EU aims to tax internet giants like Amazon, Google, Facebook and Apple

[asus killer]

I guess it could be a EU vs America thing, and a complex tax issue:

 

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That leads them to pick low-tax nations like Ireland, the Netherlands or Luxembourg, depriving other nations of their share of the revenue even though they may account for more of a company's earnings.

Critics say the tax-avoidance strategies used by the tech titans known as GAFA -- Google, Amazon, Facebook and Apple -- deprive EU governments of billions of euros while giving them an unfair advantage over smaller rivals.

 

still that doesn't interest me at all, just that probably this taxes could make things more expensive for buyers i guess

 

Quote

The EU will soon unveil a plan for taxing major internet companies like Amazon and Facebook by imposing a levy of two to six percent on revenues in every country where they operate, French finance minister Bruno Le Maire said Sunday.

 

I'm not a great Amazon or Apple client, still i saw several times my the local internet store lowering prices of products in response to Amazon sales. So at least they act as competition even if you're not their customer. Don't know the effect of this on top of the already higher prices we pay in Europe for tech.

 

https://www.afp.com/en/news/15/eu-aims-tax-internet-giants-two-six-percent-france-doc-11u08a1

[Taf the Ghost]

I'm actually kind of happy this is happening. So many of the games were causing such large dislocations & odd things to crop up. This is also in response to the change to the American Tax System with regards to Corporations, as it's now far less likely to be worth the trouble of moving money through the EU.

[Trixanity]

I'm guessing they're trying to remove tax havens more than anything. Corporate giants paying less taxes than small local businesses make no sense. I imagine it also pisses off said small businesses that their hard work and contribution to the community isn't rewarded and they can have a multinational business undercutting them and paying less at the same time. They have all the cards so to speak.

 

While soon unrelated to the EU, I seem to recall some local businesses in the UK getting tired of it and threatened to lawyer and accountant the shit out of their business and reaping the same benefits as Amazon by moving their money elsewhere. If everyone does it, things will start to fall apart.

[CommandMan7]

Governments will never be able to adapt faster than the private sector. By the time this is passed, I'm sure it will have already been circumvented.

 

Although I do agree it's insane that multi-billion dollar companies pay far less than your average mom-and-pop shop, there's not currently any good "quick fix" to this problem.

[Master Disaster]

The system right now in Europe is a joke tbh...

 

There's this weird loophole where revenue taken from one country doesn't get taxed as long as the money is paid into an account offshore so you've got the likes of Amazon who are paying like 0.1% tax on their yearly revenue because they're moving funds around from country to country. For example money paid to Amazon UK is transferred tax free to Amazon France, France move it to Holland, Holland move it to Germany and Germany move it to the UK etc so right across Europe Amazon are paying no tax on revenue at all.

 

It's a joke and needs fixing.

[asus killer]

51 minutes ago, The Viking said:

 

if they don't pay more taxes is totally the EU's fault and by extent the several countries governments that make up EU fault, and ultimately the voters that elect them. I don't get how can this be the companies fault at all, i do not evade taxes but if i can legally pay less i will do it. So that anti corporation, the man, rant is totally lost on me. 

 

On a personal level i have no problem in buying from a small or big company or care how much or little money they make, good for them if they make tons of money.

As a tax payer i also don't think it's fair how some pay more taxes than others whatever the case may be, but hardly think this "most likely 2%" will increasing that fairness. I was just talking as a consumer, maybe in a selfish view i admit.

 

I also taught this could be more why EU pays more for tech than in the US, and it's more a tax discussion that i have little intention of participating, and that was the context when i said "it didn't interest me at all". 

[WkdPaul]

Thread cleaned, please keep the Community Standards in mind ;

 

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[Guest The Viking]

I'll leave it at this then:

 

Companies have 2 duties in society, one of them moral: they must provide jobs and create wealth for the economy. Your small local cornerstore will just employ one or two people and not create much wealth, but they'll still pay a lot of taxes.

 

Big companies provide a non-negligeable amount of jobs in some countries. If I recall well, in Belgium they represent 40% of the jobs, the other 60% being companies smaller than 100 employees. By not paying their taxes in the countries they operate in, they put a strain on the local/national economy, using resources but not giving back to that territory. 

 

Sure, it's only a moral duty to pay your taxes and not try to use tricks to evade them. But, at the end of the day, they destroy competition who plays fairly, and empoverish the government. Ireland is the perfect example, they had to bail their banks via us. Yet let Apple get away with 13 billion euro.

[Mihle]

The companies that create the most jobs compared to revenue isn't the huge companies anyway. Medium sized companies do create more a lot of the time.

 

Ps. I know huge and medium isnt spesific size and can be different from person to person how they see it.

[iRandomize]

7 hours ago, Master Disaster said:

The system right now in Europe is a joke tbh...

 

There's this weird loophole where revenue taken from one country doesn't get taxed as long as the money is paid into an account offshore so you've got the likes of Amazon who are paying like 0.1% tax on their yearly revenue because they're moving funds around from country to country. For example money paid to Amazon UK is transferred tax free to Amazon France, France move it to Holland, Holland move it to Germany and Germany move it to the UK etc so right across Europe Amazon are paying no tax on revenue at all.

