French Lawmakers Approve 3 Percent Tax On Online Giants (apnews.com) 151
An anonymous reader quotes a report from AP News: France's lower house of parliament approved Thursday a small, pioneering tax on internet giants like Google, Amazon and Facebook -- and the French government hopes other countries will follow suit. The bill aims to stop multinationals from avoiding taxes by setting up headquarters in low-tax EU countries. Currently, the companies pay nearly no tax in countries where they have large sales like France. The bill foresees a 3% tax on the French revenues of digital companies with global revenue of more than $847 million, and French revenue over $28 million. The bill adopted by the National Assembly goes to the Senate next week, where it is expected to win final approval. The French government estimates that the tax will raise about $566 million this year, and considerably more next year.
While France failed to persuade EU partners to impose a Europe-wide tax on online giants, the favorite to become Britain's next prime minister, Boris Johnson, indicated his support for similar proposals in the UK. "In October, Chancellor Philip Hammond said the UK would tax 2% of British user-generated revenue in a new 'digital services tax,' which could bring in up to $502 million a year for the Treasury," reports Business Insider. "Johnson appears to like the idea."
While France failed to persuade EU partners to impose a Europe-wide tax on online giants, the favorite to become Britain's next prime minister, Boris Johnson, indicated his support for similar proposals in the UK. "In October, Chancellor Philip Hammond said the UK would tax 2% of British user-generated revenue in a new 'digital services tax,' which could bring in up to $502 million a year for the Treasury," reports Business Insider. "Johnson appears to like the idea."
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Yes, 3% is pathetic when the companies who try to do business legitimately in France have to pay 33.3%.
The French government estimates that the tax will raise about $566 million this year
Wow! That'll make a massive difference to the French economy.
Not.
Re:Legitimizing (Score:5, Informative)
33% on profits. The whole reason for this tax on revenues is that sufficiently big companies can use accounting tricks to shift their profits to tax havens.
3% of gross revenues is a lot more than 33% of zero profit.
Re:Legitimizing (Score:4, Informative)
...sufficiently big companies can use accounting tricks to shift their profits to tax havens.
Conclusion: We need to be looking into that, too.
Maybe there should be a maximum deduction based on profits in a particular country, eg. only 50% of your profits are deductible.
If you want to deduct more? Start producing the product locally. Materials/wages could be deductible up to (eg.) 90% of your profits.
There has to be a way to make it work that not only makes them pay taxes but also gives them incentives to create jobs instead of outsourcing to Chinese sweatshops.
Re:Legitimizing (Score:5, Interesting)
The whole reason for this tax on revenues is that sufficiently big companies can use accounting tricks to shift their profits to tax havens.
This is also easy for small businesses. I opened a corporation in the Cayman Islands for $200. When I do contracting, it is through that corporation. The contractees like dealing with a corp because they avoid having to file 1099s, and I save on taxes. All completely legal.
ALL corporations should be taxed based on revenue, and taxes on profits should be eliminated.
The problem with the French system is not that they are taxing revenue (that is good) but that they are specifically targeting "bigness" and "foreignness". That is unfair and is inviting tit-for-tat retaliation.
Re:Legitimizing (Score:4, Insightful)
The problem with the French system is not that they are taxing revenue (that is good) but that they are specifically targeting "bigness" and "foreignness". That is unfair and is inviting tit-for-tat retaliation.
This paragraph should have been comment #1 in this story. And really, that is the only comment that really needs to exist in the entire conversation. But since it isn't...
ALL businesses should be taxed on revenues, not on profits. If they can't be profitable while paying their fair share, they should let someone with a superior business model take their place in the market.
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If they can't be profitable while paying their fair share, they should let someone with a superior business model take their place in the market.
You're not wrong but there's a tradeoff. We like people to start and invest in new businesses. For that matter, we like established business to pay well and invest in long term projects. One way we do that is to tax profits instead of revenue. That might be compelling to you and maybe it is not. But it is a thing.
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ALL businesses should be taxed on revenues, not on profits.
Expect your groceries to get more expensive. Same for any other low-margin commodity.
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Expect your groceries to get more expensive. Same for any other low-margin commodity.
Most food should be more expensive. The way we waste food now is unsustainable.
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Expect your groceries to get more expensive. Same for any other low-margin commodity.
Most food should be more expensive. The way we waste food now is unsustainable.
