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EU adopts global minimum 15% tax on big business

bbc.com

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Re: EU adopts global minimum 15% tax on big business

#181

Post by anonuser123456 »

treewalking wrote: post #165
cwkoss wrote: post #164

Earlier quoted context omitted.

Is this a tax on profits? If so, I worry it will remain weak to hollywood-accounting attacks: it's easy to spend money until there are no 'profits'. I'd really love to see progressive taxation of corporate revenue: the bigger a company is the higher the tax rate. Huge corporations benefit from economies of scale, so there is an incentive for power concentration. This power concentration is bad for society: it deliver…

It’s weird that individuals are taxed on revenue but corporations are (usually?) taxed on profit.

Individuals (in the US) have standard deduction, which approximates the minimum value to sustain one's person. It's a bad approximation, but it is what it is.

It's assumed that corporations spend as little as possible on operations. Individuals obviously don't. Whereas a corporation wouldn't rent employees 500 sqft / person, individuals regularly rent/purchase that density for themselves. Similarly, while a corporation might buy a Camry and run in into the ground, some individuals will buy a new BMW every 3 years.

Corporations also don't have a motive to exist beyond profits. If you tax revenue and make profits untenable, then corporations simply will not exist. Individuals on the other hand try not to die.

Re: EU adopts global minimum 15% tax on big business

#182

Post by ErikVandeWater »

hollerith wrote: post #179
treewalking wrote: post #165

Earlier quoted context omitted.

It’s weird that individuals are taxed on revenue but corporations are (usually?) taxed on profit.

How would you define how much profit an individual made last year?

Income minus basic living expenses would be one way.

Re: EU adopts global minimum 15% tax on big business

#183

Post by abeppu »

alkonaut wrote: post #136
Nextgrid wrote: post #34

Earlier quoted context omitted.

Out of curiosity, how do you define where profits are made when it comes to selling digital services? There is no physical movement of goods. Do you determine it based on where the software was originally written?

If I was trying to invent some “fair taxation scheme” I’d tax the profit based on the revenue in that country. So if a company had $100B global revenue and $10B global profit and 0% of the profit was in France while 10% of the revenue was in France, then the company should be taxed based on the $1B profit that can be attributed to France based on revenue there. Any other scheme seems it’s prone to creative licensing…

Maybe this is obvious to people that do accounting for multinationals, but it's not clear to me how you even establish that 10% of the revenue was in France.

If a global company like Google pays a global company like Apple $K billion to be the default search engine on iphones, should Apple consider that revenue to be all in the US because Google is headquartered in the US even though it's purchasing something that will apply to people in lots of countries? Does it matter if Google uses local corporations in a number of companies to each pay Apple? If Google pays through its subsidiary in the jurisdiction with the highest corporate taxes, can it force Apple to realize revenue there?

Re: EU adopts global minimum 15% tax on big business

#184

Post by prawn »

ErikVandeWater wrote: post #182
hollerith wrote: post #179

Earlier quoted context omitted.

How would you define how much profit an individual made last year?

Income minus basic living expenses would be one way.

In Australia, there is a tax-free threshold of $18,200. Not sure about other countries.

Re: EU adopts global minimum 15% tax on big business

#185

Post by exceptione »

diego_sandoval wrote: post #156
zuminator wrote: post #127

Earlier quoted context omitted.

That's how taxes work generally though. I already paid income taxes on my salary, but when I spend it on something I have to pay taxes again, and then the retailer has to count it as taxable income as well. Anytime money changes hands the government gets its vig. I don't see how the corporate tax is so egregiously different.

> Anytime money changes hands the government gets its vig. And doesn't that create an artificial pressure for money to change hands fewer times (for example, in the production of a consumer good)?

No, if we are talking about VAT then companies have to make the following sum

  €800 VAT the company charged to clients
  €500 VAT the company paid to suppliers 
  ===== -
  €300 VAT the company has to pay to authorities
This system makes sure that VAT over any good will only be charged once. VAT usually rolls over from one company to the next till it reaches its destination, the consumer.

