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I didn't even need to click the link to know that Ireland was gonna be one of the three. It's like they have a vested interest, or something.

Lio 8y ago
Yes they're an obvious one. I was surprised though that Luxembourg wasn't listed whist Sweden and Denmark are. I'd be interested to here their objects if anyone can point at a fuller article or discussion of the issues.
- 7000skeletons 8y ago
  This is from earlier this year, so the debate may have progressed since then, but Sweden and Denmarks' concerns seem to stem from the way in which the EU aims to apply the tax. >“A digital services tax deviates from fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not,” Swedish Finance Minister Magdalena Andersson, and her counterparts from Denmark and Finland, Kristian Jensen and Petteri Orpo, said in a joint statement on Friday. https://www.reuters.com/article/us-eu-digital-tax/nordic-countries-oppose-eu-plans-for-digital-tax-on-firms-turnover-idUSKCN1IW337 https://www.reuters.com/article/us-eu-digital-tax/nordic-cou...
  - exDM69 8y ago
    I guess the reason for applying the tax this way is that tech giants (and non-tech corporations) use creative accounting tricks to avoid making a profit and thus paying taxes to the countries they operate in. It's either disguised as loan interest repayment or licensing fees, but the goal is tax avoidance.
  - friedman23 8y ago
    I'm so happy the people of Sweden are sane, my biggest problem with these taxes is that they are on revenue which essentially makes all low margin internet businesses unprofitable. How does that benefit consumers?
    - Ragnarork 8y ago
      Facebook, Amazon and co. are "low margin internet businesses"?
      - friedman23 8y ago
        Facebook no, Amazon started as one yes.
    - klez 8y ago
      Honest question: why should I as a person be taxed on income (the closest I guess I can get to the concept of revenue) but a business should be taxed on profit? Can anyone explain to me the basis for such a distinction?
      - friedman23 8y ago
        Income taxes are a badly implemented tax so you wont get an argument from me there. We shouldn't be extending bad policy.
      - 0xffff2 8y ago
        (The following based on US income taxes) You as a person don't have a clear "profit" to tax. I would argue that the system of deductions is the nearest equivalent to taxing your individual income on your profits.
      - CompelTechnic 8y ago
        Let's say you operate a low margin business, such as a gas station. All numbers are before tax. For the year, you spend $1,000,000 paying for fuel, convenience store supplies, electricity, wages, etc. You get $1,050,000 in revenue from your customers, for a fairly realistic margin of 5%. Now let's say you run a software business. You pay $500,000 in electric bills, computers, wages, etc, and collect $1,000,000 in revenue for a margin of 50%. Would you rather live in a society where the gas station pays MORE tax than the software business? This would be the case if you taxed revenue instead of profit. If the revenue-tax rate were 4%, the owner of the gas station would be left with $10,000 at the end of the year, and the owner of the software business would be left with $460,000. Bringing these numbers back into normal, profit-based terms, the gas station owner would be paying an effective tax rate of 80%, with the software business owner paying an effective tax rate of 8%. If businesses were taxed on revenue instead of profit, low margin businesses and capital intensive businesses would be punished disproportionately. Businesses often face unplanned expenses or loss of revenue. This would have the effect of forcing businesses to raise prices to compensate for the increased risk, and would force lots out of business. This reduced economic activity would be bad for consumers, producers, the government, and society as a whole. Individual people's income taxes cannot be treated this way, because the closest analogy to "business expenses" for a person's lifestyle is their cost of living. If cost of living were deductible it would be highly gameable and ripe for abuse by numerous parties.
  - mabbo 8y ago
    It's an intriguing concept. What effect would a tax purely on size (income rather than profit) have on the world economy, if everyone were to adopt such policies? It would discourage large companies and encourage small ones. It seems like employees do better when there is a bigger and more diverse marketplace for work, ie, many smaller companies. So they would win out, hopefully. Customers may or may not do better. It would encourage companies to keep prices low to reduce gross income, and give an advantage to incumbents in the same marketplace. But one Amazon with it's fulfillment centers, delivery networks, etc, is more efficient than two overlapping half-sized Amazons. Twice the delivery trucks means twice the delivery costs and pollution. Overall I'd be for such a system, provided it were not too onerous and didn't target specific companies.
    - friedman23 8y ago
      >What effect would a tax purely on size (income rather than profit) have on the world economy, if everyone were to adopt such policies? It would discourage large companies and encourage small ones. How so? Your argument makes 0 sense because the tax is proportional regardless of size. What it will encourage is high margin business and it will discourage low margin business. Larger businesses are able to increase their margins because of increased efficiencies.
