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US blocks crackdown on tax avoidance by net firms like Google and Amazon

guardian.co.uk

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Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#21

Post by cmdkeen »

nawitus wrote: post #19
cmdkeen wrote: post #17

Earlier quoted context omitted.

You're missing a step though - which is that these corporations do everything possible to avoid paying the due tax on those foreign profits. I'm all in favour of getting to repatriate profits then - but taking the profits through a tax haven needs to be stopped first. Take Google in the UK for instance. They don't "sell" anything in the UK according to their tax returns, so claim every deal is actually finalised thro…

The problem with preventing the use of 'tax havens' is that there's no non-arbitrary way to decide if a company is truly using another country as a tax haven, or that they are actually using developers from another country. In the Google example, Google UK is clearly benefiting from the developers that work outside UK, therefore they should be able to pay 'brand fees' or whatnot to the 'main Google'. Of course in thi…

Google was possibly a poor example as they aren't just using the brand fees but claiming they don't actually "sell" anything in the UK at all. Despite having lots of people in their London officer with sales type titles on LinkedIn...

I think the issue is that companies are currently able to get away with murder in terms of structuring debt and those brand type fees to funnel profits away. Some kind of "reasonableness" test certainly wouldn't go amiss when it comes to judging measures taken by companies. There's already a movement against measures taken solely for the purpose of tax avoidance.

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#22

Post by phpnode »

patrickaljord wrote: post #15
danmaz74 wrote: post #2

Let's see how this pans out. Maybe this time the UK will not play for the US team, given the outrage there about this issue, but I'm afraid that without a common EU position about this the US will be able to use their usual divide et impera tactics.

I hope the US wins. I'd rather this money stays with Google and Amazon than it goes to the EU states. Why? Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. What does the state do with tax money? It spends it badly and ends up creating more debt. So, it creates the opposite of value, negative value or debt, and crony capitalism…

Your post is a tirade against taxation in general, it's not pertinent to the point at hand.

Obviously (most) governments want to avoid a situation where a foreign entity is strong enough to destroy any local competitor and on top of that, contribute nothing back to the economy in terms of tax revenue. It's completely ridiculous.

If you deliver goods and services in a country, you should expect to pay the appropriate taxes in that country. It is completely unjust that Google et al can do this kind of thing, it puts local companies at a massive disadvantage.

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#23

Post by rorrr2 »

foobarbazqux wrote: post #11
beedogs wrote: post #3

So, let me see if I understand this: the US is going to bat for the big software companies who don't want to pay taxes in other countries, and yet I, an expat American, am expected to file an income tax return with the IRS every single year for my foreign earnings, which may be subject to dual-taxation if I make "too much." What a crock of shit.

It's not dual taxation. The IRS deducts the foreign tax paid. So if the foreign country has a higher tax rate, you will never pay US tax. I'm not saying it's a great policy, but it isn't as bad as it sounds. You can always renounce your US citizenship - think of it as a maintenance fee. Yes, draconian.

That's not true. In Switzerland there's a two year line of people waiting to renounce their US citizenships, because they get double taxed.

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#24

Post by cletus »

I'm no fan of the overreach of the US government that includes, but is not limited to:

- requiring all citizens and non-citizens to declare all foreign bank accounts (FBAR) including signatory authorities on trusts and companies;

- unclear rules on the aforementioned. Do you have to declare retirement accounts? Are they taxed? Nobody really knows. It's clear the only value in FBAR is in non-compliance if the government decides to prosecute you;

- requiring non-resident citizens and residents to file tax returns and pay taxes if their income is sufficiently high and either the income is in a country that has no double taxation treaty with the US or it does and its tax rate is simply lower, even for those who haven't stepped foot in the US in 20+ years. I actually know many US citizens who don't do this and it could be a real problem for them at some point.

All of this while allowing the systematic avoidance of tax by US companies on a massive scale. US companies need to report their foreign income. An individual would have to pay US taxes on foreign income. Why shouldn't a company do the same? Why can't it pay the difference between US taxes and whatever taxes they've already paid as is standard in all double taxation treaty cases?

But the move here by the French is blatantly political and narrowly targeted at US companies. You'll note the language is around the "digital economy". Well, why should such reform be limited to only Internet companies, which--surprise, surprise--are primarily US companies?

