France has approved a digital services tax despite threats of retaliation by US • Hacker News Board

Re: France has approved a digital services tax despite threats of retaliation by US

#201

Post by ApolloFortyNine » Thu, Jul 11, 2019, 6:16 PM UTC

1gn1t10n wrote: post #183

ApolloFortyNine wrote: post #153

Earlier quoted context omitted.

>- roads & infrastructure for shipping Their whole point was that the shipper would pay taxes. Which they do. This applies to most of your points as well, they do get taxed on their warehouses. What I find most comical about all this is there's already a 20% VAT on everything Amazon sells there. They do pay taxes already, France simply wants more, and this tax is written in a way where it will have a much larger effe…

As far as I understand VAT's role in the economy, the Value Added Tax is offset to the last link of a value-adding chain: the consumer. This creates the incentive of further adding value to a product/service and thus creating more economic output. Amazon may be paying other taxes, but VAT is paid by the consumer.

It's a sales tax. In the EU it's fitted into the price the consumer sees. From every sale Amazon makes 20% of that is going to the government.

You could easily argue every tax on Amazon is a tax on the consumer. If you increase the cost of Amazon doing business, prices go up.

Re: France has approved a digital services tax despite threats of retaliation by US

#202

Post by celticninja » Thu, Jul 11, 2019, 6:17 PM UTC

bko wrote: post #15

I never understood the logic behind taxing large internet businesses. The idea behind taxes is that you use some public resource and you pay for that service. You own a home in a neighborhood, you pay property tax that funds the schools. You drive a car, you pay gasoline tax that funds the streets. You hire workers locally, you pay the tax to pay back all the contributions public institutions made to adding the skill…

Amazon delivers stuff to my house. It uses all the local government run resources, like roads, to carry out that business.

Re: France has approved a digital services tax despite threats of retaliation by US

#203

Post by ElFitz » Thu, Jul 11, 2019, 6:17 PM UTC

vonmoltke wrote: post #186

marcus_holmes wrote: post #162

Earlier quoted context omitted.

that's the point the French are bringing up. French companies pay French taxes. Internet companies serve French markets, take French money, but pay taxes elsewhere, and often they pay no taxes because they can shop around to find a friendly tax haven that doesn't charge them taxes. This is only possible because internet. So, they're imposing a tax on companies that serve French customers via the internet but aren't b…

Why isn't the solution then to force all companies doing business in France to register with the French government and pay taxes on the portion of revenues derived from France?

Considering only foreign ones (local ones are already covered), the first explanation I can find is that for most of them it would just be an expensive and pointless exercise.

The time and costs involved to setup, maintain and enforce such a system would be ridiculously high compared to what it would bring in.

Another answer (still only considering foreign businesses) would be that for companies making so little, the burden could be much greater, hindering their growth (and future taxability).

And that's just from the tip of my head

Re: France has approved a digital services tax despite threats of retaliation by US

#204

Post by rtkwe » Thu, Jul 11, 2019, 6:18 PM UTC

vonmoltke wrote: post #191

rtkwe wrote: post #157

Earlier quoted context omitted.

Double Irish with a Dutch Sandwich. Companies like google can charge their profitable branches in other countries royalties to use Google software or platform moving the profits out of a higher tax country like France into Ireland where there's little to no tax. Even after they patched the Dutch part that allowed even the marginal Irish taxes to be avoided companies can still artificially lower their profit by transf…

Has any country explored options for shifting to a revenue tax to eliminate such games entirely?

I don't know honestly. Seems like a tough road to go down because there are legitimate ways for a business to have high revenues relative to their profits like low margin businesses and you don't want to stamp them out accidentally targeting this kind of dodge.

Re: France has approved a digital services tax despite threats of retaliation by US

#205

Post by ApolloFortyNine » Thu, Jul 11, 2019, 6:18 PM UTC

mola wrote: post #178

ApolloFortyNine wrote: post #153

Earlier quoted context omitted.

>- roads & infrastructure for shipping Their whole point was that the shipper would pay taxes. Which they do. This applies to most of your points as well, they do get taxed on their warehouses. What I find most comical about all this is there's already a 20% VAT on everything Amazon sells there. They do pay taxes already, France simply wants more, and this tax is written in a way where it will have a much larger effe…

Vat isn't paid on the ad space these companies sell to other foreign businesses.

They do though?

>https://sellercentral-europe.amazon.com/forums/t/been-charge...

>https://sellercentral.amazon.com/gp/help/external/201748700?...

Re: France has approved a digital services tax despite threats of retaliation by US

#206

Post by 99052882514569 » Thu, Jul 11, 2019, 6:21 PM UTC

weberc2 wrote: post #184

99052882514569 wrote: post #55

Earlier quoted context omitted.

>I disagree with that framework but applying taxes arbitrarily hardly seems fair or the best way to raise revenue. There's nothing arbitrary here, in fact they're attempting to partially address a perverse incentive to take all your business online and do some jurisdiction arbitrage to minimize corporate taxes. This gives you an unfair advantage over, say, a brick-and-mortar store or a physical ad agency in Paris tha…

I'm trying to follow the argument in good faith, so bear with me... > This gives you an unfair advantage over, say, a brick-and-mortar store or a physical ad agency in Paris that's trying to compete online. Are you sure it's "an unfair advantage" and not just "an advantage"? Doesn't your position presume that the brick-and-mortar business model deserves special protection? If so, why? If not, what then is unfair abou…

>Are you sure it's "an unfair advantage" and not just "an advantage"? Doesn't your position presume that the brick-and-mortar business model deserves special protection? If so, why?

