G7: Rich nations back deal to tax multinationals • Hacker News Board

Re: G7: Rich nations back deal to tax multinationals

#141

Post by elteto » Sat, Jun 05, 2021, 1:22 PM UTC

reader_mode wrote: post #123

vanilla-almond wrote: post #85

Earlier quoted context omitted.

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

Then they already pay taxes there.

Re: G7: Rich nations back deal to tax multinationals

#142

Post by seanwilson » Sat, Jun 05, 2021, 1:23 PM UTC

patd wrote: post #7

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 ?

Because in practice if you make 1 million in a country, you’ll claim 1 million in expense in another country (with little to no taxes) for things like IP, trademark, etc.

What stops individuals, sole traders and the self employed from doing this?

Re: G7: Rich nations back deal to tax multinationals

#143

Post by eoo » Sat, Jun 05, 2021, 1:23 PM UTC

naveen99 wrote: post #20

Naga wrote: post #15

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…

A 100% license fee seems like a non arms length transaction at a non market rate.

Yep, this is just the introduction to these kinds of thing. Then, they start to get accountants in both countries to agree on what seems a reasonable rate, say 30%? And the other 70% can be delayed earnings or whatever, and then maybe they decide to reinvest it instead. The list of resources is bottomless and continuously increasing.

What matters is that because the savings are potentially huge, your BigCo is incentivized to reduce that tax exposure and they've got the legal and accounting workforce to find that optimization.

Re: G7: Rich nations back deal to tax multinationals

#144

Post by avianlyric » Sat, Jun 05, 2021, 1:24 PM UTC

nickpp wrote: post #116

grey-area wrote: post #96

Earlier quoted context omitted.

This is all true, but I think I marginally prefer the dominion of politicians I can vote for to the feudal structure of multinational corporations, which we have even less power over.

There are 3 ways to vote in a corporation: - with your wallet: buy or not buy from them - with your broker: invest (and then literally vote from the inside) or not in them - with your feet: work or not for them Corporate interests are directly aligned with us exactly because without these votes they are finished. That is why corporates try to create products clients want, profit investors want and salaries workers wa…

This is such crap. While in theory you’re right, it ignores the biggest difference.

With politicians ever person only gets one vote, theoretically equal power to force change.

With corporations, the number of votes a person gets is directly related to their bank balance. There’s no such thing as equal power for the people, only the rich get to vote.

Re: G7: Rich nations back deal to tax multinationals

#145

Post by rjknight » Sat, Jun 05, 2021, 1:25 PM UTC

H12 wrote: post #136

vanilla-almond wrote: post #85

Earlier quoted context omitted.

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.

The European Union did introduce a system similar to this for VAT, where the rate paid depends on the country of the buyer, not the seller: https://europa.eu/youreurope/business/taxation/vat/cross-bor...

It might be a bad idea but it's not beyond the realms of possibility.

Re: G7: Rich nations back deal to tax multinationals

#146

Post by FredPret » Sat, Jun 05, 2021, 1:26 PM UTC

hliyan wrote: post #37

orf wrote: post #2

Summary: > 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…

Maximum wealth cap? What are you, Stalin?

Re: G7: Rich nations back deal to tax multinationals

#147

Post by seoaeu » Sat, Jun 05, 2021, 1:27 PM UTC

greenwich26 wrote: post #60

ko27 wrote: post #30

Earlier quoted context omitted.

The answer to your question is simple. Governments are the highest sovereign bodies. They can agree on whatever they want.

You are right, of course. But Rousseau made it quite clear that the sovereignty of a government is discretionary. This sort of thinking isn't convincing on an ideological or theoretical level to anyone but a medieval peasant, and it only increases my indignation.

Then be indignant I guess? Countries pressuring each other to do things dates back as far as the existence of countries. And it isn't like this is a broadly unpopular idea either. Most people do actually believe that multinational corporation should pay their fair share of taxes.

Re: G7: Rich nations back deal to tax multinationals

#148

Post by whatever1 » Sat, Jun 05, 2021, 1:27 PM UTC

saddlerustle wrote: post #137

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.

It depends. In my country there are examples of employers who were paying extra their employees (who were not taxed due to their pity salaries) and were requiring them to return part of their salary as cash.

Re: G7: Rich nations back deal to tax multinationals

#149

Post by lanevorockz » Sat, Jun 05, 2021, 1:27 PM UTC

orf wrote: post #2

Summary: > 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…

More taxes is always good, can’t wait for 100% taxes so I can use my gucci bag voucher while playing ps5 at home

Re: G7: Rich nations back deal to tax multinationals

#150

Post by ceejayoz » Sat, Jun 05, 2021, 1:28 PM UTC

seanwilson wrote: post #142

patd wrote: post #7

Earlier quoted context omitted.

Because in practice if you make 1 million in a country, you’ll claim 1 million in expense in another country (with little to no taxes) for things like IP, trademark, etc.

What stops individuals, sole traders and the self employed from doing this?

They can't afford a legal department and the paperwork and compliance involved in setting up and maintaining a bunch of international subsidiary companies.

It only makes sense with large amounts of profits to launder through such a system.