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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

#551

Post by bckr »

usrusr wrote: post #520
dalbasal wrote: post #203

Earlier quoted context omitted.

The actual rate is the least important part. What is important is jurisdictional issues, accounting standards, corporate law, deferral rules and the like. This is the problem with corporation tax generally. You can't really have a conversation about it in "normal" terms, that a journalist, politician or MOP can understand. It can only be understood via scenario plans and spreadsheets. It's a million little details. T…

So true. It's a fixing the algorithm vs tweaking some parameters situation. PS: if I were to design a state I would make it a part of the constitution that laws must either be written with placeholder variables for any concrete numbers you'd want to put into them or specify only concrete values for those placeholders and nothing else. And no single vote can contain both kinds at once.

Expand on this please? What would be excluded in the "nothing else"? And what good would it do to ban single votes on both parameters and constants?

Re: G7: Rich nations back deal to tax multinationals

#552

Post by daemin »

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 the whole difference between a revenue tax and a profit tax.

I don't actually know why exactly a revenue tax isn't more popular, say 1% revenue versus supposed 30% profit tax. (As if any corporation actually pays that tax rate).

Re: G7: Rich nations back deal to tax multinationals

#553

Post by anoncake »

bumby wrote: post #445
tablespoon wrote: post #413

Earlier quoted context omitted.

> I look forward to the day that we punish corporations by removing their freedom (ability to operate) instead of fining them laughably small percentages of their yearly revenue for serious violations of laws and regulations. I agree, but like you mentioned, the externalities on innocent parties would be too great. Also a lot of companies do not issue dividends, so focusing on them would do no good in a lot of cases.…

> Maybe such people could be shared a per-share fine based on shares held at a particular date? I think it’s nearly impossible to expect most shareholders to understand the business underpinnings to this degree within the existing system. Think of pensioners with mutual funds, do you think most even understand all the businesses in those funds let alone the operations of those businesses? To me, this is akin at emplo…

You are responsible for your property. If you own stock, you own part of a company so you are responsible for its actions. In the case of mutual funds, it's the funds' job to understand the businesses it invests in for you. There could be an exception for non-voting stock though.

Re: G7: Rich nations back deal to tax multinationals

#554

Post by throwaway894345 »

xxpor wrote: post #494
mohanmcgeek wrote: post #466

Earlier quoted context omitted.

> Probably the best solution is a minimum tax worldwide. I saw a similar comment earlier this week. I don't understand why first world people think developing countries would agree to this minimum tax and not undercut them on day 1 to attract investments and jobs. There are no global tax authorities. Nobody is going to enforce these things. Even this G7 treaty is going to be a mess in practice because multilateral tr…

The US would sanction them, and then they'd be screwed.

Why don’t countries do this already? E.g., most European countries and presumably the US dislike that Ireland undercuts corp tax, so why don’t they penalize corporations who operate in their borders but are headquartered in a country that doesn’t have agreeable tax laws?

Re: G7: Rich nations back deal to tax multinationals

#555

Post by Naga »

mohanmcgeek wrote: post #466
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…

> Probably the best solution is a minimum tax worldwide. I saw a similar comment earlier this week. I don't understand why first world people think developing countries would agree to this minimum tax and not undercut them on day 1 to attract investments and jobs. There are no global tax authorities. Nobody is going to enforce these things. Even this G7 treaty is going to be a mess in practice because multilateral tr…

I agree that this is hard and that there are no global tax authorities, I wasn't trying to say that's something that can just be implemented. It's probably the most realistic solution to the transfer pricing problem though, which probably says something about the scale of this issue.

I also disagree that the developing world is that much of a problem. Currently, in the developing world, money flows to places like the U.S. Virgin Islands, Bermuda, etc. While I'm sure they are not the only places that could act like as tax havens, there's probably a limit. Multinationals probably aren't going to want to relocate their headquarters to a developing country like Egypt for a variety of reasons like language, currency, corruption, weaker property laws, ease of moving cash, etc. Tax havens could also be disabled with tools like sanctions on a G7 or G20 basis. Bermuda doesn't want to play ball? Sure, then the G20 banks and governments will not allow their citizens to deal with Bermuda.

As other people have said, the goal isn't to prevent this from happening, it's to make it too risky or expensive to justify as opposed to just paying corporate tax on profits without shifting them.