Poor people disagree with you. Strongly.
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The problems is faggots like you continually redefine âoefair shareâ as more than than they are currently paying.
Dude, it's 2019. Faggot isn't an insult any more. I've been wishing I craved cock for like half my life now, because cock craves me. Alas, I still don't swing that way. Maybe in another decade, if the atmosphere is still breathable.
Re:Legitimizing (Score:4, Insightful)
The problems is faggots like you continually redefine “fair share” as more than than they are currently paying.
I prefer to define it as "The same as the small companies are paying".
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I'm actually going to rethink that. Big companies wear out the roads, etc., faster then small companies do. They should pay more.
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Budgeting a couple hundred grand per year for tax / legal advice is something only bigger companies can (and do) afford; not mom and pop places.
We don't live in a fair society. This law -- admittedly tackling the symptom and not the problem -- is an attempt at redressing some of that unfairness.
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Budgeting a couple hundred grand per year for tax / legal advice is something only bigger companies can (and do) afford; not mom and pop places.
It is MUCH harder to manipulate profit than revenue.
If you have $1M in revenue, and $50k in profit, then if you can hide 5% you will still pay 95% of a tax based on revenue, but 0% of a tax based on profit/income.
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ALL corporations should be taxed based on revenue, and taxes on profits should be eliminated.
Not really. While this captures those using tax loopholes you're using a shotgun to kill a mosquito without any consideration to the wall behind it. There are plenty of companies with large revenues who none the less fail to actually make a profit due to large overheads.
Better option would be to close the tax loopholes and not stick corporations who may be legitimately struggling with an additional tax bill.
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There are plenty of companies with large revenues who none the less fail to actually make a profit due to large overheads.
Companies are generally given credit for inputs that have already been taxed.
So if a car company buys steel, they can subtract the tax already paid by the steel company. They are only taxed on the "value added". Thus revenue taxes are commonly called "value added tax" or VAT.
If a company has little or no profit, but is still using infrastructure (roads, ports, courts) then they are a net drag on the economy. Exempting them from taxation means that successful companies are subsidizing failing companies.
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The way that we give companies credits for inputs that have already been taxed in this case is by taxing them on profits rather than revenues. By taxing them based on their revenues instead we're effectively removing that credit - but selectively, in a way that punishes companies for doing business outside of France.
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Better option would be to close the tax loopholes
Of course you are right but ... how do you propose that happen?
Can France ban companies from incorporating in a tax haven?
Okay, so we blacklist 30 jurisdictions considered tax havens. What about companies incorporated in lower tax jurisdictions? The Australian company tax rate (30%) is less than the French company tax rate (33%). Do you forbid Australian companies from trading in France?
Sure, they'll pay 33% on French profits. But remember that monies are shifted left and right such that large profits are d
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They decided to do it for all big digital companies because there is no other simple way to do it. How do you write a law that defines all the ways they can offshore profits and dodge taxes? They all do it, without exception.
Of course, there is an easy way to avoid paying this tax. Don't offshore your profits and pay the correct amount of French corporation tax.
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How do you write a law that defines all the ways they can offshore profits and dodge taxes?
You don't. Instead, you just eliminate income taxes, which are inherently easy to dodge, and replace it with a revenue based tax that is far harder to dodge.
You do this for ALL companies, not just those that are big and/or foreign.
As an American living in America, I am astounded how easy it is to avoid income tax, all perfectly legally. My house is owned by a trust, my car is owned by an S-corp, which my spouse owns. Much of my living expense come from loans (not income thus not taxable) from an overseas
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I opened a corporation in the Cayman Islands for $200.
Wow ... I didn't know it was that accessible. Obviously you did all the paperwork yourself. (?) Can I ask what the annual fees are?
And I'm curious how you repatriate the funds, if at all. Then again at the fee levels you quote, I could see the benefits of just leaving the money there and accessing it via ATM when travelling abroad.
My understanding was that government tax offices would not look favourably upon a resident living off a foreign ATM card. Though perhaps the solution is to declare some revenues l
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Obviously you did all the paperwork yourself. (?) Can I ask what the annual fees are?
I did it all online, about 15 years ago. The biggest fee is a California tax of $800 per year for "foreign" (meaning non-California corps, not non-American) corporations operating in the state.
And I'm curious how you repatriate the funds, if at all.
