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It is a pretty straight forward way to fix the current practice of setting up companies that hand over their profits to the parent company for $service (licens

by jlg23 9y ago

It is a pretty straight forward way to fix the current practice of setting up companies that hand over their profits to the parent company for $service (licenses, administrative fees, whatever).

sokoloff 9y ago
Is it? That sounds like the subject of a Steve Yegge rant. http://steve-yegge.blogspot.com/2009/04/have-you-ever-legalized-marijuana.html http://steve-yegge.blogspot.com/2009/04/have-you-ever-legali... (search for legalization)
andruby 9y ago
How straight forward is it to fix licensing and fiscal laws in 30 “independent” countries which have their own agendas without introducing new loopholes? I agree that it’s rediculous that the double dutch (irish) sandwhich is still legal, so they should work on closing that hole. As a datapoint: "Apple's 2017 accounts showed they made $44.7bn outside the US and paid just $1.65bn in taxes to foreign governments, a rate of around 3.7%. That is less than a sixth of the average rate of corporation tax in the world." [0] [0] http://www.bbc.com/news/world-us-canada-41889787 http://www.bbc.com/news/world-us-canada-41889787
ucaetano 9y ago
That practice is not only the standard in accounting, but somewhat impossible to move out of. As I mentioned in another post: Profit is a complex calculation when talking about cross-borders. If your company spends $20B in country A, $0 in country B, has revenue of $10B in country A and $10B in country B, how much profit did it generate in country B?
- 3pt14159 9y ago
  In a sane world: $0B But we don't live in a sane world. All these multi-country tax schemes effectively mean that corporate profits can't be trusted to be reported accurately. It's easier to just stick the tax on revenue and then corporations may finally have an incentive to lobby to live in a sane world again. Another option I can think of is for countries in the EU to set guidelines and impose harsh provision (a doubling of the tax rate, say) if a court finds that the guidelines have been breached. It isn't right if Wall St is overjoyed at EU earnings, but the EU hasn't collected a dime of profit.
  - downunderman 9y ago
    As I asked in my reply above, why should investment in country A come at the expense of tax revenue in country B? That isn't right.
    - ucaetano 9y ago
      > As I asked in my reply above, why should investment in country A come at the expense of tax revenue in country B? That isn't right. That's perfectly right, unless you're suggesting that every country should have only local companies and should block every foreign company from operating there. Not only it is right, it is very, very good for society. In the past 60 years, poverty went from 60% to 9% dues to that.
      - downunderman 9y ago
        I'm not against foreign companies operating where ever they want but tax comes as a cost of business. If a company won't contribute to a nation it whether through taxes or investment it has no right to be there. It's effectively a parasite.
        ucaetano 9y ago
        That doesn't make any sense. If your product costs 100 to make in country a and you sell it for 100 in country b, you're not having any profits. But if you want to ignore that and charge non-existing profits in your imaginary country, go ahead, you're dooming your imaginary country to failure for not understanding basic economics.
        downunderman 9y ago
        Yes you are. Look I know you want to seen the big picture but that's not how it should work. If you spend money in country A that shouldn't give you the right to write of revenue in country B. From the perspective of country B you were profitable. If you want to write off revenue in country B then invest, pay taxes or don't do business there. Countries don't need parasitic businesses like that. All they will do is undermine the economy and local competition.
- downunderman 9y ago
  See this is what I don't like about these kind of tech companies. They act like they're special and deserve special treatment. They aren't and they don't. A company is fully within their right to choose how it spends money but the taxation should work on an individual nation basis. Why should investment in country A come at the expense of tax revenue generated in country B?
  - ucaetano 9y ago
    Not sure I get your point. This is how accounting works, you need to allocate the actual costs of creating and operating a business. And this isn't any special for tech. Tech companies are not asking for special treatment, they are currently treated like any other company in accounting terms. Governments are trying to treat them in a special way. If you have a company that makes a chair in France for $20, ships it to Spain (let's day for free) and sells it in Spain for $0, how much profit did this company generate in each country? This is exactly the same accounting as the tech companies, but their services have a very high fixed cost and a null variable cost, while the chair maker is the opposite.
    - downunderman 9y ago
      But it wasn't sold for $0 in Spain. Its not right to be able to write off revenue from expenses of another country. Taxes are a cost of business. Again I don't get why it seems reasonable that country A gains at the expense of country B's loss. Why would country B want your business when you contribute nothing to their country/ economy?
      - tylersmith 9y ago
        Why would people in country B care about what the State itself or the vocal majority wants? Business is primarily done through companies, not countries. If avoiding the "cost of business" that is taxes is possible without getting a gun to the face it's how all rational businesses would act.
        9y ago

by jlg23 9y ago

It is a pretty straight forward way to fix the current practice of setting up companies that hand over their profits to the parent company for $service (licenses, administrative fees, whatever).

