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Italy Approves ‘Google Tax’ on Internet Companies

bloomberg.com

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Re: Italy Approves ‘Google Tax’ on Internet Companies

#21

Post by gioi »

Heliosmaster wrote: post #13
gioi wrote: post #11

I'm Italian. Here tax burden for artisans, small business, big companies is over 50%. What if we could shift part of the taxation from artisans to big multinationals? What's wrong with this idea?

That it does not lower at all taxes on common people and normal jobs. Large corporations who have interests (and money to enforce it) will always find a way (at least political). This is the usual attempt from our politicians, who have no idea how a computer is turned on (no wait.. they play poker on their ipad while discussing laws), to regulat something they do not understand.

I asked what's wrong with the idea, not with the implementation. I completely agree with the fact that this law should have been discussed at international level (at least EU+USA). I can realize from your words all your discouragement for the global ethical crisis. I really hope that future generations will be able to enforce this kind of measures. (BTW, may I ask you where are you from?)

Re: Italy Approves ‘Google Tax’ on Internet Companies

#22

Post by raverbashing »

jotm wrote: post #18

How about making the country a better place to start a company instead? You know, so you can attract foreign capital and entrepreneurs, and also reduce the local brain drain. No wonder Italians run to Germany, UK and Ireland to start their companies. Also, good luck enforcing that law.

You'll be surprised about the hassles to open an (Internet) company in Germany.

They get the business mostly because they are cheap (and educated workforce, of course)

Re: Italy Approves ‘Google Tax’ on Internet Companies

#23

Post by yetanotherphd »

gioi wrote: post #11

I'm Italian. Here tax burden for artisans, small business, big companies is over 50%. What if we could shift part of the taxation from artisans to big multinationals? What's wrong with this idea?

The problem is that you are erecting trade barriers in order to do this, by forcing ads to be sold in Italy. And the deeper problem is that every country would like to shift its tax burdens to "big multinationals" but there are tax and trade agreements to impose some fairness and order.

If an advertising company really were running some of their operation from Italy, they should certainly pay tax there (and not, say, in Ireland). But you can't expect to tax all ads that are purchased by Italians that really are sold from overseas.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#24

Post by Dylan16807 »

mattmanser wrote: post #19
Dylan16807 wrote: post #6

Google, Starbucks Corp. (SBUX) and Amazon.com Inc. have been criticized for strategies that shift billions of dollars of profits offshore.[...] Google last year moved nearly $12 billion to the Bermuda unit, the majority of its worldwide income, cutting more than $2 billion off its global income tax bill. Google’s Italian unit last year reported total income taxes of just 1.8 million euros, corporate filings show. Goo…

I think you're misunderstanding what's going on. Google employs lots of local people in many different countries to sell ads, etc. In order to do so it has national companies that are owned by Google US, but are separate legal entities. But what's happening is the national sales people are closing deals but then book those ads through a different legal entity in Ireland, even though the sale happened with a local sal…

>So what you said, as far as I understand it, makes no sense. Google are based in Italy.

There is a small Google there, but they are satellite, not headquarters. (I assume. Perhaps Italy is in the top couple percent and actually does significant things other than sales, then substitute another country here.)

>But what's happening is the national sales people are closing deals but then book those ads through a different legal entity in Ireland, even though the sale happened with a local sales person, in a local company. This is with the express purpose of avoiding tax and claiming it was 'only following the law', when it is clearly deliberately avoiding tax.

Are you arguing that there is something unethical/immoral/unfair about a big company paying a small local one to sell ads on behalf of the big company? I guess I'll just have to disagree if so. I see no reason the price of the ads should be counted as revenue for the local company.

Right now Google is funneling all the money through one country because it has the lowest taxes. Even if they stopped using loopholes, I don't see why they would stop selling from the country with the best tax rates. So Google Italy, Google France, etc. would not still book the ads.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#25

Post by Dylan16807 »

alemhnan wrote: post #7
Dylan16807 wrote: post #6

Google, Starbucks Corp. (SBUX) and Amazon.com Inc. have been criticized for strategies that shift billions of dollars of profits offshore.[...] Google last year moved nearly $12 billion to the Bermuda unit, the majority of its worldwide income, cutting more than $2 billion off its global income tax bill. Google’s Italian unit last year reported total income taxes of just 1.8 million euros, corporate filings show. Goo…

Maybe I'm wrong, but with this law Google is not able to sell ads in Italy. So if they still want to do that they need to open an Italian company and therefore pay taxes in Italy. So, for Italy at least, things would change.