ULTIMATELY, the consumer pays the VAT. The consumer cannot deduct VAT.

Re: EU adopts global minimum 15% tax on big business

#186

Post by omgomgomgomg »

This will be watered down in every way imaginable, escpecially the usual suspects like Malta with a straight up fraudluently advertised 30+ % corporate tax rate ,but they "refund" you everything but 5%, making it an effective 5% tax rate.

There is no way Malta will play along, it is a small state abusing all the EU benefits for nefarious purposes and never contributing anything useful.

This is just an example, there are many, many more more sophisticated schemes like that, Malta is just doing it openly.

Re: EU adopts global minimum 15% tax on big business

#187

Post by vkou »

bee_rider wrote: post #95
redm wrote: post #70

Earlier quoted context omitted.

It's where the profits are, not where the cost centers are. If the customers are in France, the profits are in France.

What if Netflix France has to license their content and platform from Netflix US, the the license costs are coincidentally exactly the same as the revenue made in France? Then there will be no profits in France.

In that case, they could always consider nationalizing Netflix France, and paying Netflix $0 in compensation. It is, after all, a completely profitless venture, losing it would be no big loss to Netflix.

Stupid games, stupid prizes, etc.

Re: EU adopts global minimum 15% tax on big business

#188

Post by toast0 »

msh wrote: post #117
toast0 wrote: post #54

Earlier quoted context omitted.

Why should the profit be made in france if the engineering that went into delivery was made in the US, the content was made in X, the deal for the content was negotiated in Y, network source is Z (probably france, but not necessarily) VAT in France on the subscription makes sense, but figuring out where the profit lies, is more nebulous.

You could argue that the profit is made where the money is made.

You could argue the profit is made where the money is earned. No CDN, no streaming; No content, no streaming, etc. How much would Netflix pay a (probably US based) CDN company to do what they do inhouse... that should probably still go to the CDN team, etc.

Re: EU adopts global minimum 15% tax on big business

#189

Post by exceptione »

exceptione wrote: post #172
diggernet wrote: post #163

Earlier quoted context omitted.

That would instantly bankrupt every single company in the many industries with single-digit profit margins.

True. Proposal of parent could be made more realistic by making sure only few things like bill of materials, resale items and personnel costs can be deducted. Companies already keep track of all these things. You will have to go after financialization tricks, where healthy companies get loaded with debt, weird tricks with assets and all the stuff the finance industry comes up with that has nothing to do with core fun…

Apparently some lobby found my little comment too. :)

Food for thought: in a distribution chain you will find lots of small value adds. Take sea ports, there are loads of companies that handle import of materials or products. The price they charge for their goods/services are dominated by their import costs.

Re: EU adopts global minimum 15% tax on big business

#190

Post by everforward »

mpweiher wrote: post #160
toast0 wrote: post #54

Earlier quoted context omitted.

Why should the profit be made in france if the engineering that went into delivery was made in the US, the content was made in X, the deal for the content was negotiated in Y, network source is Z (probably france, but not necessarily) VAT in France on the subscription makes sense, but figuring out where the profit lies, is more nebulous.

> engineering that went into delivery was made in the US That's a cost, not profit. > the content was made in X Cost, not profit. > the deal for the content was negotiated in Y Negotiating the deal also sounds like a cost to me. > network source is Z Cost. The profit is made where you get money, not where you spend it.

That doesn't account for infrastructure/governmental costs associated with creating the stuff that makes the profit. As a hypothetical, if a German company writes some software and US companies are the only ones that buy that software, the US harvests 100% of the taxes on profits while the German government is left holding the bill to take care of the roads that lead to the office, electricity infrastructure, employee's healthcare, etc.

It puts the government in a weird spot where they really don't want any businesses that primarily sell to foreign countries since they don't get tax revenue to fund public services for that company.

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