Contractees pay the corp, and then I draw a small salary, but repatriate most of the money as loans. I will die deep in debt, but my house and many financial assets are in a trust, which is a separate legal entity which bypasses probate and will go directly to my kids. Then the corp can just fold up and disappear.
I could see the benefits of just leaving the money there and accessing it via ATM when travelling abroad.
T
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1. Business bank accounts don't allow ATM cash withdraws. ... never heard about something like that.
Mine can
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ALL corporations should be taxed based on revenue, and taxes on profits should be eliminated.
"Should" is an interesting word. It could mean many things. Is it morally or ethically right to tax on revenue? Is it more practical? Will it generate more or less tax revenue? Does it distort behavior in a better way (for some definition of "better")?
Taxing revenue instead of profit has some advantages. There are probably fewer ways for a company to game their revenue reporting compared to reporting profit. It may be easier to allocate revenue to tax jurisdictions. It's harder to get crony tax breaks to ma
Re:Legitimizing (Score:5, Insightful)
ALL corporations should be taxed based on revenue, and taxes on profits should be eliminated.
No, corporate taxes should be eliminated, because they're evil and subvert democracy.
I don't say this because I want to make things better for corporations, I want to make things better for voters. The fact is that corporations never actually pay any taxes anyway, they pass them on to their suppliers, their employees and their customers. They're always going to earn roughly the same net profit margin, and will adjust their costs and prices accordingly. Competition doesn't prevent them from doing that, because all of their competitors are subject to the same taxes. The only competitive element revolves around who has the cleverest tax lawyers, which is not a competition that in any way benefits society as a whole.
Ultimately, only individuals really pay taxes. Taxing corporations just allows corporations to decide where that burden should actually fall, which is something I think would be better left to legislators. The first thing that makes corporate taxes evil and a subversion of democracy is the fact that to voters corporate taxes seem like "free money". Voters will never chastise legislators for raising corporate taxes, because taxes raised from corporations aren't raised from the voters. Right? Wrong. The money ultimately comes from the individual taxpaying voter, but this fact is hidden from voters.
The other thing that makes corporate taxes evil and a subversion of democracy is that they give corporations a direct, continuous and serious incentive to manipulate the lawmaking process, and bringing corporate lobbying into politics is a bad idea. Of course, regulation creates similar incentives, but that's necessary and it typically involves issues that are clearer to voters so I think the danger is somewhat less. In any case, that part of it is unavoidable, the tax foolishness is not.
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ALL corporations should be taxed based on revenue, and taxes on profits should be eliminated.
No, corporate taxes should be eliminated, because they're evil and subvert democracy.
...The other thing that makes corporate taxes evil and a subversion of democracy is that they give corporations a direct, continuous and serious incentive to manipulate the lawmaking process, and bringing corporate lobbying into politics is a bad idea. Of course, regulation creates similar incentives, but that's necessary and it typically involves issues that are clearer to voters so I think the danger is somewhat less. In any case, that part of it is unavoidable, the tax foolishness is not.
Normally, I couldn't go for "don't tax corps", but if we also added "corps can't give to political entities at all (no political campaigns, no political PACs, nothing to do with government at any level) and no lobbying", then I think I could get onboard with your suggestion.
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ALL corporations should be taxed based on revenue, and taxes on profits should be eliminated.
No, corporate taxes should be eliminated, because they're evil and subvert democracy.
The current problem is that loopholes and lobbying and legal bribery exist. If taxes were based on revenue instead of profits, the laws would include loopholes to allow revenue to be shifted just as profits can now be shifted. If the lawmakers could be trusted to eliminate the revenue shifting loopholes, they could be trusted to eliminate the current profit shifting loopholes. Taxing revenue only works until the new loopholes are discovered.
As for eliminating corporate taxes, the same problem occurs. Th
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The problem with the French system is not that they are taxing revenue (that is good) but that they are specifically targeting "bigness" and "foreignness".
They don't. In the end the law will be for everyone like web.de monster.fr etc. p.p.
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That money has been systematically exfiltrated from Europe and other places and send to coffers in the US.
No it hasn't, it's been sent to the Cayman islands (or wherever).
