Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

reuters.com

Post reply on HN
Print view View original

171–180 of 224 posts

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

#171

Post by ringtail »

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…

But you are not increasing prices. Taxes gets passed on to consumers because companies do not take hit on profit margin just because of different tax rates.

So lets assume €10M is the already inflated ammount to accommodate for Ireland/Sweden share. Then only (€3.12m, €5.25) was needed from (Sweden, Ireland) if taxes were zero. €3.12m + €5.25m = €8.37m. €163k (€10m - €8.37) went to Govts. Then consumption taxes would be (28.2%, 14.2%) for (Sweden, Ireland). Swedese are paying (.282-.142)/(1+.142) = 16.3% more than Irish for same product.

You can calculate all these from equation in my comment before. I write here again,

R'(1-T) = R

whereas T is tax rates. R' is inflated revenue. R is zerotax revenue.

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

#172

Post by lovich »

ringtail wrote: post #68
Oletros wrote: post #53

Earlier quoted context omitted.

> It rarely works well with any multinational. how many multinationals have left any big market just for taxation?

Are you saying Singapore Co cannot receive payments from French consumers unless they pay corporate income tax to French Govt ? In other words, you are saying EU can deny its citizens right to buy foreign products ?

Countries restrict their citizens from buying foreign products all the time? The US did it to Cuba as an entire economy

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

#173

Post by lovich »

dangsmum wrote: post #118
latch wrote: post #72

Earlier quoted context omitted.

Not sure I understand. You're saying EU business' not allowed to buy ads on Google would have "exactly zero impact on google" ??

google would still charge the same to display an ad exactly the same number of people will see google ads exactly the same number of people will click on an ad The only thing that would change is companies outside of the eu will burn through their ad budgets faster. plus a whole (not quite so new) industry would emerge outside the eu bypassing the regulations. such as happened in China.

Corporations have a lot of power over countries right now, but does the world you live in ignore everything countries can do to companies who ignore their laws? They can attempt to block everything Google while they build their own local services, ala China. Google is also a US company and while their software might be hard to prevent getting into the EU, they can start leveling sanctions against physical US goods if the US won't do anything to reign Google in. I dont think any of this is likely to happen, but political entities on the scale of the US, China, the EU, etc have options to bend companies to their will

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

#174

Post by lovich »

whb07 wrote: post #126
SunShiranui wrote: post #83

Earlier quoted context omitted.

And leave one of the biggest markets in the world? Why would they?

Why would they be leaving it? I can easily connect to a Russian website with servers in Moscow just fine from anywhere in the world. The same applies to EU citizens. I'm a strong believer in freedom, to include freedom from unnecessary taxation. If G/F "leaves" EU, I meant it by closing physical locations and the farce they have to put up with for taxes, they could still serve citizens from EU. Id love to see the sto…

Is unnecessary taxation all taxation? By your argument every company should just find whatever the lowest tax area of the world is and set up their headquarters there, no one will be able to stop them!

Also, if you believe in freedom, why don't you believe that countries have the freedom to stop these massive corporations from extracting wealth from their society and returning nothing? Why does only the corporations freedom matter?

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

#175

Post by dangsmum »

lovich wrote: post #173
dangsmum wrote: post #118

Earlier quoted context omitted.

google would still charge the same to display an ad exactly the same number of people will see google ads exactly the same number of people will click on an ad The only thing that would change is companies outside of the eu will burn through their ad budgets faster. plus a whole (not quite so new) industry would emerge outside the eu bypassing the regulations. such as happened in China.

Corporations have a lot of power over countries right now, but does the world you live in ignore everything countries can do to companies who ignore their laws? They can attempt to block everything Google while they build their own local services, ala China. Google is also a US company and while their software might be hard to prevent getting into the EU, they can start leveling sanctions against physical US goods if…

i think you are confounding corporations as physical, "real" organisations in the real world, and cyberspace, which has no nationality by design and where the old world order is not welcome.

The old world order would very much like to believe they have dominion over cyberspace, but they do not and should not.

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

#176

Post by ringtail »

alkonaut wrote: post #167
ringtail wrote: post #154

Earlier quoted context omitted.

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.

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

Thats why gave this example to show that it does not work as profit remains the same.