 

It's a joke and needs fixing.

For one, tax is not based on revenue but on profit. Many European corporations are paying a 0.1% tax in relation to their revenue. Those turning a negative profit is effectively receiving tax in comparison with their revenue. I work in a very low-margin business, and some quick back-of-the-envolope math puts our tax at 0.7% of revenue (which just so happens to be 21% of profit).

 

Secondly, that is simply not true. Amazon is based in Luxembourg (hence the Sarl in their name). I believe they pay tax of approximately 30% of their income, which is clearly stated in their annual report. Moving income across borders does not mean that the income is not taxed. Join taxation rules ensure that this is not the case.

 

The reason for Amazon to be based in Luxembourg has to do with the rules regarding deductable costs, that vary greatly between countries. This calculation quickly becomes very complicated, but these rules are also the reason that Amazon added "fulfillment" to a lot of their marketing back in 2006.

[Master Disaster]

23 minutes ago, iRandomize said:

For one, tax is not based on revenue but on profit. Many European corporations are paying a 0.1% tax in relation to their revenue. Those turning a negative profit is effectively receiving tax in comparison with their revenue. I work in a very low-margin business, and some quick back-of-the-envolope math puts our tax at 0.7% of revenue (which just so happens to be 21% of profit).

 

Secondly, that is simply not true. Amazon is based in Luxembourg (hence the Sarl in their name). I believe they pay tax of approximately 30% of their income, which is clearly stated in their annual report. Moving income across borders does not mean that the income is not taxed. Join taxation rules ensure that this is not the case.

 

The reason for Amazon to be based in Luxembourg has to do with the rules regarding deductable costs, that vary greatly between countries. This calculation quickly becomes very complicated, but these rules are also the reason that Amazon added "fulfillment" to a lot of their marketing back in 2006.

It is true

Quote

Revenue from Amazon’s UK retail sales are reported through a separate company in Luxembourg. However, in its US filings the company reveals that UK revenues hit £7.3bn last year.

 

For accounting purposes Amazon Services UK reports turnover as a charge to the parent company for the cost of delivering products, which was £1.46bn last year.

 

The company received a tax credit of £1.3m from the UK authorities, which it will be able to deduct from future tax bills. Pre-tax profits halved from £48m in 2015 to £24m last year.

https://www.theguardian.com/technology/2017/aug/10/amazon-uk-halves-its-corporation-tax-to-74m-as-sales-soar-to-7bn

 

They transfer all their profit to another branch of their company then report their profit as the charge for the transfer meaning their £7bn profit for last tax year was submitted as £1bn.

[iRandomize]

On 3/5/2018 at 11:02 PM, Master Disaster said:

It is true

https://www.theguardian.com/technology/2017/aug/10/amazon-uk-halves-its-corporation-tax-to-74m-as-sales-soar-to-7bn

 

They transfer all their profit to another branch of their company then report their profit as the charge for the transfer meaning their £7bn profit for last tax year was submitted as £1bn.

They did not make a profit of £7bn. They had revenues of £7bn. Big difference.

 

Most of their profit was taxed in Luxembourg. The European union allows this, and it is one of the core principles of the EU.

[Thaldor]

If someone wants numbers as proof how bad the situation is:

 

Google Finland Oy (Ltd.)

Revenue 2016 (by Suo­men Asia­kas­tie­to Oy ): 6.4M€

Income 2016 (by Suo­men Asia­kas­tie­to Oy ): 464k€

Taxes 2016 (by Finnish Tax Administration): 0€

 

Google has one of the biggest server rooms in Finland and offers it's serch engine advertising. In 2010 IAB Finland estimated that incomes in search engine optimization and advertising were around 66M€ (companies that make their incomes public and do not use "creative accounting" in other words: companies that don't evade taxes) and I would put every cent I have on that that sum has sky rocketed in 6 years and Google Finland makes a lot of sales.

 

In contrast Supercell Oy:

Revenue 2016 (by Suo­men Asia­kas­tie­to Oy ): 2.1B€

Income 2016 (by Suo­men Asia­kas­tie­to Oy ): 744,9M€

Taxes 2016 (by Finnish Tax Administration): 182M€

 

In 2017 Supercell and it's main shareholder (Japanese Softbanks subsidiary Kahon 3) paid togheter 979M€ of taxes (674M€ were Kahon 3s income from the stocks of Supercell) and by the CEO of Supercell they did it because they are proud to be a Finnish company and every Finnish company should pay its taxes to Finland.

 

And before someone asks, yes, in Finland tax informations are public, anyone can check anyones taxes and it's totally fine (when someone can get your address and phonenumber with one phone call, who the frack cares if they get to know how much money you have). Company taxes are even published as open data under CC4.0-license (year later, 2016 is the last open data to be found at the moment). We don't mind that someone else knows how much we had taxable incomes and how much taxes we paid, hell, when the tax informations are published (usually around summer) it's quite a big headlines who paid the most taxes and who is the richest person in Finland and how much companies paid taxes.

