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France Plans 5% Digital Tax as Governments Chase Internet Giants

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Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#281

Post by NicoJuicy »

sbacic wrote: post #270
NicoJuicy wrote: post #268

Earlier quoted context omitted.

A fine = following the rules & earning money. Ps. I hope your being sarcastic

I was not being sarcastic - the question was purely rhetorical. From the company's perspective - there is no difference because they all result in the same thing - transfer of money from the company to the government.

They are not the same thing.

You break the rules = fine

A political protection against something from other countries ( eg. Dumping and killing the internal market) = tariff

Taxes = helping the country/nation, based in money you earned from civilians/local businesses there

These are very different things.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#282

Post by Mirioron »

anoncake wrote: post #234
rb808 wrote: post #175

Earlier quoted context omitted.

You make it sound as if taxation is a good thing. In much of the world capitalism, retained profits and growing the economy is used to make people wealthier. The countries with fastest growth and highest employment, healthiest companies tend to have lower tax rates (China, USA). Countries that treat companies as if they a problem that need more tax (much of Western Europe) tend to have high unemployment and poorly pe…

> Countries that treat companies as if they a problem that need more tax (much of Western Europe) tend to have high unemployment and poorly performing economies where young people leave. Maybe countries with high unemployment and poorly performing economies have a problem with companies paying too little taxes.

How does that fix the problem though? The government doesn't create jobs, companies do.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#283

Post by thirdsun »

apexalpha wrote: post #279
grondilu wrote: post #263

I'm French and I love Amazon. I buy many stuff on Amazon that I have absolutely no idea how I could get them otherwise. That news makes me anxious about Amazon deciding not to offer its service in France one day.

Then there will be a competitor that will offer it. In NL we have a local grown Bol.com that does exactly what Amazon does (minus AWS). Would it be fair if Amazon started competing while they pay no tax here when Bol.com does? I don't think so.

Unless Amazon is breaking any laws by not paying taxes, yes, I think it's fair. What I'm trying to say is that in order to prevent tax avoidance proper legislation is required. Before we punish the players for utilizing the framework to their advantage we need to fix the system.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#284

Post by Ntrails »

ecaradec wrote: post #267
HNBRN wrote: post #260

French guy here. I think a lot of comments miss the point of the new tax : Some US tech companies use fake transfer prices to avoid paying income taxes in France. Eg Irish facebook subsidary owns the Facebook brand for Europe and charges other subsidiaries for using it. The French Facebook subsididary was charged so much in past years that it didnt declare any benefits in France. This is fraud. But this is fraud at E…

French guy too. I have to add that’s not specific to US company : Total, Ikea, and even EDF (french electricity state owned company ) also use the same practices. I too would prefer that they fix the law. It has been decades we know this and nothing seems to be done. I hope that the fact that population is getting more and more upset by the situation will push the politics to move. Btw the way the same companies dont…

I think the key point here is that all global companies structure their tax in the most efficient fashion possible. They pay a bunch of money (millions) to save far more in tax globally. Forget morality. They are behaving optimally for their incentives.

The only way forward is to shut down the model of "redirecting profits to the place with the lowest tax". Kill it with fire.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#285

Post by BartBoch »

AnthonyMouse wrote: post #243
BartBoch wrote: post #241

Earlier quoted context omitted.

Actually, it is. The 1.5% tax rates will bring more than the current system. This is not something made up. This was well researched and whole armies of economists are behind it. More and more countries are considering it. Now megacorps don't pay taxes at all, so what's better?

> The 1.5% tax rates will bring more than the current system. Under your current economic structure, surely. But once you make it so that companies can reduce their supply chain's tax burden from ~20% to 1.5% by becoming vertically integrated, what do you expect to happen next? > Now megacorps don't pay taxes at all, so what's better? Option one is income tax at e.g. 20%, local companies pay 20% while megacorps pay ~…

I am surprised about you saying it would be 20% for small business. What (optimized) market requires for a raw source to change hands 13 times before it is a final product (mind that we are talking small business here). The revenue tax would force the market to optimize and become more competitive.

And even if megacorps would grow vertically - that's OK, since this would force them to grow locally, take parts of the market and optimize it. It's a win-win.

I also don't think DBCFT would work in an OPEN market like EU. Your opinion seems very US-oriented, while this thread is about EU. The EU rules and tax system is completely different to US and it cannot be compared.