Lets assume there is no US Co. Ireland Co is parent company and its only doing business in EU. Then either Ireland [1] allows low tax rates to attract business in which case profit is low and thus UK/France share is low. Or Ireland is high-tax, then business move to another low-tax in EU.

This only work if there is single tax rate in EU. But if there is single tax rate, then why even go this complicated tax calculation route.

[1] Estonia (and in near future Latvia) does not tax untill profit distribution, reducing effective tax rate to 0%.

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

#177

Post by alkonaut »

ringtail wrote: post #171
alkonaut wrote: post #155

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. 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…

But you are not increasing prices. Taxes gets passed on to consumers because companies do not take hit on profit margin just because of different tax rates. So lets assume €10M is the already inflated ammount to accommodate for Ireland/Sweden share. Then only (€3.12m, €5.25) was needed from (Sweden, Ireland) if taxes were zero. €3.12m + €5.25m = €8.37m. €163k (€10m - €8.37) went to Govts. Then consumption taxes would…

Yes, all kinds of secondary effects may come of this. Such as price increases, (and from that then tertiary effects such as reduced consumption). A reasonable effect is also companies moving around somewhat to get closer to business rather than close to low taxes.

In this example Swedish consumers would potentially see price increases - but on the other hand they could see tax reductions if the increased tax revenue from corporations gives some reform space for income or consumption tax cuts. Potential for jobs moving in from Ireland has the same positive effect on the bottom line.

The losers in the above scenario is the Irish because they'd see increased prices, lost jobs, and potentially raised taxes to offset lost corporate tax revenue.

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

#179

Post by whb07 »

lovich wrote: post #174
whb07 wrote: post #126

Earlier quoted context omitted.

Why would they be leaving it? I can easily connect to a Russian website with servers in Moscow just fine from anywhere in the world. The same applies to EU citizens. I'm a strong believer in freedom, to include freedom from unnecessary taxation. If G/F "leaves" EU, I meant it by closing physical locations and the farce they have to put up with for taxes, they could still serve citizens from EU. Id love to see the sto…

Is unnecessary taxation all taxation? By your argument every company should just find whatever the lowest tax area of the world is and set up their headquarters there, no one will be able to stop them! Also, if you believe in freedom, why don't you believe that countries have the freedom to stop these massive corporations from extracting wealth from their society and returning nothing? Why does only the corporations…

Corporations don't have money. It's also a giant cat and mouse game, governments want to tax and companies want to minimize that. So you end up with weird situations like Apple and Google hoarding cash because they don't know how to put it to work and they sure as shit don't want to lose it to the taxman[0].

So if you substantially lowered or entirely removed corporate taxes they would bring that money back to the US and spend it in R&D or capital investments, or return it in large forms to shareholders via dividends!

What oh what, do people usually do when they get sudden influxes of cash? They spend it or re invest it! They don't just bury it or burn the cash for warmth like Pablo Escobar. That seems like a better end goal than having the cash idly sitting abroad or being spent by crooked politicians who by virtue of being in office propose to be holier than thou and always manage to spend money not earned by themselves

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

#180

Post by ringtail »

alkonaut wrote: post #177
ringtail wrote: post #171

Earlier quoted context omitted.

But you are not increasing prices. Taxes gets passed on to consumers because companies do not take hit on profit margin just because of different tax rates. So lets assume €10M is the already inflated ammount to accommodate for Ireland/Sweden share. Then only (€3.12m, €5.25) was needed from (Sweden, Ireland) if taxes were zero. €3.12m + €5.25m = €8.37m. €163k (€10m - €8.37) went to Govts. Then consumption taxes would…

Yes, all kinds of secondary effects may come of this. Such as price increases, (and from that then tertiary effects such as reduced consumption). A reasonable effect is also companies moving around somewhat to get closer to business rather than close to low taxes. In this example Swedish consumers would potentially see price increases - but on the other hand they could see tax reductions if the increased tax revenue…

A reasonable effect is also companies moving around somewhat to get closer to business rather than close to low taxes.

Why ? The payroll will increase even if profit remains the same.

The losers in the above scenario is the Irish because they'd see increased prices, lost jobs, and potentially raised taxes to offset lost corporate tax revenue.

I doubt it. Consumption tax are never popular. Instead of businesses, the people at large might migrate to Ireland for significantly low cost of living.

Post reply on HN