EU lost up to €5.4B in tax revenues from Google, Facebook: report • Hacker News Board

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#161

Post by aembleton » Thu, Sep 14, 2017, 3:22 PM UTC

im3w1l wrote: post #111

aembleton wrote: post #88

Earlier quoted context omitted.

Require UsTech to run their sales to their Ireland and German customers through their Ireland and German subsidiaries. Then tax them based upon the result of their (sales to Irish customers - Irish costs) and in Germany, the equavelent (sales to German customers - German costs). It's quite possible in those two places, they would pay no tax because their costs are higher, but this is also an incentive to keep employi…

> (sales to Irish customers - Irish costs) and in Germany, the equavelent (sales to German customers - German costs). The way companies deal with this is to create artificial costs. For instance have the German part pay big patent license fees (loan interest is another option) to the Irish part. Then German sales - German costs = 0.

If the German part pays big licence fees to the Irish part then that wouldn't be deductible. They would only be able to deduct German costs.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#162

Post by newen » Thu, Sep 14, 2017, 3:22 PM UTC

MarkCole wrote: post #17

tyrw wrote: post #9

Is the EU tax based on revenue instead of profit? Or is basing it on revenue in this instance just supposed to make the "percentage paid" smaller to make FB and Google look worse?

I believe the article is just poorly worded in that regard. > "It says that Google pays taxes worth up to 9 percent of its revenues outside the EU" They're simply asserting that Google currently pays 9% of its revenue in taxes outside of the EU. I don't believe they are calculating their lost tax revenue that way. To answer your question in the EU corporate tax is yes based on profit. Your revenue minus your expenses…

Not really. The idea is that they are hiding their profits, and so their profits are not being taxed. But the actual profit (as a percentage of the revenue) that they are hiding is expected to be similar inside and outside of the EU.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#163

Post by aembleton » Thu, Sep 14, 2017, 3:28 PM UTC

aembleton wrote: post #88

elgenie wrote: post #67

Taxing multinational corps is pretty difficult. Let's say a parent company UsTech, which makes money from ads on a ubiquitous digital platform, has an Irish subsidiary UsTechDublin,LLC and a German subsidiary UsTechBerlin,GMBH. UsTechBerlin hosts a bunch of very well paid engineers who work on app performance and backend infrastructure efficiency; UsTechDublin hosts a bunch of low paid customer service reps that prov…

Require UsTech to run their sales to their Ireland and German customers through their Ireland and German subsidiaries. Then tax them based upon the result of their (sales to Irish customers - Irish costs) and in Germany, the equavelent (sales to German customers - German costs). It's quite possible in those two places, they would pay no tax because their costs are higher, but this is also an incentive to keep employi…

I should add that it would only be possible to require a company to have a local subsidiary if it has a physical presence in the country. Someone like Amazon will because they have warehouses.

Someone like Google could probably get away with doing business remotely, but then any business that buys from them would not be able to deduct that as a cost when calculating tax which would effectively mean that they pay the tax, making a local rival more competitive.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#164

Post by fooster » Thu, Sep 14, 2017, 3:34 PM UTC

ionised wrote: post #137

whb07 wrote: post #129

Earlier quoted context omitted.

They don't have offices and don't pay taxes for 99% of countries. I don't see you standing up for the sovereign rights of the people from French Guiana or Egypt or Sudan. You see it just so happens that the full breadth of services offered by Facebook and Google are available essentially with a simple internet connection. I'd dare say you could sign up for Gmail and Facebook as a scientist living in Antártica and who…

I'm not even sure what point you are trying to make with this rant other than what sounds like tax is theft . Would you rather multinationals were not taxed at all? If something is tricky to get right is it not worth doing at all? If that's what you believe you're not going to find many on your side.

I find the idea of no corporate tax pretty appealing yes.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#165

Post by whb07 » Thu, Sep 14, 2017, 3:35 PM UTC

Oletros wrote: post #143

whb07 wrote: post #129

Earlier quoted context omitted.

They don't have offices and don't pay taxes for 99% of countries. I don't see you standing up for the sovereign rights of the people from French Guiana or Egypt or Sudan. You see it just so happens that the full breadth of services offered by Facebook and Google are available essentially with a simple internet connection. I'd dare say you could sign up for Gmail and Facebook as a scientist living in Antártica and who…

When taxes are compared to Mafia, there is no point in discussions

It's the actual definition of government, it does everything with the threat of violence. In the grand scheme of things, the social contract between members of society, some rights are given up to the state to be the intermediary. They enforce rules with threat of encarceration and are able to deal with problems via force (cops and military).

So yes, taxes are collected just like the Mafiosi collect their debts.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#166

Post by wastedhours » Thu, Sep 14, 2017, 3:39 PM UTC

alkonaut wrote: post #155

ringtail wrote: post #150

Earlier quoted context omitted.

In my understanding what you are saying is, a country will tax profit on revenue generating from its own territory by its own tax rate. For the sake of simplicity, assume 100% profit margin. Let R and R' be revenue generating without and with such tax law. Let T be tax rate. So a company was hoping R into its bank account. But with the new taxes it would be (R - RT). Naturally the company would just increase the reve…

> In my understanding what you are saying is, a country will tax profit on revenue generating from its own territory by its own tax rate. Say we have a hypothetical company that operates only in Sweden and Ireland, and has offices only in Ireland. It has a revenue of €10M and a profit of €1M. This company had €4M (40%) of it's revenue in Sweden (tax rate 22%) and 60% of the revenue in Ireland (tax rate 12.5%). How sh…

So almost like an EU VATMOSS for profit?

