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> Germany, where the sale happened. Well, that's not clear. The advertising company "sells" ad space from a server in Jerusalem, but the user logged in from Th

> Germany, where the sale happened. Well, that's not clear. The advertising company "sells" ad space from a server in Jerusalem, but the user logged in from Thailand. Where did the sale occur? I touched on this earlier. Does Google (for example) have to pay 5% of taxes to London on ad revenue because 1/20 servers are in England? That incentivizes them to just move their data centers, which further advantages them because only large companies can pack up their toys and go home. If it's mapped to the physical location of the server, most large companies have enough capital to relocate their servers to a tax haven. If it's the physical location of the user, how do you determine that with a high degree of certainty? All users have to do is use a VPN that's located in St. Martin, and all your efforts will be in vain. Also, there is also VAT, sales tax, etc etc. > Legislators allow these to happen, and the legislators job is make better laws that are not allow to e.g. transfer money into or have direct or indirect relationship with tax heavens. I would argue that it's this dizzying maze of laws that causes these problem, because I have said before, laws, especially tax laws, are an NP complete system. Legislators have to pass laws to justify their existence. Now they're passing laws to cover up holes in laws either they or other people passed in a non digitally connected age. The solution is not better laws, but fewer laws.

aries1980 9y ago
> Well, that's not clear. Now I get your point. Of course the ratio of servers in a given country should not be the basis of taxation. The situation of these large companies is they have a web of shelf companies just to optimise their taxes. E.g. neither Facebook nor Google or Apple does their core business activity and R&D in Ireland or formerly in Luxembourg. They simply extract the profit on arbitrary measures. In classical companies (manufacturing, automotives, media, etc) when there is a holding company, usually there is a realistic “commission” that the child companies keep on sales revenue, e.g. 40%. This is an extrapolated number to a company level based on what the company would pay to an individual salesman in commission. There are holding companies for intellectual properties in the UK, e.g. ARM or WPP, BAE Systems, Rolls Royce, etc. If you are interested, I'd have a look to their quarterly financial reports to see how they divide the profit among their subsidiaries. But, we can reverse the question: how less would be the revenue if Facebook or Google would have no office presence in the country? If they can answer this question (and they do when they make their quarterly financial reports), then it is easy to measure how much tax is fair to pay. > I would argue that it's this dizzying maze of laws that causes these problem Sure, fewer laws the better. Yet, safe havens for stashing money from questionable sources are individual cases. Their economy is based on extracting money made in other countries and the tourism related to stashing the money. There are plenty of whitepapers with ideas how to resolve this situation, yet nothing happens, because the people who can make it happen, personally are not interested in it.

aries1980 9y ago

> Well, that's not clear. Now I get your point. Of course the ratio of servers in a given country should not be the basis of taxation. The situation of these large companies is they have a web of shelf companies just to optimise their taxes. E.g. neither Facebook nor Google or Apple does their core business activity and R&D in Ireland or formerly in Luxembourg. They simply extract the profit on arbitrary measures. In classical companies (manufacturing, automotives, media, etc) when there is a holding company, usually there is a realistic “commission” that the child companies keep on sales revenue, e.g. 40%. This is an extrapolated number to a company level based on what the company would pay to an individual salesman in commission. There are holding companies for intellectual properties in the UK, e.g. ARM or WPP, BAE Systems, Rolls Royce, etc. If you are interested, I'd have a look to their quarterly financial reports to see how they divide the profit among their subsidiaries. But, we can reverse the question: how less would be the revenue if Facebook or Google would have no office presence in the country? If they can answer this question (and they do when they make their quarterly financial reports), then it is easy to measure how much tax is fair to pay. > I would argue that it's this dizzying maze of laws that causes these problem Sure, fewer laws the better. Yet, safe havens for stashing money from questionable sources are individual cases. Their economy is based on extracting money made in other countries and the tourism related to stashing the money. There are plenty of whitepapers with ideas how to resolve this situation, yet nothing happens, because the people who can make it happen, personally are not interested in it.