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Paradise Papers: Dear Tim Cook

projekte.sueddeutsche.de

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Re: Paradise Papers: Dear Tim Cook

#521

Post by sveme »

freyir wrote: post #441
styx31 wrote: post #80

What annoys me the most is that, as a small company, I can't evade from my country tax system. I pay the taxes. All of them, at full rate. But there are these big companies which can afford to create offshore companies/holding just to evade some tax system, and lower their tax rate. So, what? The tax rate of a country is now "artificial", because it will never be applied to all revenues from all companies, because th…

We cannot expect companies to voluntarily pay more taxes than the minimum, while there are legal loopholes at their disposal. The solution may mean reducing the tax rate for all companies, closing the loopholes, and then enforcing the law. But that would require elected government leaders to put their jobs on the line (lowering corporate taxes sounds bad to many voters since corporations have been vilified, even thou…

I don't understand why you have to lower corporate tax rates first before closing all loop holes...

Re: Paradise Papers: Dear Tim Cook

#522

Post by freeflight »

tyingq wrote: post #414
freeflight wrote: post #386

Earlier quoted context omitted.

> That analogy is hard for me to follow. Again, for the most part, no laws are being broken. The analogy was more to demonstrate that harsher regulation ain't always the only solution. And with something as abstract as "taxation" I think it's usually a rather bad approach because new regulations will only result in new loopholes being created, it's an endless cat&mouse game wasting a lot of resources for everybody in…

Ahh, that helps me understand better. Hard to be completely clear in a global context though. Nike, for example, has a company in a tax haven that owns the intellectual IP for "the swoosh". It receives payments from other Nike companies for the "right to use". That loophole has to exist, as any company, in any country, could be an IP holder.

> That loophole has to exist, as any company, in any country, could be an IP holder.

Exactly, that's why it's probably more useful to appeal to conscience then trying to enforce compliance through regulation.

In the case of multinational corporations that might be a lost cause, but these corporations are also just made up of real people, so there's still a very slim chance.

The other alternative would be a straightforward global taxation system, eliminating a lot of the "multinational" loopholes.

But that sounds awfully a lot like a "World Government" and people who don't like paying taxes usually ain't exactly keen on NWO sounding ideas either.

Re: Paradise Papers: Dear Tim Cook

#523

Post by improbable22 »

toyg wrote: post #480
improbable22 wrote: post #448

Earlier quoted context omitted.

But this is exactly what happens now. And this is what the letter is upset about. He thinks Apple Europe Gmbh. made profit, and Apple's accountants say Apple Paradise Inc. made the profit, and we all think Apple Cupertino made the profit. And I don't see a good way to settle the argument, thus I suggest not having it. "tax has to be paid where they are created or used" Yes exactly. When they sell a cool computer for…

> Apple's accountants say Apple Paradise Inc. made the profit ... because they offset all local profits to expenses incurred in licensing the brand. > When they sell a cool computer for E2000, they have used their brand to sell it, and there tax is collected. But tax is supposed to be collected there and it's not , because Apple accountants immediately declare all profits as debits towards AParadise, so there is $0 p…

Of the E2000 the customer paid, about E400 is tax right away. That's far from nothing.

You could argue it should be higher, or lower. It's frequently adjusted.

My point is that this transaction is what certainly happened in Germany. Taxing this is very clear, transparent, and fair.

Whether or not the global empire turned a profit that quarter (maybe you bought a Samsung!), and which bits of the global empire were losing money or making money... and which bits are independent or not really independent... these are much harder to pin down, perhaps impossible. And attempting to do so (as we do now) encourages all sorts of strange behaviour, which requires lots of fancy lawyers, and can't be copied by smaller competitors. I don't know why we do this.

I'm very much not arguing for zero taxes, I do not want to live in Somalia.

I'm arguing for a tax system which doesn't reward stupid tricks --- the financial equivalent of moving your email server 100m across some border. Instead of ever stricter rules about where your server is located, we just have to get used to the idea that the cloud exists, and if the cloud is in Somalia or on the moon who cares? It's where the human beings are that matters.

Re: Paradise Papers: Dear Tim Cook

#524

Post by germanier »

ptaipale wrote: post #510
germanier wrote: post #371

Earlier quoted context omitted.

It's perfectly OK if that company actually operates in that country. It is not OK if the only presence they have is a mailbox and the actual act of operation is done somewhere else. A taxation race to the bottom is not what the fundamental principles of the EU are about. At best they are an unwanted side-effect.

> It is not OK if the only presence they have is a mailbox and the actual act of operation is done somewhere else. As I said, the very point of EU (free movement of goods and capital) is that it is perfectly OK to have just a mailbox presence (e.g. to handle warranty claims and such, a service which is sold to the actual operating company in another EU country) and have the actual operation done somewhere else. I tak…

Sorry, I didn't make my point clear enough. Amazon does provide services from Luxembourg which would be fine if that's where they are actually based at. As far as I know they have some lawyers there but that's about their presence (which is what I meant with "mailbox only"). The actual service is peovided somewhere else. Making it possible to exploit that is definitely not the point of EU freedoms. I provided an example that illustrates EU freedoms working how they are supposed to be in a cousin comment.

And yes, Amazon operates in Germany. They have engineering offices, customer service, and warehouses all located in Germany. Every company from Luxembourg should be able to. But taxing income derived from that is still possible under EU rules (and actually done).