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U.S. companies repatriate over half a trillion dollars in 2018, but pace slows [reuters.com]
Re: Legitimizing (Score:1)
Are you an idiot? US companies do everything they can to keep foreign money OUT of the US because it costs them a massive % to bring it back home. A lot of it gets stashed IN THE EU, several of the biggest companies actively move money TO places like Ireland.
France is just butthurt because without a general EU tax, Ireland is making money they aren't, so now they're looking for a slice of the pie.
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Parent post is the most accurate (and entertaining) summary of the situation.
Shame you posted as AC ... that was brilliant.
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France: You're cooking the numbers to avoid tax!
Online giants: We're just following your tax code. What would the correct numbers be?
France: We don't know! All we know is that the tax code definition of French revenue is bad, but our lawmakers are unable to fix it.
Online giants: If you're unable to put the finger on the problem, then how do you know we owe more tax?
France: Whatever. We're just going to tax you an extra 3% on the revenue measured using the definition we don't like.
Online giants: Well, if that's how you feel. [adds paywall and reoccurring fee structures targeting EU politicians, governments & bureaus/agencies/etc, while allowing EU private citizens free access]
FTFK*
(*Fixed That For Karma...the real "bitch" kind)
Strat
They know what the correct numbers should be. (Score:2)
The prices paid by French customers should be paid to a French subsidiary, not to a Panamanian or Cayman Island one. That French subsidiary should only pay off-shore providers reasonable costs for services provided it, not inflated charges for "intellectual property" to subsidiaries also in tax havens, or for charges not originating in the tax haven. This would leave the French entity with a large profit, on which it should pay French tax before remitting the remainder to the parent company.
This is all pret
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All of this is a straight forwards opinion, you should not be using the over-rated mod unless something is obviously factually incorrect or devoid of any constructive criticism.
It appears that the western world craves the ability to beat on the poorest in society whilst worshipping those who got the lucky breaks. Everyone thinks they should be able to make their children rich but everyone overlooks the fact that unless you start off poor then you'll likely never appreciate inherited wealth. Americans are ba
Something something, but on the Internet (Score:5, Insightful)
Re:Something something, but on the Internet (Score:5, Insightful)
Yep, it needs to be the law that if you sell a product in a country you pay tax in that country. Period. No exceptions.
Apple, Amazon, etc., are making a mockery of the world right now.
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The French consumers are gonna pay this tax not Apple and Amazon.
Re:Something something, but on the Internet (Score:5, Interesting)
I'm sure there's competitors waiting to step up if Apple/Amazon raise their prices by 33%.
eg. All those mom+pop stores that Amazon is busy destroying.
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I'm sure there's competitors waiting to step up if Apple/Amazon raise their prices by 33%.
In what universe is a 33% price hike needed to cover a 3% tax?
Would increase geoblocking (Score:5, Interesting)
Yep, it needs to be the law that if you sell a product in a country you pay tax in that country. Period. No exceptions.
Then I take it you would enjoy looking at more "Not available in your country" geoblock walls when there aren't enough prospective customers in a country to warrant the expense of preparing tax returns for that country.
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when there aren't enough prospective customers in a country to warrant the expense of preparing tax returns for that country
Huh? Just what kind of a fantasy world do you live in where this is at all an issue. Are you implying that if you have a presence in a country that you are able to do all the complicated things such as keep your business registered, but can't do the relatively simple and automated things such as keep track of taxes?
I'm not sure if you realise how simple taxes are when you just pay them normally, or how complicated actually having even a basic presence in a country actually is.
No you won't be geoblocked.
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relatively simple and automated things such as keep track of taxes
Simple? In some cases, it means having to keep multiple sets of books. Because different countries have different interpretations of what constitutes things like revenue and expenses. And some of them depart pretty significantly from the way companies would like to run their businesses.
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or how complicated actually having even a basic presence in a country actually is
I was referring to the case of, say, a U.S.-based business with no office in France selling a service to one or more customers in France. Is this supposed to require first establishing "a basic presence in a country"?
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The summary addresses my point with respect to the legislation enacted in France. It doesn't address Joce640k's stricter proposal.
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Tax declarations or tax return you have to make anyway. The only difference is that at the end of the year the company has to pay, instead of getting "0" recipe.
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Yep, it needs to be the law that if you sell a product in a country you pay tax in that country. Period. No exceptions.
Then I take it you would enjoy looking at more "Not available in your country" geoblock walls when there aren't enough prospective customers in a country to warrant the expense of preparing tax returns for that country.