That's actually what the US (rightfully IMHO) is objecting to.

All of this is simply window dressing however. The real problem with the system is complexity. Think of tax loopholes as bugs. The more complex software, the more bugs there are and the harder it is to eradicate them. Tax law is no different.

Unfortunately there is no political appetite for true reform as every complicated exception is the result of shoring up some constituency or pork barreling or other "corruption" so as much as we need to stop, say, poring money into corn subsidies, it just won't happen for the foreseeable future.

Borders are disappearing. We already see the nonsensical effects of this such as attempts to limit content distribution to geographical regions. At some point we're simply going to have a global tax regime and, dare I say it, world government, scary as that will probably be.

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#25

Post by gsb »

foobarbazqux wrote: post #11
beedogs wrote: post #3

So, let me see if I understand this: the US is going to bat for the big software companies who don't want to pay taxes in other countries, and yet I, an expat American, am expected to file an income tax return with the IRS every single year for my foreign earnings, which may be subject to dual-taxation if I make "too much." What a crock of shit.

It's not dual taxation. The IRS deducts the foreign tax paid. So if the foreign country has a higher tax rate, you will never pay US tax. I'm not saying it's a great policy, but it isn't as bad as it sounds. You can always renounce your US citizenship - think of it as a maintenance fee. Yes, draconian.

There are also different treatments of capital gains, and phantom gains which arise only from shifts in exchange rates. For anyone of any means beyond their salary alone these both can lead to paying more combined tax to both countries than either would require individually. Thats dual taxation in my book.

Phantom gains have been particularly bad in the last decade with the falling US dollar. In Australia, house prices in my area about doubled between 2002 and 2012, but with the change in exchange rates, the IRS calculates the gain as if the price had more than quadrupled!

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#26

Post by danmaz74 »

patrickaljord wrote: post #15
danmaz74 wrote: post #2

Let's see how this pans out. Maybe this time the UK will not play for the US team, given the outrage there about this issue, but I'm afraid that without a common EU position about this the US will be able to use their usual divide et impera tactics.

I hope the US wins. I'd rather this money stays with Google and Amazon than it goes to the EU states. Why? Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. What does the state do with tax money? It spends it badly and ends up creating more debt. So, it creates the opposite of value, negative value or debt, and crony capitalism…

The thing here is not about "more taxes" or "less taxes". It is about WHO pays the taxes, however high or low they are. Giving a big competitive advantage to these (mostly US) corporations isn't going to lower your taxes in France; on the contrary, you don't just have to pay more taxes (or create more debt).

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#27

Post by edoloughlin »

nawitus wrote: post #19
cmdkeen wrote: post #17

Earlier quoted context omitted.

You're missing a step though - which is that these corporations do everything possible to avoid paying the due tax on those foreign profits. I'm all in favour of getting to repatriate profits then - but taking the profits through a tax haven needs to be stopped first. Take Google in the UK for instance. They don't "sell" anything in the UK according to their tax returns, so claim every deal is actually finalised thro…

The problem with preventing the use of 'tax havens' is that there's no non-arbitrary way to decide if a company is truly using another country as a tax haven, or that they are actually using developers from another country. In the Google example, Google UK is clearly benefiting from the developers that work outside UK, therefore they should be able to pay 'brand fees' or whatnot to the 'main Google'. Of course in thi…

Of course in this case most of the development is not happening in Ireland

I'd say that very little (probably zero) development is done in Ireland, but I get the impression you think that development is the taxable activity (I don't know if it is or not). However, there are 1,700 people doing something in Ireland (from http://www.idaireland.com/google/index.xml, 1/2 way down):

A site reliability/engineering team supporting Google’s European hosting and search activities; Multilingual customer support for Google’s AdWords advertising product; On-line relevancy testing and Google product support; Shared Services to support Google’s EMEA operations.

As an Irish person, I'm getting a little weary of the constant references on HN implying that Ireland is little more than a tax haven. There is a significant number of jobs attached to the US multinational presence here, viz:

- Apple: 4000 employees (http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-...)

- eBay: 3000 (http://www.irishtimes.com/business/sectors/retail-and-servic...)

- Google: 1700 (see above)

- Facebook: 500 (http://www.irishtimes.com/business/sectors/technology/facebo...)