Could be a few issues with it still, e.g. declaring that your in-house logistics operation requires €100 to transport your €200 widget to Sweden, rather than €10 to Ireland, no?

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#167

Post by alkonaut » Thu, Sep 14, 2017, 3:40 PM UTC

ringtail wrote: post #154

IanCal wrote: post #152

Earlier quoted context omitted.

I think the key thing here is "based on" does not have to be "equal to". One option, which I've not thought through, would be something like the following: You make £500 profit. You pay 20% corporation tax, so that's £100. The question is who does that get paid to? If 15% of your revenue comes from the UK and 50% comes from France, then £15 of the corp. tax goes to the UK and £50 goes to France. More complicated with…

Thats easy to avoid. US Co will sell to Ireland Co which in turn will sell in UK/France. Since Ireland legally allows to go profit as low as 0.05%. UK/France is not getting much. Also when US says 20%. It means US gets £100. US aint the sharing type :p. How would this even work with territorial taxation countries such as Singapore/Hong Kong ?

The US->Ireland->EU thing is exactly what's going on now, and exactly what proposals like this are trying to address.

This kind of system will only work within a group of nations that agree that this is a good idea, such as the EU. Ireland and the Netherlands probably don't agree - but can hopefully be forced.

Obviously no countries in the EU have territorial taxation.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#168

Post by [deleted] » Thu, Sep 14, 2017, 3:40 PM UTC

aembleton wrote: post #163

aembleton wrote: post #88

Earlier quoted context omitted.

Require UsTech to run their sales to their Ireland and German customers through their Ireland and German subsidiaries. Then tax them based upon the result of their (sales to Irish customers - Irish costs) and in Germany, the equavelent (sales to German customers - German costs). It's quite possible in those two places, they would pay no tax because their costs are higher, but this is also an incentive to keep employi…

I should add that it would only be possible to require a company to have a local subsidiary if it has a physical presence in the country. Someone like Amazon will because they have warehouses. Someone like Google could probably get away with doing business remotely, but then any business that buys from them would not be able to deduct that as a cost when calculating tax which would effectively mean that they pay the…

[deleted]

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#169

Post by l5870uoo9y » Thu, Sep 14, 2017, 3:44 PM UTC

microcolonel wrote: post #92

l5870uoo9y wrote: post #89

Earlier quoted context omitted.

The underlying problem is that companies take advantage of "globalization". Companies can legally move not only their production abroad but also the profit. So companies naturally — with the blessing of American business inteligensia — avoid taxes. I think national control of the economy is eminent and is the only way forward if you want to realize and spread some of the tremendous opportunities and benefits that aut…

Fundamentally the "problem" lies in the fact that the nominal tax rate they can expect to pay in the United States is the highest among all the developed nations. Ireland is prudent and wise enough to be the better home for their revenues. Globalization means that nations, provinces, and municipalities compete for the patronage of businesses. If you want a global economy, but you also want to be the legal home of Goo…

You can't complete with a country like Singapore, which literally asked foreign hedge fund managers to help write their tax laws. You can setup a company in Singapore for 1000$ per year and you pay no tax on all income outside Singapore.

Re: EU lost up to €5.4B in tax revenues from Google, Facebook: report

#170

Post by whb07 » Thu, Sep 14, 2017, 3:48 PM UTC

ionised wrote: post #137

whb07 wrote: post #129

Earlier quoted context omitted.

They don't have offices and don't pay taxes for 99% of countries. I don't see you standing up for the sovereign rights of the people from French Guiana or Egypt or Sudan. You see it just so happens that the full breadth of services offered by Facebook and Google are available essentially with a simple internet connection. I'd dare say you could sign up for Gmail and Facebook as a scientist living in Antártica and who…

I'm not even sure what point you are trying to make with this rant other than what sounds like tax is theft . Would you rather multinationals were not taxed at all? If something is tricky to get right is it not worth doing at all? If that's what you believe you're not going to find many on your side.

First, let's establish some basic points. Governments don't have money, people do. Companies don't have money, people do. In the case of government, it taxes the money to get funds to spend in its activities. In the case of companies, the investors and employees are the ones who own that money.

If you hold those basic tenets true, then why deal with taxing moneyless companies? If you're to look at the breakdown of stock ownership in a large public company you would find that it's large funds comprised millions of people's savings which really own Apple and Google.

If an Italian man owns Google stock then yeah he should be taxed according to the rules of the society he lives in. But why should the working grandmother in Idaho have to pay EU taxes as she owns a 0.000001% ownership or whatever in Google? In what rational world is that "fair"?

If you were to remove corporate taxes, more money would flow directly back to those who own the public company(in the form of dividends) or be invested back into R&D or more employees.

If we assume that our Idaho grandmother would get an extra $400 bucks in the form of a cheque from Google paying dividends, then maybe she could travel to Europe and spend more money directly than would have been possible had EU taxed Google.

Or, Grandma's investments would grow along with the funds of institutional investors who would have more capital and would love to invest elsewhere. So there would be more capital looking to be placed and you come up with a smart idea and get funded. Suddenly you create a new giant company in the heat of Europe(I'm guessing you're European?) and employ thousands of people which would otherwise be home with parents working temp jobs and being stifled by a deep bureaucracy in Brussels that keeps getting bigger and fatter every year!