sokoloff 9y ago

Is it? That sounds like the subject of a Steve Yegge rant. http://steve-yegge.blogspot.com/2009/04/have-you-ever-legalized-marijuana.html http://steve-yegge.blogspot.com/2009/04/have-you-ever-legali... (search for legalization)

andruby 9y ago

How straight forward is it to fix licensing and fiscal laws in 30 “independent” countries which have their own agendas without introducing new loopholes? I agree that it’s rediculous that the double dutch (irish) sandwhich is still legal, so they should work on closing that hole. As a datapoint: "Apple's 2017 accounts showed they made $44.7bn outside the US and paid just $1.65bn in taxes to foreign governments, a rate of around 3.7%. That is less than a sixth of the average rate of corporation tax in the world." [0] [0] http://www.bbc.com/news/world-us-canada-41889787 http://www.bbc.com/news/world-us-canada-41889787

ucaetano 9y ago

That practice is not only the standard in accounting, but somewhat impossible to move out of. As I mentioned in another post: Profit is a complex calculation when talking about cross-borders. If your company spends $20B in country A, $0 in country B, has revenue of $10B in country A and $10B in country B, how much profit did it generate in country B?

3pt14159 9y ago
In a sane world: $0B But we don't live in a sane world. All these multi-country tax schemes effectively mean that corporate profits can't be trusted to be reported accurately. It's easier to just stick the tax on revenue and then corporations may finally have an incentive to lobby to live in a sane world again. Another option I can think of is for countries in the EU to set guidelines and impose harsh provision (a doubling of the tax rate, say) if a court finds that the guidelines have been breached. It isn't right if Wall St is overjoyed at EU earnings, but the EU hasn't collected a dime of profit.
- downunderman 9y ago
  As I asked in my reply above, why should investment in country A come at the expense of tax revenue in country B? That isn't right.
  - ucaetano 9y ago
    > As I asked in my reply above, why should investment in country A come at the expense of tax revenue in country B? That isn't right. That's perfectly right, unless you're suggesting that every country should have only local companies and should block every foreign company from operating there. Not only it is right, it is very, very good for society. In the past 60 years, poverty went from 60% to 9% dues to that.
    - downunderman 9y ago
      I'm not against foreign companies operating where ever they want but tax comes as a cost of business. If a company won't contribute to a nation it whether through taxes or investment it has no right to be there. It's effectively a parasite.
      - ucaetano 9y ago
        That doesn't make any sense. If your product costs 100 to make in country a and you sell it for 100 in country b, you're not having any profits. But if you want to ignore that and charge non-existing profits in your imaginary country, go ahead, you're dooming your imaginary country to failure for not understanding basic economics.
        downunderman 9y ago
        Yes you are. Look I know you want to seen the big picture but that's not how it should work. If you spend money in country A that shouldn't give you the right to write of revenue in country B. From the perspective of country B you were profitable. If you want to write off revenue in country B then invest, pay taxes or don't do business there. Countries don't need parasitic businesses like that. All they will do is undermine the economy and local competition.
downunderman 9y ago
See this is what I don't like about these kind of tech companies. They act like they're special and deserve special treatment. They aren't and they don't. A company is fully within their right to choose how it spends money but the taxation should work on an individual nation basis. Why should investment in country A come at the expense of tax revenue generated in country B?
- ucaetano 9y ago
  Not sure I get your point. This is how accounting works, you need to allocate the actual costs of creating and operating a business. And this isn't any special for tech. Tech companies are not asking for special treatment, they are currently treated like any other company in accounting terms. Governments are trying to treat them in a special way. If you have a company that makes a chair in France for $20, ships it to Spain (let's day for free) and sells it in Spain for $0, how much profit did this company generate in each country? This is exactly the same accounting as the tech companies, but their services have a very high fixed cost and a null variable cost, while the chair maker is the opposite.
  - downunderman 9y ago
    But it wasn't sold for $0 in Spain. Its not right to be able to write off revenue from expenses of another country. Taxes are a cost of business. Again I don't get why it seems reasonable that country A gains at the expense of country B's loss. Why would country B want your business when you contribute nothing to their country/ economy?
    - tylersmith 9y ago
      Why would people in country B care about what the State itself or the vocal majority wants? Business is primarily done through companies, not countries. If avoiding the "cost of business" that is taxes is possible without getting a gun to the face it's how all rational businesses would act.
      - 9y ago