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G7: Rich nations back deal to tax multinationals

bbc.co.uk

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Re: G7: Rich nations back deal to tax multinationals

#131

Post by hemantv »

This feels like US wants to keep competition out from creating big companies.

Very similar to feeling to how wealthy wants higher income taxes (not wealth taxes) when they have all the money the need. To maintain status quo.

Seems like US enjoyed with this arrangement by creating very large companies (monopolies) worldwide, now they want to keep US world order intact.

Good for world, China wouldn't play balls with this. Bad for Europe since they have ever smaller shrinking big companies.

Re: G7: Rich nations back deal to tax multinationals

#132

Post by seoaeu »

ajkdhcb2 wrote: post #76
peteretep wrote: post #50

Earlier quoted context omitted.

China’s tax rate is considerably higher than 15% and they also don’t want their industries to be competing against companies who are cheating the tax man.

I just wanted to show how silly is sounds that some ally countries think they can enforce actions on other countries

Isn't the literal definition of 'allies' a group of countries which pool their military resources to compel other countries to act how they want? I don't see the contradiction

Re: G7: Rich nations back deal to tax multinationals

#133

Post by saddlerustle »

Naga wrote: post #15
amelius wrote: post #6

Earlier quoted context omitted.

> 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. Why is this necessary, if countries can just tax companies based on the money they made in their country ?

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…

What you're describing is a method of deferring taxation, not avoiding taxation. Google is a US publicly traded company so its profits ultimately belong to its shareholders, and it can only pay that out via the US.

Re: G7: Rich nations back deal to tax multinationals

#134

Post by cletus »

The first proposal of having a minimum corporate tax rate probably doesn't mean a lot because you to then start policing what subsidies governments give to effectively discount below 15%.

The more interesting part is what I hope is the start of serious efforts to tackle profit-shifting, which is a name invented for "transfer pricing" because that is technically illegal. But it's the same thing.

A good starting point is that if you book x% of your revenue in country A then country A should get to tax x% of your profit.

Here's another part of this they should adopt: borrowing money should count as repatriating profits. In the era of zero interest rates debt is used to effectively defer taxes forever. There's no legitimate reason to allow entities to borrow money at near-zero interest rates instead of repatriating retained earnings.

Re: G7: Rich nations back deal to tax multinationals

#135

Post by whatever1 »

The problem with businesses is that they hide systematically profits. The big ones are shifting their profits globally. The small ones never register profits (claiming they always operate at a loss, specially if they operate with mostly cash and not credit cards).

And in business, it is easier to hide your profits because you can shift around money to assets (this ferrari and the Manhattan condo are company owned), compensation (my CEO will get a 1000% raise this year), liabilities (paid off that huge loan we got to buy the lambo) etc.

The problem cannot be solved unfortunately. There are crude methods like estimating profits from revenues, but really, this has never worked.

Re: G7: Rich nations back deal to tax multinationals

#136

Post by H12 »

vanilla-almond wrote: post #85
throwaway13337 wrote: post #44

This 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…

Thank you for your reply. In hindsight it makes a ton of sense that this would only apply to companies with a physical presence in multiple countries.

Tracking country of origin for every online purchase and grouping them in order to pay international taxes would be an absolutely ludicrous requirement. No matter how low your opinion of the G7 is, they're not that dumb.

Re: G7: Rich nations back deal to tax multinationals

#137

Post by saddlerustle »

whatever1 wrote: post #135

The problem with businesses is that they hide systematically profits. The big ones are shifting their profits globally. The small ones never register profits (claiming they always operate at a loss, specially if they operate with mostly cash and not credit cards). And in business, it is easier to hide your profits because you can shift around money to assets (this ferrari and the Manhattan condo are company owned), c…

Companies shifting profits to compensation is better for states than booking corporate profits, because income is taxed at a higher rate.

Re: G7: Rich nations back deal to tax multinationals

#138

Post by nickpp »

nabla9 wrote: post #74
throwaway13337 wrote: post #44

This 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…

Don't worry. The proposed tax does nothing you think it does, as the article explains. Pillar one does not apply small companies. Small companies pay just corporate tax as they did before, as the article explains. Nothing changes in that front. Pillar two.

This time. Once the mechanism is in place and the large companies have complied, they will come for the small companies too.

Re: G7: Rich nations back deal to tax multinationals

#139

Post by Schlaefer »

ajkdhcb2 wrote: post #76
peteretep wrote: post #50

Earlier quoted context omitted.

China’s tax rate is considerably higher than 15% and they also don’t want their industries to be competing against companies who are cheating the tax man.

I just wanted to show how silly is sounds that some ally countries think they can enforce actions on other countries

This happens all the time, see e.g.: https://en.wikipedia.org/wiki/Brussels_effect

Of course you're free to ignore it, if you don't care about hundreds of million potential customers.

Re: G7: Rich nations back deal to tax multinationals

#140

Post by foepys »

sumedh wrote: post #125
bertil wrote: post #112

Earlier quoted context omitted.

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.

In that case the US should first handle Delaware before throwing the first stone.
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