Because that would never drive French people to L'Pirate Bay instead. Eventually they'll say "Sacre Bleu, why am I paying zis 80 Euro a year for zis tereblay serviz" and just stop buying from Amazon.
Amazon won't take vindictive actions against their French customers because they know that will be cutting off their nose to spite their face.
In the end, Amazon will acquiesce and pay the tax (which they know full well they've been avoiding).
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My comment related to publishers far smaller than Amazon that lack enough volume from France to justify becoming established in France. Though the legislation described in the summary includes a minimum revenue threshold at which a sales tax takes effect, Joce640k's counterproposal includes no such threshold: "Period. No exceptions."
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My business is in Australia, but it accepts orders from all over the world.
Under Australian tax law, if a customer in Australia purchases my products I have to charge them 10% GST/VAT and forward it to the government. If a customer outside of Australia purchases my products, I do not have to charge them the 10% GST/VAT.
I sell a couple of products that are manufactured in the USA. When I import a shipment of them, I have to pay 10% GST/VAT on them before customs releases the shipment to me.
If I wanted to get
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I should pay the French Government some corporate income tax on that transaction?
No. Why do you ask? Do you actually make more than $800M in global revenue and more than $23M in France? Ah, and well, your company is not in France, wow that was so simple again.
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Apple, Amazon, etc. can easily afford that. However, smaller companies can sell the world over throught the app store because Apple/Google/Amazon comply with VAT, etc. for them. If there was an income tax on top of that, it would be difficult.
There are a lot of solutions to the problem, but exempting small companies seems to cost very little.
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The law is really quite simply. Simply provide tax returns from offshore cost locations and the profit declared at those locations will be proportied against revenue and the tax on the profit of local revenue be shifted back to the local revenue point at the applicable tax rate and each and every source of cost be chased down and it profit and tax basis evaluated and that tax paid at point of revenue at the applicable rate, instead of point of tax evasion at tax haven rates, basically pirated social service
taxing revenue (Score:3)
Typically a company pays tax on its profit. Companies buy goods all over the world and sell them in your country for some percentage higher than what they pay fo
Re: Something something, but on the Internet (Score:1)
Not all of it is a shit hole. Just the parts that let thousands upon thousands of "refugees" overtake their cities and countrys.
Ok so most of it..
Re: Something something, but on the Internet (Score:1)
Or not, since some EU partners are actually actively encouraging big companies to evade tax...
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Care to name one?
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I'll spell it out for you. Ireland. Or Luxumbourg. That's two. I'm surprised Hungary doesn't get more play, they have the lowest corporate tax rates. I wonder what's going on there.
By offering lower taxes they encourage companies to evade taxes in higher tax countries like France and Germany.
And the French and German tax laws allow them to do it. France is closing a loophole.
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Note that "tax evasion" has a specific meaning in law. And it's not actually what is being done by Amazon et al. What they're doing is "tax avoidance", which is perfectly legal.
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Airbus Global revenue 63 Billion €. A single A200 costs $81 million. I’m pretty sure they’ve sold at least one to Air France. So I can assume this tax will apply to Airbus?
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Airbus already pay its taxes.
pay 1.3B income tax euros, 2018, 1.5B 2017, on top domestic tax $800B.
Contrast Amazon, evade all taxes!
Even in USA they look to force big tech to pay their taxes.
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A single A200 costs $81 million. I’m pretty sure they’ve sold at least one to Air France. So I can assume this tax will apply to Airbus?
Only if it's an $81 million CAD file of an A200. This bill applies to digital companies.
You say the A200 sells for $81 million. How much did it cost to make? $75 million in parts and labour?
Now, $81 million in revenue for Google and Facebook costs how much to generate? $5 million?
See the difference?
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While I feel deeply suspicious about Google, Amazon and Facebook, I don't see any reason to single them or their industry out for special treatment.
Ideas like alternative minimum tax are not new, and there's no reason a new minimum tax rule - if it applies to everyone equally - would be better or worse than any other tax innovation.
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Why "Online giants"? Why not put some measures in place to avoid tax avoidance by all large companies?
The problem with this is that many tax avoidance loopholes aren't the result of gaps in local laws, but rather the unintended interaction between taxes in different jurisdictions as part of necessary laws that allow cross border business operations in the first place. As such it's not possible for a single country to do this by itself.