Right, but blocking sales to another country has absolutely nothing to do with how an entity in another country pays their taxes. Italy is objecting only to the fact that the ad-selling-Google is in another country, and trying to make them build a local version.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#26

Post by DominikR »

gioi wrote: post #11

I'm Italian. Here tax burden for artisans, small business, big companies is over 50%. What if we could shift part of the taxation from artisans to big multinationals? What's wrong with this idea?

There will never be a shifting of taxation from X to Y!

You have such a high tax because of your governments incompetence.

That being said - I'm no fan of that kind of tax avoidance, they should definitely pay their taxes.

But what will happen until the EU has ruled on this (which can take many years), is that Italy will further reduce its competitive advantage because suddenly Italian corporations will be unable to buy Adwords, Facebook Ads and so on which should make them invisible to international customers.

Good luck competing with a startup/small business that cannot buy any ads.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#27

Post by znowi »

Google became too greedy and this is the result of it. I, for one, in support of this law. You can't harvest billions of profit worldwide, then sneak it all through tax heavens and expect it to continue indefinitely. Someone will get weary of this practice.

As a thought experiment, imagine the US reaction if Google was an Italian company - making loads of money in the US and paying 0 taxes :)

Re: Italy Approves ‘Google Tax’ on Internet Companies

#28

Post by _delirium »

tluyben2 wrote: post #8
toyg wrote: post #3

Italy: always at the forefront of legislative innovation to kill the internet. Piratebay blocks? Check. Fighting encryption and anonimity? Check. Taxing the crap out of anything that moves? Check. Cutting investments in r&d and universities across thr board? Check. And then they wonder why their economy sucks.

They are doing that in most EU countries, not only Italy or the PIGS. I would say the PIGS have a lot of reasons besides maybe this why they are going badly; simple things like being anti-client-friendly as much as possible and finding that normal.

I have a little experience in several EU countries, and if there's any correlation, it's generally in the other direction, with the higher-tax ones generally being better places to do business (I doubt this is a causal relationship, though). The issue with southern Europe is that the government is corrupt, slow, and non-transparent, and regulations are unpredictable and inconsistently enforced.

For example, Denmark's taxes are about 1.5x Greece's (50% of GDP versus 35% of GDP, overall). But Denmark is generally a nicer and easier place to do business. The bureaucracy is large and expensive, but in return for all the money it costs, you get quick, non-corrupt, predictable service. You can register a company in literally hours (online!), for example, while it takes weeks in lower-tax Greece.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#29

Post by vkou »

yetanotherphd wrote: post #23
gioi wrote: post #11

I'm Italian. Here tax burden for artisans, small business, big companies is over 50%. What if we could shift part of the taxation from artisans to big multinationals? What's wrong with this idea?

The problem is that you are erecting trade barriers in order to do this, by forcing ads to be sold in Italy. And the deeper problem is that every country would like to shift its tax burdens to "big multinationals" but there are tax and trade agreements to impose some fairness and order. If an advertising company really were running some of their operation from Italy, they should certainly pay tax there (and not, say,…

Said tax and trade agreements don't impose fairness and order, as much as they tie every participating nation down in a race to the bottom. Any board of directors would be considered to be out of their minds if for the sake of a single, non-critical contract, they signed agreements that completely tied their hands in how their firm should run. On the other hand, when governments do it, they are heroes.

Disclaimer: I'm a Canadian working for Google. And I have no opinion on this particular piece of legislature.

Re: Italy Approves ‘Google Tax’ on Internet Companies

#30

Post by was_hellbanned »

znowi wrote: post #27

Google became too greedy and this is the result of it. I, for one, in support of this law. You can't harvest billions of profit worldwide, then sneak it all through tax heavens and expect it to continue indefinitely. Someone will get weary of this practice. As a thought experiment, imagine the US reaction if Google was an Italian company - making loads of money in the US and paying 0 taxes :)

The point becomes moot if you eliminate corporate income tax. You want companies to pay salaries, not taxes.
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