Re: G7: Rich nations back deal to tax multinationals

#556

Post by cal5k »

Tostino wrote: post #519
lanevorockz wrote: post #149

Earlier quoted context omitted.

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

What a reductionist view of things. No one serious is arguing for that.

Top marginal income tax rates in many countries now exceed 50%, not even considering payroll tax, property tax, sales tax, etc.

The question is: how can anyone seriously support tax rates that high? After a certain level, more than half your time is spent working for the government - failure to pay means fines and possible jail time. This is serfdom.

Higher corporate tax rates should not be applauded by anyone. Higher corporate tax rates invariably increase cost of living because companies can simply raise prices to compensate. If all of your competitors have to pay the same (higher) tax rates as you, the correct game theoretic move is for everyone to simply bake the higher tax rates into the price of their products/services.

Almost all forms of taxation ultimately impact the middle class in one way or another, either directly or indirectly. So while nobody is "seriously arguing" for, say, a 70% top marginal tax rate, it's easy to get there when you actually look at the entire tax burden across all levels of government, including price increases caused by higher tax rates.

Re: G7: Rich nations back deal to tax multinationals

#557

Post by edoceo »

HWR_14 wrote: post #504
edoceo wrote: post #492

Earlier quoted context omitted.

Just tax the revenue in the country where the money changed hands. (The client's home) That's the taxable event. So, I think, for your case, Britain (UK)

How did the money change hands in Britain? The British person typed his CC number into a web form that routed to a server in the Cayman Islands that charged a bank in France. That bank in France will then demand repayment at the end of the month from the guy in Britain.

The demand side actor is the driver of the transaction.

Re: G7: Rich nations back deal to tax multinationals

#558

Post by gambiting »

tazjin wrote: post #517
gambiting wrote: post #343

Earlier quoted context omitted.

In the UK if you're in full time employment and only have one job, then there's literally nothing to do. Not even clicking somewhere to approve your tax return - your employer does it all for you. I know people who are literally unaware when the tax year ends because they never in their entire adult lives had to do anything with the tax return - it's just completely irrelevant to a normal working person. And on the o…

This only works until you make ~100k GBP or have "complicated" income (e.g. shares instead of cash), which people in our industry hit very easily.

I'd argue about the "very easily" point for IT workers in the UK, as 100k+ salaries are very rare, and if you get shares instead of cash it's still taxed as income and doesn't trigger a self assessment. Only if you hold onto them and only if you make more than the capital gains threshold, you have to fill out a self assessment.

But in either case - sure, but the system means absolutely no worries about your tax return for 90% of British employees.

Re: G7: Rich nations back deal to tax multinationals

#559

Post by bonzini »

542458 wrote: post #546
bonzini wrote: post #528

Earlier quoted context omitted.

But why do intra-company IP transfers have to be treated as actually moving money?

Two reasons: they’re not always actually intra company. Apple and Apple Ireland are different companies - and while intuitively it feels like you can just lump them together, it’s often much more complicated than that. Second, because it is actually moving money. If I’m a Canadian software company that does most of its sales in the US through an American subsidiary (not uncommon), the way it works is the American sub…

One is a wholly owned subsidiaries of the other. It's not of course a sufficient condition, but I m sure it's possible to distinguish the relationship between Apple and Apple Ireland from that between say Dell and EMC, or IBM and Red Hat, or the daughter companies of conglomerates like Berkshire Hathaway.

> Otherwise the money would never get back to Canada and I wouldn’t be able to pay my developers!

It doesn't have to be paid for the right to sell the IP. You can just move all revenue back into headquarters' coffers, and use it to finance the various cost centers. Just write the law so that it cannot be called a sale.

Re: G7: Rich nations back deal to tax multinationals

#560

Post by mnouquet »

miohtama wrote: post #93
nickpp wrote: post #90

So the largest violence monopolists in the world are using the unique opportunity handed to them by the pandemic to create a cartel with two purposes: - raise the protection tax they levy on their subjects - prevent smaller violence monopolists from undercutting their protection fees through competition Basically governments deciding competition is not good for them and everyone should just pay up.

It's good if all competition can be taxed equal. Small biz cannot compete against Amazon that pays 0% tax in their international arrangements.

"Small business" are just the "think of the children" or "9/11" argument to justify money grab. True motive is simply to siphon more money to the ruling western elites.
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