New Taxes for Internet Giants in New Zealand

[Guest]

Facebook and Google could face higher tax rates in New Zealand

Source: https://www.stuff.co.nz/national/politics/110678049/facebook-and-google-could-face-higher-tax-rates-in-new-zealand

 

Quote

The Government is exploring a move to tax digital giants like Facebook and Google more for their income made within New Zealand.

Prime Minister Jacinda Ardern announced the move at her post-cabinet press conference on Monday.

 

Cabinet has agreed to issue a discussion document in May on how to update tax settings to suit the digital world, likely with a "Digital Sales Tax" or DST, similar to what is being explored in Australia and the European Union.

This tax would be chargeable on any revenues digital companies make on Kiwi users in New Zealand, even if they maintain only a tiny subsidiary company on our shores. This levy would be quite small - in the range of two to three per cent.
 

The Government expects it would bring in between $30m and $80m a year, starting at the earliest by 2020. The cross-border digital services trade is estimated to be around $2.7b in size.

Details are not yet finalised but the tax will likely look similar to one Australia, the United Kingdom, and the European Union are exploring.

 

"Some companies can do significant business in New Zealand without being taxed for the income they earn," Ardern said.

Some companies might be a term used to describe both overseas and New Zealand companies, including MEGA. 

Quote

Google's New Zealand subsidiary paid just $393,000 in tax in 2017, despite an estimated revenue in the hundreds of millions. Facebook paid just $43,000 in 2014. Both companies have pledged to pay more tax in New Zealand.

 

The news comes ahead of the Tax Working Group (TWG) releasing its report on Thursday. That report is not expected to cover multinational tax revenue in much detail.

Documents prepared for the TWG by officials suggested such a tax could either be in breach of international tax treaties, or World Trade Organisation rules.

This could really just be another cash grab by the government, however it is also a sign that the world is evolving to a different scale of companies, and this could well be a needed tax. This is mimicking new taxes being set in place in Australia and Europe, so this could very well be a possibility for those markets as well. 

 

The move comes after New Zealanders are scheduled to pay GST (Goods and Services Tax) on online products from retailers such as Amazon and Aliexpress for all goods under $400. This GST is expected to kick in October 2019. 

 

 

[poochyena]

28 minutes ago, floofer said:

Both companies have pledged to pay more tax in New Zealand.

oh yea, i'm sure they'll get right on that. /s

[Trik'Stari]

I'm torn between my hatred for almost all taxes, and my hatred of Facebook.

 

Google.... to a lesser extent, although I'm getting more and more fed up with them as time goes on.

[Taf the Ghost]

It was simply a matter of time before local governments starting taking a bite out of the Internet Giants' revenue when they didn't get any for the infrastructure. 

[Mihle]

Good.

[mr moose]

I'm in favor of this. Googles advertising platform has wrenched massive amounts of cash out of the Australian industry leaving FTA and Radio with significantly limited sources of funding.    While it might be easy to say that that's just technical evolution (I am in favor of that), but it's not good for the customer or the economy as well, making it a much bigger issue than it looks.

[suicidalfranco]

tax avoidance strategy in 3...

[RejZoR]

For multibillion corporations to literally pay peanuts in taxes where other companies that can't pick and choose which cuntry they'll funnel their money through need to pay fully is just disgusting and anti competitive.

[Trik'Stari]

8 hours ago, VegetableStu said:

eh, i split the difference and only hate taxes when it's not used to the best interests of the public ._.

 

facebook still a big nope though

That would be most of them IMHO.

 

I don't mind paying for roads (yet the roads are always shit anyways right?) or fire departments or what not. I hate paying for 18 gazillion federal agencies, some of whom are in my opinion, completely unconstitutional in their existence *cough*ATF*cough*.

 

I also don't like how much money Congress makes, I don't like how much we pay for their safety (do a better job or don't volunteer for the position), and I definitely don't like the fact that we pay for their healthcare, at all.

 

I'm fine with paying the military, although that could be done better (more for the troops and medical coverage, less for random military contractors that are buddies with someone in congress). As for education, I think we need to restrict federal student loans and funding to STEM fields only, that way maybe we can get more people going into STEM fields instead of other useless degrees.

 

At the same time, I do want corporations to pay less taxes. Instead of taxes they should be paying their employees far more than they actually do (shared profit margin should be a thing). If taxes are to benefit "the people", why have government as a middle man when you could just give that money directly to "the people". The government is likely to just waste it or spend it on shit that doesn't really benefit anyone.

[Stefan Payne]

Oh, yeah, raise taxes. What could possibly go wrong?? 
Higher taxes always solved any problems...

/s

[justpoet]

To be honest, internet sales have gotten away with being a tax loophole for a long time, because it has always been hard to handle country/state/regional/local/city/district taxes, which have a different structure in one place vs another.

 

Large companies like FaceBook not only do sales and money exchange in all those places now, they also sell the data of users and sell advertising to target those places as well, and must be current on the same kinds of laws for those interactions.  So, while it is more overheard to handle things like sales tax/gst in all the different places, they're already of a scale and magnitude to handle it, just as google, amazon, apple, Dell, Lenovo, Samsung, LG, etc are…basically any global scale business.

