One size fits all proposed EU 3% digital tax would kill the digital internet geese that lay golden eggs

Patslatt1

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One size fits all proposed EU 3% digital tax would kill the digital internet geese that lay golden eggs

The EU Commission must suffer from collective economic illiteracy in the attempt to tax digital internet companies that use legal tax avoidance to shift profits to low tax jurisdictions. The commission proposal for a one size fits all 3% tax on revenues would kill many of the digital internet geese that lay golden eggs. It targets the rich profit margins of American multinational giants like Alphabet Google while severely penalising internet companies that spend many years building up networking economies of scale by sacrificing short term profits, Amazon for example. In the fourth quarter, Alphabet's net profit margin trended at 21%. Had Amazon's EU revenues been taxed at 3% in the past decade, its fantastic global growth from reinvesting all profits would have been severely hobbled.

The 3% tax begins on companies with worldwide revenues of more than 750 million euros and digital service revenues of more than 50 million euros in the EU single market. While 750 million euros seems large, it is not large for global multinationals and the arbitrary 3% tax would put many EU companies at a severe competitive disadvantage compared to companies in the gigantic market of China which has about 800 million people online.

The Irish government should do the EU a favour and carry out its threat to veto the tax. The Irish government wants the OECD to develop global taxation rules for internet digital companies. One possibility is to copy the Trump administration's recent tax change which imposes a 10% tax on royalties and fees paid to foreign companies and entities.
 


Lumpy Talbot

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A completely pointless proposal and it contains a form of surrender at best. The EU policymakers, as all national policymakers do, recognise that the likes of Amazon, Apple, Google etc are never going to pay any official rate of corporation tax as long as they can manipulate the surfacing of profits in offshore locations.

I doubt any of these companies have ever paid more than 2% corporation tax in any year.

If the policy makers were serious they would announce a tax that would ensure these companies paid the official rate of corporation tax with a floating surcharge that would mean they paid the difference between what they actually paid and the official corporation tax rate every year.

And to those who wail and bemoan on behalf of corporations how corporation tax hinders the honest wealth creators from creating more beneficial employers I would have to say that if a company isn't healthy after tax then it wasn't healthy before tax was applied either.

If a business needs tax concessions to survive then it isn't as profitable a business as it thought it was in the first place.

The separation of responsibility by corporations from contributing to the societies in which they live and do business will bounce back on them in the end.
 

Patslatt1

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A completely pointless proposal and it contains a form of surrender at best. The EU policymakers, as all national policymakers do, recognise that the likes of Amazon, Apple, Google etc are never going to pay any official rate of corporation tax as long as they can manipulate the surfacing of profits in offshore locations.

I doubt any of these companies have ever paid more than 2% corporation tax in any year.

If the policy makers were serious they would announce a tax that would ensure these companies paid the official rate of corporation tax with a floating surcharge that would mean they paid the difference between what they actually paid and the official corporation tax rate every year.

And to those who wail and bemoan on behalf of corporations how corporation tax hinders the honest wealth creators from creating more beneficial employers I would have to say that if a company isn't healthy after tax then it wasn't healthy before tax was applied either.

If a business needs tax concessions to survive then it isn't as profitable a business as it thought it was in the first place.

The separation of responsibility by corporations from contributing to the societies in which they live and do business will bounce back on them in the end.
Identifying profits is tricky in international companies given the allocation of corporate HQ costs across countries and murky transfer pricing of services between affiliates.

The biggest internetcompanies should be paying a lot more tax but the point of the OP is that one size 3% fits all damages the growing EU and US companies that have to compete with gigantic competitors in China and the US.
 

Lumpy Talbot

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Identifying profits is tricky in international companies given the allocation of corporate HQ costs across countries and murky transfer pricing of services between affiliates.

The biggest internetcompanies should be paying a lot more tax but the point of the OP is that one size 3% fits all damages the growing EU and US companies that have to compete with gigantic competitors in China and the US.
It is just a way of unofficially lowering the corporation tax rate across the EU to 3%
 

Barroso

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... The commission proposal for a one size fits all 3% tax on revenues would kill many of the digital internet geese that lay golden eggs...
They seem more like cuckoos than geese to me ...

