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

Re: G7: Rich nations back deal to tax multinationals

#151

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

lbriner wrote: post #56

The G7 won't be able to make a decision on behalf of the world! Why do companies already register their ships in Panama or hide their money in the Cayman islands? (Other havens are available) Because these countries have decided they would rather have the income than agree that what they are doing is somewhere between morally dubious and completely ammoral. It is easy to point the finger though, some of these places…

Yes, they will - as they did with Swiss bank secrecy [0].

It's actually quite simple: if you want to do business with the G7 countries - with close to 40% of the world economy [1] - you follow their rules.

While 60% is a lot, it's a much different blend of markets to work with - hundreds of other countries, legislations, etc. - and it would be a much larger effort to cover.

So: wether I like it or not the truth is: if the G7 countries agree on something, other countries will follow.

[0] https://www.reuters.com/article/us-swiss-secrecy-idUSKCN1MF1... [1] https://www.nationmaster.com/country-info/groups/Group-of-7-...

Re: G7: Rich nations back deal to tax multinationals

#152

Post by lanevorockz » Sat, Jun 05, 2021, 1:29 PM UTC

amelius wrote: post #6

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…

> 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 ?

This is just to make the silly socialists happy, we all know that friends of the government will get tax rebates and not pay any taxes just as today.

Re: G7: Rich nations back deal to tax multinationals

#153

Post by bodono » Sat, Jun 05, 2021, 1:30 PM UTC

peteretep wrote: post #46

bodono wrote: post #13

Earlier quoted context omitted.

Yes I understand that, but I believe that many corporations today pay even lower than a 15% effective tax rate. I suppose you're saying that these loopholes will be closed up to that minimum?

I think your choice of words here is confusing the issue a little, and would propose “incentive” for a tax break the government would like you to take (employing felons), and “loophole” for tax avoidance the government doesn’t want you to take (eg: sending all your profits to the Cayman Islands). Given that, if min tax rate is 15% and standard corp tax is 20%, the government is happy for you to get to 15% and would l…

The way the government creates incentives is by creating loopholes

https://smartasset.com/taxes/tax-loopholes

"The basic definition of a tax loophole is a provision in the tax code that allows taxpayers to reduce their tax liability."

And corporations readily exploit loopholes (or incentives if you prefer) to dramatically reduce their tax burden below 15%. See, eg, here:

https://itep.org/amazon-has-record-breaking-profits-in-2020-...

Amazon has enjoyed an effective tax rate of 4.7% over the last 10 years by using tax breaks, tax credits, and depreciation, that have nothing to do with offshoring cash.

Re: G7: Rich nations back deal to tax multinationals

#154

Post by galangalalgol » Sat, Jun 05, 2021, 1:30 PM UTC

cblconfederate wrote: post #3

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…

This taxes everyone along with the multinationals. The complex deals they do mean they always pay a lot less than the 12.5% or whatever the tax rate is so i don't see how raising it for everyone else will help

A flat tax on business without deduction seems like it would squash smaller players that must devote a larger percentage of their profits to fixed costs.

Re: G7: Rich nations back deal to tax multinationals

#155

Post by pjc50 » Sat, Jun 05, 2021, 1:32 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?

There's a fixed cost to administer such arrangements.

But the system is not fixed - people do start exploiting these arrangements, and once the number reaches critical levels they get whacked. An example in the UK was "employee benefit trusts", which were used by a lot of celebrities and footballers. https://www.rossmartin.co.uk/disguised-remuneration-zone/302...

You need to be big enough to (a) pay for enough legal bulletproofing and (b) have political cover against the law going after you.

Re: G7: Rich nations back deal to tax multinationals

#156

Post by viraptor » Sat, Jun 05, 2021, 1:32 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.

Doesn't this already apply though? I don't know the details here, but Steam seems to apply both state- and country-specific taxes at checkout. Steam is not a multinational corporation as far as I know.

Re: G7: Rich nations back deal to tax multinationals

#157

Post by Chris2048 » Sat, Jun 05, 2021, 1:32 PM UTC

lixtra wrote: post #43

Chris2048 wrote: post #21

Earlier quoted context omitted.

Because if they did, bombs would soon fall in order to destabilise that threat.

I have difficulties to come up with current examples. Maybe some could argue that pre Soviet Afghanistan (in the ‘60) was such a place. But today?

Its similarly difficult to find examples of competent propaganda ; because anything easily labeled propaganda is not competent.

Scientific and logical principles of "evidence" to not apply to human political systems, b/c the method of inquiry are too compromised by the power the system wields over them. Even information about Afghanistan comes through via the government. But today? There is us nothing modern the government wants you to know about.

Re: G7: Rich nations back deal to tax multinationals

#158

Post by jokoon » Sat, Jun 05, 2021, 1:32 PM UTC

I already said that the pandemic would force the entire world to lean to the left in terms of politics. It's inevitable.

I'm very happy about that decision, but I'm not really confident it will lead to something. I'm also a bit cynic that it took a pandemic to make countries realize they need money.

I'm also waiting to see if government are really planning to fight against tax havens.

The problem is that it's impossible to protest against those small Island tax havens because they're just too far away. Maybe protesters could block flights or boats that go to those tax havens?

Re: G7: Rich nations back deal to tax multinationals

#159

Post by amelius » Sat, Jun 05, 2021, 1:33 PM UTC

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…

> Probably the best solution is a minimum tax worldwide.

Wouldn't that make companies pay taxes in countries they are based in (as opposed to where they make money)?

Anyway this could be the push that the EU needed to start their own Silicon Valley.

Re: G7: Rich nations back deal to tax multinationals

#160

Post by bodono » Sat, Jun 05, 2021, 1:33 PM UTC

nomoreplease wrote: post #41

bodono wrote: post #13

Earlier quoted context omitted.

Yes I understand that, but I believe that many corporations today pay even lower than a 15% effective tax rate. I suppose you're saying that these loopholes will be closed up to that minimum?

Depends what you mean by loop holes. In the US, you can deduct R&D or capital costs like building a factory. That can make your tax bill nearly zero. I wouldn’t call that a loop hope. It’s something out there to incentivize capital spending and job creation. Other countries have the same

Right, so the question is will those 'deductions' still be allowed or not? If so, then get ready for endless deductions from countries that want lower tax rates than 15%.