Earlier quoted context omitted.
It's complicated. "Money they made in their country" is hard to define. Large companies abuse intangible assets to shift profits around, but it's hard to say at what point abuse starts. For example, Google USA sells advertising to its clients. But, the assets it is selling are actually owned by Google Ireland. Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has n…
Shod google not be taxed twice in this example? Once on the income made in the USA when they sold the actual thing, and once in Ireland when the Irish branch sold the thing to the USA branch? Not to mention sales tax....
G7: Rich nations back deal to tax multinationals
121–130 of 931 posts
Re: G7: Rich nations back deal to tax multinationals
#122Earlier quoted context omitted.
It's complicated. "Money they made in their country" is hard to define. Large companies abuse intangible assets to shift profits around, but it's hard to say at what point abuse starts. For example, Google USA sells advertising to its clients. But, the assets it is selling are actually owned by Google Ireland. Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has n…
Shod google not be taxed twice in this example? Once on the income made in the USA when they sold the actual thing, and once in Ireland when the Irish branch sold the thing to the USA branch? Not to mention sales tax....
If the US branch bought a widget for $90 and sold it for $100, they'd pay tax only on the $10 of profit. If it actually cost the Irish branch $90 to make those widgets then that would be entirely fair and the right way to assign the tax burden. However, if the widget is actually free to "make" and yet the US branch is changed $100 for them we get the current situation.
Re: G7: Rich nations back deal to tax multinationals
#123This sounds like it will be hell for small software companies with customers all over the world. Paying taxes differently for each country of the customer you sell to is a ridiculous hardship. It only benefits the large multinationals to reduce their competition. These sorts of rules centralize markets to fewer and fewer companies able to spend the resources to fulfill more and more complex rules. The end result is h…
Small software companies with customers all over the world are not multinational companies. These small software companies are located in one country i.e. one physical presence, unlike tech companies where their presence is in multiple countries. So this tax change won't affect small software companies located in one country with international customers. Edited to add ... The article states: " the rules will aim to m…
>Small software companies with customers all over the world are not multinational companies
It's extremely common even for small software companies to have offices across the world
Re: G7: Rich nations back deal to tax multinationals
#124Earlier quoted context omitted.
The secret of high net worth individuals is they don't own anything and they don't earn anything.
What?
The trick is to not own things (personally) but control them, e.g. if you want a yacht, you create a holding somewhere that buys the yacht and owns the yacht, and you can use it whenever you like. The holding then has contracts with other companies renting you out. And you work for 0 EUR for the holding and have no income. The holding also owns the house you live in. If you're a high risk person the company can be owned by your wife(example is simplified, the setup is more complex and implemented my EY e.g.).
For example I want a computer. If I pay for the computer as a private citizen, I have to pay income tax, social security on the money before I can spend it and then I have to pay VAT on the item.
Hamilton got too greedy here [1] and the setup wasn't the best, but you get the idea:
"Hamilton set up another Isle of Man company to purchase a €1.7m motorhome that he uses at racetracks. [..] He is contracted to Mercedes, with whom he secured his fourth world championship last month, via a Guernsey company."
See Hamilton doesn't get the money from Mercedes, his "Guernsey company" does. He doesn't own the motorhome, he owns the company that owns the motorhome. No VAT payed, no income tax payed. And the company he owns might be through several shell companies so no IRS knows what he owns. And when it knows, the company only makes losses (see Trump setup), so no taxes payed on owning the company either.
[1] https://www.theguardian.com/news/2017/nov/06/lewis-hamilton-...
Re: G7: Rich nations back deal to tax multinationals
#125Earlier quoted context omitted.
> So Ireland, Luxenburg and other corporate tax over-friendly countries Why cant US pass laws banning companies registered in tax haven countries to operate in the US?
Both Ireland and Luxembourg have legitimate activities: Irish whiskey isn’t a big deal compared to tech, but there’s no real reason to ban it. Defining a line is hard, especially when the country’s traditional advantage _is_ finance, like it is in Luxembourg, even outside of tax-optimisation. It’s easier to have rules against countries with less credibility, but then again, you risk making things complicated for Seyc…
> Both Ireland and Luxembourg have legitimate activities:
So those countries need to decide if they want to support legitimate activities or legitimate activities with fair tax policy approved by the US.
If they dont like US's demands they can stop trading with US but we know they are not going to do that.
Re: G7: Rich nations back deal to tax multinationals
#126Will rich nations back a deal to tax multinational citizens?
This is one area where America has a secret lead for both foreigners and ultra-rich citizens. Checkout GRATs and Opportunity Zones if you want to daydream about how to pay near-nothing in taxes as an American sitting on a massive windfall.
And then there’s all of the things you can do inside of an insurance policy.
Re: G7: Rich nations back deal to tax multinationals
#127Summary: > Firstly, the G7 want a global minimum tax rate so as to avoid a "race to the bottom" where countries can undercut each other with low tax rates. > Secondly, the rules will aim to make companies pay tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits. Good. It’s a shame that Biden had to back down from the initial 28% because of do…
It’s odd that they aren’t already paying taxes where goods are sold.
IIUC, they are paying taxes on goods sold, but those taxes are then offset by “losses” which they incur by “buying”, say, IP licenses, from their sister company. This sister company get record profits, but this company is then located in a tax haven, and pays no taxes on these profits.
Re: G7: Rich nations back deal to tax multinationals
#128Earlier quoted context omitted.
Less companies will be formed there if they don't have a tax advantage.
And yet tax receipts locally will be up.
And less private spending and investment by these corporations and their shareholders. The optimal size of government spending, as a percentage of GDP, for economic growth, is likely well below 25%, and significantly lower than the level in every OECD country, so to the extent that this enables increases in government spending, it will likely hurt economic growth:
https://web.archive.org/web/20170821004405/http://ime.bg/upl...
Re: G7: Rich nations back deal to tax multinationals
#129Summary: > Firstly, the G7 want a global minimum tax rate so as to avoid a "race to the bottom" where countries can undercut each other with low tax rates. > Secondly, the rules will aim to make companies pay tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits. Good. It’s a shame that Biden had to back down from the initial 28% because of do…
Good. I didn't think such a global minimum was politically possible. There was recently an article on HN where the author claimed that high tax rates don't impact high net worth individuals because they have already made their money. It just makes it harder for others to join the club. Perhaps what we need is a global maximum wealth (rather than income) cap, as a multiple of global median per-capita wealth. Perhaps s…
This'll be hard to do when voting power in corporations is directly tied to paper wealth.
Although one idea I was playing around with in my mind was around whether the tax could be made payable in public stock, provided that the voting rights are still assigned to the holder for a guaranteed minimum window (5 years?) that could extend pretty much indefinitely until the government chooses to close a position, e.g to pay for things.
I have no idea how good or bad an idea it is, but it's an idea.
Re: G7: Rich nations back deal to tax multinationals
#130Summary: > Firstly, the G7 want a global minimum tax rate so as to avoid a "race to the bottom" where countries can undercut each other with low tax rates. > Secondly, the rules will aim to make companies pay tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits. Good. It’s a shame that Biden had to back down from the initial 28% because of do…
Biden has been consistently good at this, going in with a crazy bold position and letting people argue him down to somewhere that would probably be his real position in the first place.