The Irish government should do the INTERNET COMPANIES a favour and carry out its threat to veto the tax. The Irish government wants the OECD to develop global taxation rules for internet digital companies. One possibility is to copy the Trump administration's recent tax change which imposes a 10% tax on royalties and fees paid to foreign companies and entities.
Fixed that for you.
 

NYCKY

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A completely pointless proposal and it contains a form of surrender at best. The EU policymakers, as all national policymakers do, recognise that the likes of Amazon, Apple, Google etc are never going to pay any official rate of corporation tax as long as they can manipulate the surfacing of profits in offshore locations.

I doubt any of these companies have ever paid more than 2% corporation tax in any year.

If the policy makers were serious they would announce a tax that would ensure these companies paid the official rate of corporation tax with a floating surcharge that would mean they paid the difference between what they actually paid and the official corporation tax rate every year.

And to those who wail and bemoan on behalf of corporations how corporation tax hinders the honest wealth creators from creating more beneficial employers I would have to say that if a company isn't healthy after tax then it wasn't healthy before tax was applied either.

If a business needs tax concessions to survive then it isn't as profitable a business as it thought it was in the first place.

The separation of responsibility by corporations from contributing to the societies in which they live and do business will bounce back on them in the end.
This is an overly simplistic view of it. Jurisdictions trying to attract companies don't normally view their suitors as tax cash cows but rather as employers and generators of economic activity.

Regardless of whatever corporation tax these entities pay, they pay plenty in payroll taxes, social insurance, permits, penalties, license fees etc and they pay this whether or not they make money or lose money.

Jurisdictions have citizens that need to be taken care of whether or not corporations are coming in generating economic activity and hiring locals.
 

Patslatt1

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This is an overly simplistic view of it. Jurisdictions trying to attract companies don't normally view their suitors as tax cash cows but rather as employers and generators of economic activity.

Regardless of whatever corporation tax these entities pay, they pay plenty in payroll taxes, social insurance, permits, penalties, license fees etc and they pay this whether or not they make money or lose money.

Jurisdictions have citizens that need to be taken care of whether or not corporations are coming in generating economic activity and hiring locals.
Part of the governments' problem with taxes is caused by poor allocation of government spending. The US spends 17% of the economy on health care and big EU health care spenders including Ireland are at 12%. If these countries could get their citizens to do twenty minutes walking a day,to cut back on smoking and binge drinking and remove high fat and salty foods from diets, those spending figures could be halved. There are many other examples of wasteful spending and one result is the inability of many NATO countries to defend themselves against a conventional attack from Russia. Germany's military spending is less than 2% of the economy and the latest report is that all of its eight submarines are out of action. Its infrastructure of roads and railways has been neglected for decades as money is diverted to caring for a big elderly population.
 

Watcher2

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Part of the governments' problem with taxes is caused by poor allocation of government spending. The US spends 17% of the economy on health care and big EU health care spenders including Ireland are at 12%. If these countries could get their citizens to do twenty minutes walking a day,to cut back on smoking and binge drinking and remove high fat and salty foods from diets, those spending figures could be halved. There are many other examples of wasteful spending and one result is the inability of many NATO countries to defend themselves against a conventional attack from Russia. Germany's military spending is less than 2% of the economy and the latest report is that all of its eight submarines are out of action. Its infrastructure of roads and railways has been neglected for decades as money is diverted to caring for a big elderly population.
But if smokers stop smoking, the pressure on health service providers increases later in the persons life. Smokers die younger. Non smoker, healthy people live longer with complications lasting longer. The "drain" on health services is worse. In addition, the taxes collected from cigarettes would not be there so a double whammy hits the government.

I'm a non/ex smoker by the way.
 

Watcher2

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It's a subject that belongs in economics, not "policy discussion" where few will look.
Trivial. Its not a big enough topic to command two threads. All you've pointed out is that the mods should not only merge the two threads, they should move it to the economics forum.
 

Patslatt1

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But if smokers stop smoking, the pressure on health service providers increases later in the persons life. Smokers die younger. Non smoker, healthy people live longer with complications lasting longer. The "drain" on health services is worse. In addition, the taxes collected from cigarettes would not be there so a double whammy hits the government.

I'm a non/ex smoker by the way.
From memory, smokers' life expectancy is about five years less than average, with many suffering chronic disabilities from a great variety of cancers, lung ailments and heart diseases. Their drain on health services is likely a multiple of that of non smokers.
 


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