I could go on, but I have stuff to do, and I feel like I've already done more research than most journalists commenting on this area. For those interested, there's a list of foreign ICT companies operating in Ireland at http://www.idaireland.com/business-in-ireland/information-co...

Edit: Removed woe-is-me comment following a trigger-happy downvoter.

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#28

Post by digitalengineer »

patrickaljord wrote: post #18
camus wrote: post #10

Earlier quoted context omitted.

You should go back to where ever you come from or wherever it is better for you to live. Sarkozy ruined France so yes now everbody needs to pay for it. And the problem is not taxes,i'm happy to pay taxes. The problem is people like French liberals ( liberals are "right-wing" in France ) that gives hand outs to their friends or vote laws without financing their them , and then all they have left is blaming the poor,th…

Sarkozy is not libertarian at all if that's what you mean by "libéral". He's just as socialist as the left when it comes to the economy. To give you an idea, Sarkozy created more than 50 taxes during his mandate [1] and didn't cut on spending while creating more social aid programs (RSA). Only in France would he be considered a libertarian or "néo-libéral" as they say just because he limited the maximum amount of tax…

Only France could make Brussel look like Galt's Gulch to the people who have a lot of money.

http://www.publicserviceeurope.com/article/1876/french-elite...

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#29

Post by patrickaljord »

phpnode wrote: post #22
patrickaljord wrote: post #15

Earlier quoted context omitted.

I hope the US wins. I'd rather this money stays with Google and Amazon than it goes to the EU states. Why? Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. What does the state do with tax money? It spends it badly and ends up creating more debt. So, it creates the opposite of value, negative value or debt, and crony capitalism…

Your post is a tirade against taxation in general, it's not pertinent to the point at hand. Obviously (most) governments want to avoid a situation where a foreign entity is strong enough to destroy any local competitor and on top of that, contribute nothing back to the economy in terms of tax revenue. It's completely ridiculous. If you deliver goods and services in a country, you should expect to pay the appropriate…

It's not tirade against taxes in general, it's a tirade against spending. Don't you understand that states have clearly refused to cut their spending and that their only answer is more taxes? We're already at 60 to 70% taxes here in France and they always need more because they refuse to cut spending, not only do they refuse to cut them but they make them bigger each year. First they're coming for Google and Amazon but you don't care because they're not you, then they'll come for your money. Here in France even if you earn around €40k, you're close to a 50% tax already when you sum they all up. They are so desperate that they even went after Nutella to tax the palm oil they use pretending it was dangerous even though scientist said there was nothing special about it [1].

The second article of the Déclaration des droits de l'Homme clearly states that private and individual properties ought to be protected. Where is the respect for private property when 50% of your property is taken by force by the State every year. Our whole revolution was about fighting unfair taxation, privileges for the few and insane State spending... and now we're back to square 1.

1: http://www.guardian.co.uk/world/2012/nov/12/france-nutella-a...

Re: US blocks crackdown on tax avoidance by net firms like Google and Amazon

#30

Post by weavejester »

patrickaljord wrote: post #15
danmaz74 wrote: post #2

Let's see how this pans out. Maybe this time the UK will not play for the US team, given the outrage there about this issue, but I'm afraid that without a common EU position about this the US will be able to use their usual divide et impera tactics.

I hope the US wins. I'd rather this money stays with Google and Amazon than it goes to the EU states. Why? Because the more profit Google and Amazon make, the more value they produce for society as in more work, better technology, better life etc. What does the state do with tax money? It spends it badly and ends up creating more debt. So, it creates the opposite of value, negative value or debt, and crony capitalism…

The idea that private industry is always more efficient than the public sector is, at best, an over simplification. One need look no further than healthcare to find an example where the public sector is vastly more efficient than a market of competing, private sector companies.

The state also spends money on things that would not be funded any other way. Pure-scientific research, such as CERN. Policing for people too poor to hire private security services. The idea that these things are "the opposite of value" is ludicrous.

Also, if you're not going to tax Google and Amazon, then that gives large international companies who can dodge tax a huge advantage over smaller national companies who cannot. That undermines the underlying principle of capitalism: competition. Either you tax no companies, or all of them - any halfway position is worse than either.

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