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Spain planning on going ahead with ‘Google tax’ despite US tariff threats

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201–210 of 275 posts

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#201
post #71

I'm not sure of the details of Spain's proposal but something needs to be done really to make taxation more fair. At the moment you get headlines like "Facebook paid just £28m tax after record £1.6bn revenues in UK" because they fiddle it with offshore tax havens while normal UK businesses have to pay more like 30% of their income in tax, not 1.7%.

normal UK businesses have to pay more like 30% of their income in tax UK corporation tax rate is 19%. USA corporation tax rate is 21%. Pushed down partly due to low tax competition from the rest of the world, i.e. places like the UK. Facebook pay little corporation tax in the UK because it isn't a British company. It's an American company. It was created in America. Most of its employees are there. Its headquarters a…

I'm sorry if this is a misunderstanding but I thought you pay tax where you do business. So Facebook should be tax on profits generated in the UK - but they play with their corporate structures to make it look like they aren't actually doing any trade here.

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#203
post #5

Earlier quoted context omitted.

The EU will never close tax loopholes since there will always be a veto from the likes of Ireland, Netherlands, Luxembourgh or UK.

Wow. The EU requires unanimous approval. The Europeans looks at the US’ Articles of Confederation and said, “we can make that work.” They need a rogue group of reformers that create a new system of government, illegally, like the US’ Federalists. Only then will the EU get its shit together.

He he. The US Articles of Confederation had an European predecessor: https://en.wikipedia.org/wiki/Liberum_veto :-D

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#204

Let's take a moment to savor the irony here - Donald Trump is leading a charge to stop unfair taxation of American tech companies abroad, while they openly work to get him out of office by any means necessary.

Why is this taxation unfair?

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#205
post #79

An honest question - What outcomes would there be if countries like Spain decide one day to impose exorbant taxes, like those totalling $1b annually for Google? Would it just be cheaper for these companies to pull out? And what international recourse would happen?

Only when the taxes reduce their profits to zero. As long as a country only taxes domestic revenue, that's unlikely to happen. And in my opinion, countries should be taxing (domestic revenue - domestic costs), rather than allowing companies to move their undeclared profits around to the nearest tax haven to dodge all taxes.

So if I setup a company to do research and development in Spain, and spend $100 billion dollars creating a breakthrough technology, then I license my breakthrough technology to Americans for $1 billion dollars per year, America should be taxing my $1 billion per year in revenue as if it were 100% profit because I don't have any expenses in America?

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#206
post #201

Earlier quoted context omitted.

normal UK businesses have to pay more like 30% of their income in tax UK corporation tax rate is 19%. USA corporation tax rate is 21%. Pushed down partly due to low tax competition from the rest of the world, i.e. places like the UK. Facebook pay little corporation tax in the UK because it isn't a British company. It's an American company. It was created in America. Most of its employees are there. Its headquarters a…

I'm sorry if this is a misunderstanding but I thought you pay tax where you do business. So Facebook should be tax on profits generated in the UK - but they play with their corporate structures to make it look like they aren't actually doing any trade here.

Governments generally tax everything they can think of. So there are many different taxes and Facebook pays them all.

There's VAT, which is essentially passed through to their customers but the seller collects it.

There's employment, local government taxes. Facebook pays those because it has workers in the country.

There's corporation taxes, which are taxes on corporate profits. Facebook pays some of these because technically speaking there is no one company called just "Facebook", there's Facebook Inc (USA), Facebook Ltd (UK) etc and they buy/sell services from one another. Specifically, Facebook USA buys software development and sales services from Facebook UK, and Facebook UK buys the rights to the name and the ability to insert ads into the ads system from Facebook USA. We think of them as a single firm but legally they aren't, and this follows from the lack of one global government so it's not a small quirk or weird legal hack Facebook are engaged in: there is literally no such thing as a company of the world.

