going to improve under a union, they're terribly mistaken. What will really happen is a good portion of them will simply lose their jobs, most of them will have wage stagnation, and only the most specialized and skilled workers will be able to demand higher compensation.

> Similarly, the degree to which some corporations "take" money from people depends on the circumstances. People have to live somewhere, eat something, etc, and this has a big influence on the corporations they must give their wealth to. So distinguishing governments from corporations is not particularly meaningful or interesting, and leads you to artificially exonerate some bad activities of corporations whilst incriminating some good activities of governments.

Corporations are by no means perfect and bad behavior can't simply be excused. I also don't doubt that government does some "good activities". My complaints are more about the efficiency of how they do so. I believe more competition would lead to better services than government (and corporations) offers in almost all areas. (To be clear, I'm not an anarchist, but the smaller the government, the better).

We also need to look at consumer responsibility though. If consumers are outraged by the behavior of some corporations they do have skin in the game, and can protest the behavior by refusing to pay for their services. As much as I'm not a fan of things like big tech companies engaged in censorship, they're not essential services and if people are outraged enough they'll stop using them. On the other hand, the banking services which are unpersoning people for political views are different story: One, because they are essential, but two, because it is government red tape which prevents competitors from replacing them.

The biggest problem of government is that it simply wants to do more and more. Socialism gradually creeps in a step at a time, mostly unnoticed because each step is small and seems harmless. A few decades later and almost all personal liberties are under assault and top down control has become the norm, instead of bottom up market forces. The constitutional limitations of the US government are invaluable and the attacks on them are a disaster for the whole of humanity.

> individuals with more resources/power are free to move to the jurisdiction of a different government.

There some merit in this, but some governments will also still try to tax you even for earnings you make outside of their jurisdiction. Aside from that, corporations can locate to different jurisdictions, and will locate if taxation is more favorable to them elsewhere. A government therefore, needs to create an environment which is friendly to businesses, else their economy will go sour. The recent democrat fuckup of the NY Amazon deal is a good example of what bad government policy looks like. Yes, Amazon make enough money that they don't need tax breaks, but what favors have the Dems for New Yorkers? Anti-business policies damage the local economy for everyone, not just the greedy corporations.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#226

Earlier quoted context omitted.

Exactly. What a lot of governments seem to want is some form of tax on foreign companies for the privilege of gaining access to their local population/market. For physical goods we call that an import duty.

They do indeed want that, but what is it that has changed recently that makes this so much more urgent? People claim that digitisation has changed the equation, but I don't understand why. Google is for the most part a regular US exporter. It appears to me that the only thing that has changed is that the US has left everyone else in the dust, which causes envy.

What's changed is that the "foreign competition" are winning to the point that "local businesses" are closing. Exactly the same thing that drives calls for protectionism in physical goods industries.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#227
post #118
post #103

Earlier quoted context omitted.

Wouldn’t it be more accurate to say that it’s correcting an imbalance? Google operates in France but is able to undercut France businesses for digital content sold to French people ( merchandise is traceable ) because it happens to have an Ireland operation?

If the imbalance is that an Irish company is more competitive than a French one, then no, not really.

The problem is not that Ireland is a country using its taxes more efficiently than another. The problem is that one country can offer a much lower rate that is only viable for them if companies make their entire EU business as if it was happening in this country.

Let say you are Luxembourg, and the average tax is 30% of your profit in the EU. Luxembourg is roughly .1% of the EU population. Assuming an ideal world, a company would them make .1% of its profit in Luxembourg. Now, let say Luxembourg offers a deal with a company so that they can artificially put all the profit from its EU operations in Luxembourg: in order for the country to keep the same taxes, it would only need to have a tax rate of 0.03%. From the Luxembourg point of view, they have the same tax amount as before. And from the company perspective, they are now paying taxes as if they were only paying taxes in Luxembourg, which is peanuts for them.

Now, the current situation is not as caricatural as this scenario, but that is what is happening. The end result is just lower taxes created artificially (but legally). And the big problem is that it is not easy to fix while being in a EU context: the easiest solution would be to have common tax rates, though that would create some other issues. At the very least, closer tax rates would help the matter as moving your profit from one country to another is not free for the companies.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#228
post #153

Earlier quoted context omitted.

In this case, this will be the race to the bottom and smallest countries will be able to charge 0% tax just for the sake of office space rented since their domestic market is small enough to not bring much of income tax (Luxembourg for example). The issue here is with omitting responsibilities. If a company makes hundreds of millions of income in a country, it should pay some taxes there. There is a huge push in Pola…

That's interesting. Are there large companies who would pay this 1.5%, who do not at present pay much Polish VAT? Or employ many people? Otherwise, why not tweak existing large taxes? You could do it on the employer's social security contribution (i.e. the part paid before not after the nominal salary) to make it sound better.

Companies like Google, Facebook etc. don't pay taxes in Poland by claiming expenses in Ireland/Holland. Thus they are "at loss" in Poland. The revenue tax would allow no tax avoidance due to that.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#229
post #208

Earlier quoted context omitted.

In this case, this will be the race to the bottom and smallest countries will be able to charge 0% tax just for the sake of office space rented since their domestic market is small enough to not bring much of income tax (Luxembourg for example). The issue here is with omitting responsibilities. If a company makes hundreds of millions of income in a country, it should pay some taxes there. There is a huge push in Pola…

There would be no race to the bottom if there was a real, tangible benefit to being established in a high tax country - ie, better public services, a more educated workforce, more business friendly environment, etc. As it is right now, very few countries justify their tax rates and that prompts people and businesses to do the rational thing and go where they pay less for the same thing. I think it's very concerning t…

A country does not have to justify its tax rates before Facebook. A country should focus on serving its citizens, not multinationals.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#230
post #188

Earlier quoted context omitted.

In this case, this will be the race to the bottom and smallest countries will be able to charge 0% tax just for the sake of office space rented since their domestic market is small enough to not bring much of income tax (Luxembourg for example). The issue here is with omitting responsibilities. If a company makes hundreds of millions of income in a country, it should pay some taxes there. There is a huge push in Pola…

That sounds like a version of VAT that favours large integrated companies. What are the proposed benefits?

No tax avoidance. Companies pay millions in taxes just to get them back in refunds. While this is not bad, it starts to look bad when they don't generate fake expenses locally, but they do that in a different country. It means that the money gets neither to the government, nor the local market. So the revenue tax guarantees, that at least government can get that money.

Other benefits are virtually no accounting (the money would be taken on a bank level), lower taxes for the majority of society (SMB's paying fraction of what they pay now), no tax-gray areas and limiting to long chains of "middle man".

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