Re: Paradise Papers: Dear Tim Cook

#525

Post by bantunes »

For people talking about how the solution is to fix the tax code: the problem is not the tax code or the rates. Even if the tax rate was 2%, these people wouldn't pay it.

I feel the problem is much deeper than that - the fact that Tim Cook, and others, do not see it as "fair" to pay for the use of public facilities and services. That they fail to grasp the notion that by helping a nation create better, more educated, healthier citizens will effectively improve their bottom line in the future. That levelling the playing field creates more customers for their businesses. Unfortunately you can't put that on a quarterly profit report, so let's just make more and more money and screw everything else. That's not success. That's a virus in economical form, slowly killing the host.

Re: Paradise Papers: Dear Tim Cook

#526

Post by qznc »

simonh wrote: post #519
Clanan wrote: post #281

Earlier quoted context omitted.

The fix can certainly involve appealing to morals and human responsibility. A company is, after all, just a group of people. This should be a very strong tactic considering how liberal Silicon Valley is. The major players preach constantly about progressive ideals, yet fail to do more than the minimum when push comes to shove. My business partner and I purposefully pay normal taxes, avoiding accountants' crazy tax re…

>The fix can certainly involve appealing to morals and human responsibility... Are you really suggesting the management and board of every major company in the world should meet to decide how much tax they should choose to pay each year? Even if they did, where should they choose to pay it? Should Apple Pay more tax in China where the phones are assembled? In America where they are designed? In the countries where th…

My (ultra-simplistic) idea would to only tax land and VAT. Abolish all other taxes.

Unfortunately, governments like fine-grained taxes because it gives them the illusion of control.

Re: Paradise Papers: Dear Tim Cook

#527

Post by dontreact »

pjc50 wrote: post #507
pc86 wrote: post #424

Earlier quoted context omitted.

Please explain the difference between "tax loophole" and "tax law."

With a so-called "general anti-avoidance rule" (GAAR) https://www.gov.uk/government/publications/tax-avoidance-gen... Effectively if your tax arrangements are weird enough they have to be submitted to a judicial-like body to determine whether they are for some sort of legitimate business purpose or purely for the purpose of tax avoidance. An example: https://www.gov.uk/government/uploads/system/uploads/attachm... "Pa…

Really cool thanks for the pointer! Has GAAR been effective in the UK at preventing tax havens?

Re: Paradise Papers: Dear Tim Cook

#528

Post by aaomidi »

Clanan wrote: post #281
tyingq wrote: post #240

Earlier quoted context omitted.

They aren't, for the most part, doing anything illegal though. They are using the existing laws to their best advantage. The fix for this can't be trying to appeal to their morals. It would have to be something else that just limits the legal choices. Edit: If you disagree, are you saying that shaming them into not doing this solely on some moral compass is the right fix? Does that scale?

The fix can certainly involve appealing to morals and human responsibility. A company is, after all, just a group of people. This should be a very strong tactic considering how liberal Silicon Valley is. The major players preach constantly about progressive ideals, yet fail to do more than the minimum when push comes to shove. My business partner and I purposefully pay normal taxes, avoiding accountants' crazy tax re…

What management wants is not what shareholders want.

What you’re saying is impossible and the law needs to fix this, not appeal to emotion.

Re: Paradise Papers: Dear Tim Cook

#529

Post by an_account »

Flenser wrote: post #520
pavlov wrote: post #498

Earlier quoted context omitted.

Yes, that's exactly why American corporations do the things they do. It's not a legal obligation though. Shareholders could choose to have corporations managed differently. That kind of "pro-tax" activist shareholders don't exist, but it's not inconceivable that large public funds (pensions etc.) could become such.

Perhaps if governments started penalising corporate tax avoidance by confiscating a percentage of a company's shares the shareholders would be incentivised to make sure whoever is running the company will pay taxes fairly.

And how should the government define “tax avoidance”? With tax law? Oh wait, they already do it, and you get pentalized if you break it.

The problem isn’t Apple, the problem is the government can’t get its act together to pass tax reform.

Re: Paradise Papers: Dear Tim Cook

#530

Post by Cakez0r »

mprev wrote: post #517
Cakez0r wrote: post #331

Earlier quoted context omitted.

I am new to the contracting game in the UK, but I haven't met a software contractor yet who isn't using this approach. My accountant even recommended it to me when I set up. It is definitely a non-trivial tax saving. Do you pay yourself dividends from your company? Or do you use your profits to increase your director salary so that you pay tax at the same rate as a full-time PAYE employee? Not meaning to call you out…

I didn't say anything about avoidance, so I'm not sure your questions about dividends etc were directed at me. At the turn of the century, it was common for software developers in the UK to leave their job on a Friday and then show up to do the same role at the same desk on the following Monday but suddenly they were a LTD company acting as an independent contractor. IR35 sought to put an end to that. It didn't apply…

Ah, my apologies. I got you mixed up with the parent comment poster.

To explain anyway: As a contractor with a limited company, I have two options when it comes to moving money from my company to my personal account.

1) Set my salary to be the same amount as the money I've earned from contracting, thus paying the same amount of tax as a "regular" PAYE employee who works full time

2) Set my salary to be minimum wage and pay everything left in my company account as a dividend, resulting in paying less tax.

My point is that option number 2 is "tax avoidance exploiting legal loophole" or "sensible tax practice" depending on how you want to frame it. Businesses will use whatever legal options they have to pay the least amount of tax, including small businesses (although small businesses might not even consider that they're already doing it).

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