 

For some odd reason (sarcasm) Amazon doesn't even have Finnish website and doesn't really care about Finland as much as having a subsidiary in Finland or try to protect it's trademark (Amazon Oy in Finland is some petstore, which seems to be in trouble since they paid 17k€ of taxes but didn't make any profits and got tax rebates). Microsoft also doesn't have subsidiary in Finland even though it bought Nokia (no known as Mokia (meaning in English "Goofs")), which didn't pay any taxes, because "bankruptcy" (Revenue 2016: 0.8B€ Income 2016: 0.3B€ Taxes 2016: 0€.... WHAT?!? 300 000 000€ income and not a single cent of paid taxes?!?). Even the original Nokia paid a lot more taxes than modern Mokia (Nokia was born from tire/boot company Nokian Renkaat Oyj: Revenue 2016: 651,8M€ Income 2016: 196,7M€ Taxes: 30M€)

 

It's about time someone does something to this madness that they call "creative accounting" which in layman terms is tax evasion. If the problem is that bad in Finland, I don't even want to know how bad it is somewhere like UK where there's a lot more bigger companies and corporations. Yeah, it would drive companies away from Europe, but do we really need companies that are straight out criminals? They might generate some personel tax incomes but they probably at the same time collect some business support funds from goverments and the real question is, are they contributing companies in Europe or just expensive sinkholes?

[ARikozuM]

On 3/5/2018 at 7:49 AM, asus killer said:

I'm not a great Amazon or Apple client, still i saw several times my the local internet store lowering prices of products in response to Amazon sales. So at least they act as competition even if you're not their customer.

Amazon and the like are usually detriments to small businesses. They have much lower overhead, can cover much larger markets, and obtain lower prices compared to a brick and mortar store. They aren't acting as "competition", they're just able to get away with having the lower prices. Pet food pricing makes very little sense on Amazon. They're able to charge $30 for bag A when a brick and mortar might pay $25 for bag A. There's no way that Amazon is making only $5 on each sale, they're getting the bag for much lower than anyone else can get it for. Amazon has also been caught giving brands for lower than IMAP pricing leading to C&D being filed against them. 

[AresKrieger]

Well if their "fixed" tax rate is worse than loses due to VAT i don't know why they would bother paying any european tax at that point, especially google and facebook as they don't deal with goods most of the time. The only reason the EU gets anything at all is due to the tax haven status.

 

@Thaldor Why are you mentioning revenue, that isn't relevant in regards to corporate taxes profit is what matters

[Canada EH]

Welcome to the world of Business.

Tax Incentives and avoiding tax is what they do.

Build warehouse/manuf in a high tax country, or go to low tax country.

 

[Thaldor]

23 minutes ago, AresKrieger said:

Why are you mentioning revenue, that isn't relevant in regards to corporate taxes profit is what matters

For me it gives some kind of scale on what the company is running and in my opinion, against something like Google, revenue based taxing would be a god send just because they are misusing the system so badly that something profit based extra taxing wouldn't touch them. Few percents of revenue taxation from the revenue of the subsidiary company wouldn't really hurt something like Google, but at least they would pay some taxes.

 

Spoiler

I don't really feel any symphaty for those that use "creative accounting", if you ask me anyone doing that should be taxed at least twice, even if they couldn't pay their taxes, just because they are using the loopholes in the system to try to not pay taxes. This country is going so fast from a welfare state to some shitfare state like USA that something extremely radical has to be done. And I have gotten quite enough how much rich and companies misuse the system, like there's around 500k unemployed people in Finland but only around 40k open jobs but almost every company is looking for trainees and trial workers just because they don't need to pay them salary, totally legal, for example one quite huge company is looking for a unpaid trainee to lead VR development project for them for a summer. And that is mainly possible just because the system allows people to take trainee spots and go to job trials with unemployment benefit and sometimes they are even forced to go or they loose the benefit. When I was couple of months unemployed I was forced to go to make some webpage to one shitty company (unpaid of course), too bad I forgot to give them the master password, forgot to publish the site and probably by accident purged them from their server on the last day, but I was only a unpaid trainee, what do I know about webpages even if I might be an IT-engineer, I should have had some guidance from someone more experienced

 

[asus killer]

7 hours ago, ARikozuM said:

Amazon and the like are usually detriments to small businesses. They have much lower overhead, can cover much larger markets, and obtain lower prices compared to a brick and mortar store. They aren't acting as "competition", they're just able to get away with having the lower prices. Pet food pricing makes very little sense on Amazon. They're able to charge $30 for bag A when a brick and mortar might pay $25 for bag A. There's no way that Amazon is making only $5 on each sale, they're getting the bag for much lower than anyone else can get it for. Amazon has also been caught giving brands for lower than IMAP pricing leading to C&D being filed against them. 

you can't live in a globalized world with internet and want to have competitive brick and mortar stores, let alone small brick and mortar stores. I guess this must have been discussed when the first big supermarket chain appeared and local small neighborhood stores couldn't compete on price. Still some people will be willing to pay a little more, most wont.

If you buy more from producers you can get a better price, and more than that the difference between receiving such large amount of money from consumers and the usually 30 days payment of invoices let's them have big profits just from the money management.