Because it employs more people and pays taxes locally. It's perfectly valid for the government to ignore that and focus solely on the consumer side (i.e. minimize prices), but it's also perfectly valid (and economically sound) to do what France is doing.

>What is the implied incentive in this case? It seems like it's just incentivizing a brick and mortar business model

No, it is not incentivizing it. It levels the playing field a bit by applying more consistent taxation.

>Doesn't this all point to a fundamental problem with "corporate tax"? Wouldn't it be better (fairer) to reduce or remove corporate tax and raise sales tax or similar, such that it doesn't matter whether the business has a presence in the country in question?

I can be persuaded by that argument (economists do love consumption taxes for a reason, after all), but either way it's not for Amazon to decide. In France, it is for the French people to decide, via their representatives. Whatever positive or negative consequences arise are also theirs to bear.

Re: France has approved a digital services tax despite threats of retaliation by US

#207

Post by inscionent » Thu, Jul 11, 2019, 6:21 PM UTC

friedman23 wrote: post #190

TeMPOraL wrote: post #142

Earlier quoted context omitted.

Ads don't make money from thin air; someone pays for those ads. Google accesses a market of French advertisers, and that market exists because of French government. (Also, arguably, French eyeballs are a resource belonging to France, which Google exploits.)

> Google accesses a market of French advertisers, and that market exists because of French government. Why don't you try justifying that one? Because I posit that if the French government didn't exist the market would exist anyway.

[flagged]

Re: France has approved a digital services tax despite threats of retaliation by US

#208

Post by 99052882514569 » Thu, Jul 11, 2019, 6:22 PM UTC

buboard wrote: post #124

99052882514569 wrote: post #37

Earlier quoted context omitted.

Let's say it is. Why would that change anything? France's government isn't trying to target or punish anyone (whether Ireland or Google), it just wants to stop the corporate tax avoidance it sees as unfair.

What you call avoidance is the essence of EU. Undoing that would bring us back to pre-EEC situation

Tax avoidance via jurisdictional arbitrage is certainly not the essence of EU.

Re: France has approved a digital services tax despite threats of retaliation by US

#209

Post by vixen99 » Thu, Jul 11, 2019, 6:25 PM UTC

ripdog wrote: post #28

bko wrote: post #15

I never understood the logic behind taxing large internet businesses. The idea behind taxes is that you use some public resource and you pay for that service. You own a home in a neighborhood, you pay property tax that funds the schools. You drive a car, you pay gasoline tax that funds the streets. You hire workers locally, you pay the tax to pay back all the contributions public institutions made to adding the skill…

Those large tech companies can make money in France because the french government provides all that is necessary for a free, fair and functioning market. How could Google make money in France if there was no french police force, education system, market regulation, court system, contract enforcement? All money made on the white market in any country is facilitated by that government, and taxes are paid on all profits…

What about the money the French make by using Google services? Desktop search traffic originating from Google is 90% - presumably for a good reason.

https://www.statista.com/statistics/220534/googles-share-of-...

Re: France has approved a digital services tax despite threats of retaliation by US

#210

Post by weberc2 » Thu, Jul 11, 2019, 6:25 PM UTC

cma wrote: post #175

bko wrote: post #15

I never understood the logic behind taxing large internet businesses. The idea behind taxes is that you use some public resource and you pay for that service. You own a home in a neighborhood, you pay property tax that funds the schools. You drive a car, you pay gasoline tax that funds the streets. You hire workers locally, you pay the tax to pay back all the contributions public institutions made to adding the skill…

> I never understood the logic behind taxing large internet businesses. Why have 20% of Taxi revenue (or whatever it is) leave the country if basically all of the service is provided in country, and the internet taxi company takes the large cut over a sustained period through a combination of first-mover advantage an network effects? (Not that that's what's going on completely in the case of ride sharing, as Uber may…

> Why have 20% of Taxi revenue (or whatever it is) leave the country if basically all of the service is provided in country, and the internet taxi company takes the large cut over a sustained period through a combination of first-mover advantage an network effects?

Because the value proposition for a service like Uber is the technology to efficiently broker transactions between riders and drivers (and hopefully we can avoid the predictable digression that this brokerage is trivial). The aforementioned 20% pays for that technology while the other 80% pays for the cost of the ride (the driver's time, fuel, car mileage, etc).

Also, I don't think the first-mover or network effects are particularly strong in the case of Uber. I have a hard time believing that the overwhelming majority wouldn't jump ship immediately if a competitor arrived on the scene who could offer better fares for customers and/or better rates for drivers. By comparison, an upstart Facebook competitor wouldn't be able to compete even if they could "outprice" Facebook (I guess "outprice" would be "better data privacy" in this example) because Facebook's product is the network. Of course, being able to compete with Uber (i.e. offering better rates/fares) is still prohibitively hard for most upstarts, but that's different than first-mover or network effects.