To what extent corporate profits are allocated to specific countries determines what amount of corporation tax is paid, however, all such allocations are entirely arbitrary. None can be said to be more rigorous or accurate than any others, although tax lawyers make a lot of money out of trying :)

For instance, all of these positions could be reasonably argued:

1. Facebook makes zero profit in the UK and thus should pay no corporation taxes at all. That's because Facebook makes money due to the actions and software written by the employees in the USA; without the UK office Facebook would still exist but without the USA office it wouldn't. Therefore all money is "made" in the USA and none is "made" in the UK.

2. Facebook makes lots of profit in the UK because if every British person stopped using Facebook tomorrow, it'd punch a big hole in their revenue stream. The incremental costs of serving a British customer over an American customer is tiny because they even speak the same language, so once the US version of the site was developed, the costs were already sunk. Thus all revenue from British users is pure profit and so 19% of all revenue originating from British firms should accrue to the UK government.

3. Facebook doesn't make any money in the UK, it actually makes its money in the Ireland because that's where its EU registered headquarters is, and EU corporate tax law was designed to allocate profits to the nameplate location.

4. Facebook makes its money in Ireland because that's where the datacenters are. This is the critical aspect because it's ads are sold in real time auctions and thus the location where the click is processed is where the "sale" is being made.

Of course this is circular: in argument 2 we talked about "British firms" but what is a British firm? Is ARM? It's owned by the Japanese now. Maybe it's a Japanese firm. Or maybe it's still British because that's where most of the work is done.

Because the concept of "making money" for an international firm is so vague, and impossible to refine in a principled way, in practice what happens is a bunch of well paid corporate tax lawyers sit down with the government tax agencies and thrash out some sort of ad hoc deal or arrangement. The company agrees to pay some tax to the UK even though they may feel entirely American and in return the government agrees not to go to court and fight a very complex and expensive tax case that they might well lose, depending on the whims of the judge and/or how vague the various tax treaties are written.

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#207
post #204

Let's take a moment to savor the irony here - Donald Trump is leading a charge to stop unfair taxation of American tech companies abroad, while they openly work to get him out of office by any means necessary.

Why is this taxation unfair?

Someone else explained it well here: https://news.ycombinator.com/item?id=21713883

The proposed new tax is on top of everything in place, just to placate political rhetoric about big American tech "getting away".

This is entirely a nationalist, protectionist tax Spain is levying, and it's not rooted in reason

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#208

Earlier quoted context omitted.

Wow. The EU requires unanimous approval. The Europeans looks at the US’ Articles of Confederation and said, “we can make that work.” They need a rogue group of reformers that create a new system of government, illegally, like the US’ Federalists. Only then will the EU get its shit together.

The reason the EU's system is so similar is that the circumstances are similar. If you don't require unanimous approval on critical issues then why would smaller countries ever join with Germany, France, Italy, and the UK around?

If you require unanimous agreement how can you ever prevent a bad actor from taking advantage of the system?

Re: Spain planning on going ahead with ‘Google tax’ despite US tariff threats

#209
post #99

Earlier quoted context omitted.

The 'double-taxed' argument is so lame. Money circulates in a system and gets taxed basically infinitely. Worker gets paid and pays income taxes and retirement taxes. Worker spends their pay, and has to pay sales taxes. Business gets revenue from that purchase, and has to pays taxes. Business gives it to employee as salary. Taxes. Employee spends it. Taxes. Taxes. Taxes. There is no such thing as 'double-taxation'. I…

People always look at it differently once it's their money being taken away. Anyone who thinks running a business is easy or more profitable than it should be should try to run one.

> People always look at it differently once it's their money being taken away.

Yeah, they tend to take on a more selfish attitude. People will also believe all kinds of dumb or awful things if they think it justifies their self-interest (hence the cliched quote I won't repeat).

That's why I think moderation rather than ideological purity is probably the way to go.

> Anyone who thinks running a business is easy or more profitable than it should be should try to run one.

Making ends meet isn't easy for a lot of people, either. For them, their hard work doesn't have as much of an upside at your hard working business owner.

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