DBCFT could work if the issue would be EU vs World, not EU within.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#286

Post by BartBoch »

iguy wrote: post #265
BartBoch wrote: post #228

Earlier quoted context omitted.

Companies like Google, Facebook etc. don't pay taxes in Poland by claiming expenses in Ireland/Holland. Thus they are "at loss" in Poland. The revenue tax would allow no tax avoidance due to that.

I understand but disagree about the tax on profits, see https://news.ycombinator.com/item?id=19295683 But my question about what Google et. al. actually do in Poland. Is it a sales office for a product made elsewhere? (Few employees, large cash flow.) An engineering office for a product sold elsewhere? (Little VAT, lots of income tax.) Etc.

Sales for a product made elsewhere.

I know where you are going with this - the issue is that they don't pay pretty much any taxes due to avoidance, yet they drain the market from the revenue thus limiting the ability for local companies who cannot avoid taxes trying to develop in this space.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#287

Post by Nasrudith »

pjc50 wrote: post #82
crazygringo wrote: post #74

Earlier quoted context omitted.

That would be a nightmare. First, tax laws don't have clear intentions to begin with -- if a tax law passes with 51 out of 100 votes in the legislature, all 51 representatives could be supporting the "letter" of the law for 51 different actual intentions, many of which might not be noble in the first place (e.g. give a particular local factory a tax break to win more votes next election). Second, because of this, "in…

The usual solution is a "General anti-avoidance rule" (GAAR). This doesn't get into the intent of the tax law, only into the intent of the business action . If there would be a simpler, more natural, and otherwise cheaper way to do it, but it's been done a particular way to avoid tax, then it's unlawful.

I wonder how well that would work for intangibles like branding, patents, or copyright - all three are artificial and can essentially be charged for arbitrarily and the company value is what provides their worth.

I suspect it would be easier to have a subsidiary rate rule - they may charge percentage either net or gross but not expenses for any IP including required external salaries but even that probably has loopholes or inviabilities.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#288

Post by sisu2019 »

platz wrote: post #45
kyrra wrote: post #41

Earlier quoted context omitted.

It's not that simple? How do you tax a German company paying an Irish company to show ads in France?

much like the trolley problem and driverless cars, you can easily get lost in the weeds in a legitimate, complex theoretical question, when for a concrete problem a simple answer can easily be obtained. In fact, the theoretical question obscures or acts as cover for the concrete case. For driverless cars, you just apply the brakes. For google, do you outlaw "The double Irish with a Dutch sandwich"

Outlaw what exactly? Subsidiaries? Licence Agreements? Profit/Loss calculations? The European Union? "The double Irish with a Dutch sandwich" is an emergent property of a bunch of laws "working as intended".

So what you really ask is to get rid of the rule of law so you can target the bad guy du jour directly. Just remember that you may be "the bad guy" tomorrow.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#289

Post by rlanday »

NicoJuicy wrote: post #281
sbacic wrote: post #270

Earlier quoted context omitted.

I was not being sarcastic - the question was purely rhetorical. From the company's perspective - there is no difference because they all result in the same thing - transfer of money from the company to the government.

They are not the same thing. You break the rules = fine A political protection against something from other countries ( eg. Dumping and killing the internal market) = tariff Taxes = helping the country/nation, based in money you earned from civilians/local businesses there These are very different things.

That’s not really true. Tariffs are clearly a form of tax. Both taxes and fines are used to discourage undesirable behavior. One difference is businesses typically assess on their own how much they owe in taxes, whereas the government tells them how much they owe in fines.

Re: France Plans 5% Digital Tax as Governments Chase Internet Giants

#290

Post by terragon »

AnthonyMouse wrote: post #121
alkonaut wrote: post #93

Earlier quoted context omitted.

> The things you say should "simply be outlawed" -- how? How are you going to determine which internal loan is "expensive" versus "very expensive"? How are you going to differentiate between legitimate payments and the "royalties" you put in quotes that you call a construct? Example for interest rates: Credit risk and intrabank/central bank rates are considered by courts when judging whether a rate is “too high”. Swe…

It's more complicated than that. A few percent here or there is all it takes to make a company unprofitable. Most companies don't have huge margins even when they're not trying to reduce them on purpose. You don't need the rate to be higher by a lot, only a little. And then there is the principal. If you want profits in a jurisdiction, the entity there can get cash by e.g. selling its shares to the parent, which it t…

Yours is a very well reasoned argument.
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