      - mabbo 8y ago
        No, taxes are based on profits. I work for Amazon, which notoriously has nearly zero profit most years. The company pours money into investments instead. That's how it's gotten so big. What I'm saying is that if there were a small additional tax on giants based purely on their company value or gross sales, it would 'level the playing field' for incumbents who don't have the efficiencies of scale that the big companies have, which I think is beneficial to society.
    - jopsen 8y ago
      It seems more like companies would have stronger incentives to keep the profit margin high.. I would be concerned if low profit margins is a problem.. companies with a low profit margin is the reason we can afford so much stuff.
  - ionised 8y ago
    Why should we care whether they are making a profit or not? There are so many ways a company can legally and artificially lower its profit numbers.
    - EpicEng 8y ago
      >Why should we care whether they are making a profit or not? Because it is generally in everyone's best interest for companies to invest in themselves rather than increase margin at all costs. Growth is good. Many companies would simply go under if you tax them on revenue. >There are so many ways a company can legally and artificially lower its profit numbers Then you try to cut those off as much as possible. Like most things in the real world, there's no perfect solution, but we weigh the pros and cons and make a decision.
      - ionised 8y ago
        > Growth is good Given our current economic situation and our effect on our environment I'm not convinced that it is that simple.
        EpicEng 8y ago
        Well it's not of course, and you're right in a way. It's also not good for a whole host of low margin / capital heavy businesses to tank.
  - _Codemonkeyism 8y ago
    The way tech companies are reducing income to zero by shifting around IP and IP license costs it's sadly impossible to tax income. So either tax revenue (or at VAT to digital goods delivered in a country like ads) or close IP license loopholes.
  - _Codemonkeyism 8y ago
    "Yet the Nordic countries, which are home to several large digital companies like Sweden-based music streaming service Spotify (SPOT.N) [...]"
- kawsper 8y ago
  Both Apple and Facebook have announced that they are opening datacenters in Denmark, so that might be part of the equation.
- deleted 8y ago
  [deleted]
tyu1000 8y ago
Good for them. France and Germany take endless steps to protect their domestic economic interests regardless of what any EU legislation or sense of fairness says, Ireland is well within their rights to do the same.
- digianarchist 8y ago
  Ireland have already been given some lucky charms by the EU. For example, they were given permission to set their corporate taxes to a ridiculously low 12.5%.
  - rusk 8y ago
    Spoken like somebody who knows very little about the topic. The effective tax rate is far lower than this, but also, most countries have an effective tax rate for megacorps far lower than what they advertise once exemptions, subsidies and tax-breaks come into play.
    - dbdjfjrjvebd 8y ago
      Yes but a lot of that is done by allowing large companies to offshore their profits.
      - rusk 8y ago
        No, that's not completely true. It's a part of the picture but there's plenty more strokes going on than that.
        dbdjfjrjvebd 8y ago
        Hence "a lot" which allows for other processes. We agree.
        rusk 8y ago
        To me “a lot” signifies “most of” which I think understated the amount of other skullduggery going on.
adam_klein 8y ago
The way to go Ireland. A ridiculously stereotypical statement from the French finance minister: “It just remains for me to offer Paschal a beer in a Dublin pub, and then I think we’ll be able to move toward a decision,” he said, referring to his Irish counterpart, Paschal Donohoe
- simias 8y ago
  I don't really see it that way, to me it sounds like he's trying to sound like he wants to have a friendly discussion with the Irish finance minister (and not sound too coercive or aggressive). People routinely drink beer in Parisian bars and pubs as well, if he's playing on an Irish stereotype it's a very mild one.
dev_north_east 8y ago
"Country looks out for its interest, more on page 2"

Lio 8y ago

Yes they're an obvious one. I was surprised though that Luxembourg wasn't listed whist Sweden and Denmark are. I'd be interested to here their objects if anyone can point at a fuller article or discussion of the issues.

7000skeletons 8y ago
This is from earlier this year, so the debate may have progressed since then, but Sweden and Denmarks' concerns seem to stem from the way in which the EU aims to apply the tax. >“A digital services tax deviates from fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not,” Swedish Finance Minister Magdalena Andersson, and her counterparts from Denmark and Finland, Kristian Jensen and Petteri Orpo, said in a joint statement on Friday. https://www.reuters.com/article/us-eu-digital-tax/nordic-countries-oppose-eu-plans-for-digital-tax-on-firms-turnover-idUSKCN1IW337 https://www.reuters.com/article/us-eu-digital-tax/nordic-cou...