There's also a conspiracy that the wealthy and well off in the UK support and funded the Brexit campaign precisely because the EU rules are attempting to put an end to tax hav
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The EU has been trying to sort this out for a while, but it's hard to get agreement when some countries benefit from it and brexit is wasting everybody's time.
If some of the bigger economies like France have their own taxes for this stuff the rest will probably just agree to an EU wide rule eventually.
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Why "Online giants"? Why not put some measures in place to avoid tax avoidance by all large companies? Because, you know, that is something that you might actually have gotten broad support for in the EU.
Because these specific tax avoidance schemes are the most easy to implement if your business is online. You don't even need a physical footprint of any kind within the country you are trying to exploit.
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Starbucks seem to be managing it well enough despite their business being almost entirely brick and mortar retail.
Re: Result: The online giants block France. (Score:2)
America needs this & France needs to change (Score:3)
Likewise, America needs to do 10% for state2state, and out of nation. Give 1 % of it to delivery company for collecting/processing, 7% to state, and 2% to the feds.
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So do I have to put that website I made for you on a CD and FedEx it to you just so the taxes are collected?
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Website developer is not who they are going after. Basically, they are ignoring goods/service that come from outside and electing to focus on the large companies selling advertisement. However, advertisement is SMALL compared to the missed VAT/Sales taxes.
As to taxes on services over the net, good luck figuring out a good way to collect that.
Did you read anything WindBourne? (Score:2)
This is about a digital services tax, and you are talking about delivery of physical goods.
There is no delivery company. Nothing physical is being delivered. Everything your wrote is irrelevant. The delivery company can't collect any tax because there is no delivery company...
As to taxes on services over the net, good luck figuring out a good way to collect that.
Did you not understand even a little bit? The bill mentioned is exactly the way they figured out how to do just that.
If you have global revenue over 750
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No no no, not on a CD. My laptop has no CD drive! How do I install it?
Did you not understand the topic even a little? (Score:2)
What you wrote has no relationship to the article at all. (totally unsurprising)
This is about a digital services tax, and you are talking about delivery of physical goods.
There is no delivery company. Nothing physical is being delivered. Everything your wrote is irrelevant. The delivery company can't collect any tax because there is no delivery company...
It will be levied on multinationals which monetise user data from advertising, carry targeted advertising, and internet platforms which act as inter
I predict: Google won't pay Neither will Facebook (Score:1)
because they can hire an army of lawyers to do their evil for them.
In fact, this tax will cost more to collect than it will ever make them. Silly French.
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No, because this only applies to companies with "global revenue of more than $847 million, and French revenue over $28 million" just to avoid exactly what you said.
But you'd have known that if you read the summary.
"Johnson appears to like the idea." (Score:2)
Well, then that's settled, it's a bad idea if that moron likes it.
French government picked a good time to do this (Score:2)
Wrong Solution (Score:2)
This isn't the right solution because it imposes a huge barrier to low cost intermediaries that might have very large revenue but tiny profits. Far from helping EU businesses compete against the US tech giants this is a boon to vertically integrated companies like the large tech giants. I mean compare operating an ad intermediary service which passes almost all revenue on to the actual ad network versus running the full stack like google does. The former company will have problems operating in France if
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Then again I'm probably being hopelessly naive treating this law as if it was really a neutral tax law. I bet if one investigates those triggers were set very carefully so they only apply to US tech giants and don't sweep in any French or EU firms.
What a bunch of whiny hypocrites around here. (Score:3)
On the one hand, post after post complains about China having an unfair advantage. Such as low wages or lax regulations. Levelling the playing field with government subsidies, tariffs and interventions are all good, wonderful and patriotic.
But when the French don't like french companies competing unfairly with low (no) tax foreign companies. Suddenly government subsidies, tariffs and interventions are all evil money grabs by the dirty Euro's.
A French company in France selling exactly the same thing would be paying French taxes. Why should foreign companies get such an unfair advantage? If it's ok to have tariffs to support local companies in one situation, why not the other?
Or is it bad in both situations?
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This is a tax on people that will be passed to people. It's insanity to support more taxes.
Facebook, Google etc. are cost free for people. So the one who might pay more in the end is the company doing the advertizing. So perhaps or perhaps not _their customers_ pay a bit more for Nike's or Coke's.