 

The question will be if the law gets written as a penalty, which would suck, or as a "we want a portion like we ask of businesses in our country, for doing business here"…which is what California did for internet sales tax.

 

When companies are smaller, and only in one place, without data centers and warehouses in multiple states/countries, then there's a case to make that they should only pay tax where they are based, and if people are required to file their purchases with local govt, then they need to.  But people don't ever see the money change hands in most cases for FB/Google and other data broker/advertiser businesses, so something like this is a good step forward, which can go akin to GDPR and similar such that a company must already be able to tell you what they know about you and who they're selling that to, so again won't be a ton of overhead for a global company to track.

 

I don't think this is about solving a social problem.  I think it is simply a country trying to get taxes based on money exchanged based on their country, like they would if the company were based there.  That makes logical sense for them to look at, so long as any implementation they eventually come up with isn't super horribly flawed.

[justpoet]

1 hour ago, Trik'Stari said:

If taxes are to benefit "the people", why have government as a middle man when you could just give that money directly to "the people". The government is likely to just waste it or spend it on shit that doesn't really benefit anyone.

Welcome to fiscal conservatism and small govt thinking, which no US party adheres to (except maybe the Libertarians), despite them all claiming they want it in one way or another at one point in time.

[Trik'Stari]

1 hour ago, justpoet said:

Welcome to fiscal conservatism and small govt thinking, which no US party adheres to (except maybe the Libertarians), despite them all claiming they want it in one way or another at one point in time.

Problem is, corporations won't willingly share the profit margin with the employees, and I'm almost certain that share holders are legally entitled to a large chunk of it. Which is a problem I see no solution to.

[CTR640]

Yea sure, like we believe in unicorns shitting gold bars and shit like that. Those giant companies simply will pull any sketchy trick to get away with it and govs simply are too weak to do any crap. AND if they gets fined, they'll fight the cases.

[mr moose]

5 hours ago, Stefan Payne said:

Oh, yeah, raise taxes. What could possibly go wrong?? 
Higher taxes always solved any problems...

/s

Not raising taxes, introducing new taxes to try and stem the loss of money going overseas. 

[Thaldor]

I hope Finland would do something same. All of the big companies are just leeches, you can go all day saying how they create jobs and what not, but the situation won't change, their incomes and revenues are going through tax paradise islands and they don't pay a cent.

 

If someone is interested in numbers, one funny thing here in Finland is that all of the tax records are public (you can even check your neighbours tax records, because no one really cares if someone knows how much you earn unless you do something criminal). Google has probably the biggest datacenter in Finland, building it costed around 350 million euros during 2009-2011. In 2017, Google Finland Oy sold all Google ads for Finnish companies, their revenue was 7,6 million euros and profits 567 000 euros, wanna guess how much Google Finland Oy paid taxes? You guessed it probably right, 0€. Also that 7,6 million euros don't include datacenter costs or anything like that, because it's handled by Google Ireland (you make great beer around there, but please do something for your business taxation), basicly that 7,6 million euros are paychecks and some running costs and incomes. Nokia Oyj had around 389 million euros of taxable incomes in 2017, they paid 0€ because officially the company is bankrupt (and it's subsidiaries also had taxable incomes in millions to tens of millions, still taxed 0€). Even when you can say, Nokia is no more, it has a lot of network development and sells and license incomes and investments, but they don't pay taxes. 2017 is the latest year in Finnish tax offices open data, but it's a good year to have because there are some really nice numbers like Supercell Oy (yes, the mobile game company) paid probably more taxes than Nokia Oyj in it's whole lifetime (~125 million euros), also nice to see that Nokia is not completely a lost cause, Nokian Renkaat Oyj (the tire company which gave birth to Nokia Oyj, the mobile phone company) paid ~13 million euros of taxes. Facebook doesn't even have Finnish branch (can't guess why /s), so we don't see them in this data. It's very sad to look around the business taxation records actually, because you end up finding out how fucked up the world is, you recognise companies that you know must have had a lot of income (large companies that do a lot) and then you see "taxable income: 0-10€; Paid taxes: 0-3€", like where the fuck all that money goes? You don't run one of the biggest companies in Finland with incomes less than the weekly allowances of 5 year olds. I would totally vote for the person who would make it so that businesses should be taxed by their revenue (even if it was something like 0,1-1% which wouldn't really hurt anybody, but there would be massive tax incomes). (and yes, I very well know where that money goes and how those companies can evade taxes and how they can spare themselves from paying taxes)

[leadeater]

19 minutes ago, Thaldor said:

Nokia Oyj had around 389 million euros of taxable incomes in 2017, they paid 0€ because officially the company is bankrupt (and it's subsidiaries also had taxable incomes in millions to tens of millions, still taxed 0€).

That's a hell of a lot of income to be bankrupt......

[williamcll]

On 2/18/2019 at 5:11 PM, suicidalfranco said:

tax avoidance strategy in 3...

The smaller islands gonna be banking a lot again.