- exDM69 8y ago
  I guess the reason for applying the tax this way is that tech giants (and non-tech corporations) use creative accounting tricks to avoid making a profit and thus paying taxes to the countries they operate in. It's either disguised as loan interest repayment or licensing fees, but the goal is tax avoidance.
- friedman23 8y ago
  I'm so happy the people of Sweden are sane, my biggest problem with these taxes is that they are on revenue which essentially makes all low margin internet businesses unprofitable. How does that benefit consumers?
  - Ragnarork 8y ago
    Facebook, Amazon and co. are "low margin internet businesses"?
    - friedman23 8y ago
      Facebook no, Amazon started as one yes.
  - klez 8y ago
    Honest question: why should I as a person be taxed on income (the closest I guess I can get to the concept of revenue) but a business should be taxed on profit? Can anyone explain to me the basis for such a distinction?
    - friedman23 8y ago
      Income taxes are a badly implemented tax so you wont get an argument from me there. We shouldn't be extending bad policy.
    - 0xffff2 8y ago
      (The following based on US income taxes) You as a person don't have a clear "profit" to tax. I would argue that the system of deductions is the nearest equivalent to taxing your individual income on your profits.
    - CompelTechnic 8y ago
      Let's say you operate a low margin business, such as a gas station. All numbers are before tax. For the year, you spend $1,000,000 paying for fuel, convenience store supplies, electricity, wages, etc. You get $1,050,000 in revenue from your customers, for a fairly realistic margin of 5%. Now let's say you run a software business. You pay $500,000 in electric bills, computers, wages, etc, and collect $1,000,000 in revenue for a margin of 50%. Would you rather live in a society where the gas station pays MORE tax than the software business? This would be the case if you taxed revenue instead of profit. If the revenue-tax rate were 4%, the owner of the gas station would be left with $10,000 at the end of the year, and the owner of the software business would be left with $460,000. Bringing these numbers back into normal, profit-based terms, the gas station owner would be paying an effective tax rate of 80%, with the software business owner paying an effective tax rate of 8%. If businesses were taxed on revenue instead of profit, low margin businesses and capital intensive businesses would be punished disproportionately. Businesses often face unplanned expenses or loss of revenue. This would have the effect of forcing businesses to raise prices to compensate for the increased risk, and would force lots out of business. This reduced economic activity would be bad for consumers, producers, the government, and society as a whole. Individual people's income taxes cannot be treated this way, because the closest analogy to "business expenses" for a person's lifestyle is their cost of living. If cost of living were deductible it would be highly gameable and ripe for abuse by numerous parties.
- mabbo 8y ago
  It's an intriguing concept. What effect would a tax purely on size (income rather than profit) have on the world economy, if everyone were to adopt such policies? It would discourage large companies and encourage small ones. It seems like employees do better when there is a bigger and more diverse marketplace for work, ie, many smaller companies. So they would win out, hopefully. Customers may or may not do better. It would encourage companies to keep prices low to reduce gross income, and give an advantage to incumbents in the same marketplace. But one Amazon with it's fulfillment centers, delivery networks, etc, is more efficient than two overlapping half-sized Amazons. Twice the delivery trucks means twice the delivery costs and pollution. Overall I'd be for such a system, provided it were not too onerous and didn't target specific companies.
  - friedman23 8y ago
    >What effect would a tax purely on size (income rather than profit) have on the world economy, if everyone were to adopt such policies? It would discourage large companies and encourage small ones. How so? Your argument makes 0 sense because the tax is proportional regardless of size. What it will encourage is high margin business and it will discourage low margin business. Larger businesses are able to increase their margins because of increased efficiencies.
    - mabbo 8y ago
      No, taxes are based on profits. I work for Amazon, which notoriously has nearly zero profit most years. The company pours money into investments instead. That's how it's gotten so big. What I'm saying is that if there were a small additional tax on giants based purely on their company value or gross sales, it would 'level the playing field' for incumbents who don't have the efficiencies of scale that the big companies have, which I think is beneficial to society.
  - jopsen 8y ago
    It seems more like companies would have stronger incentives to keep the profit margin high.. I would be concerned if low profit margins is a problem.. companies with a low profit margin is the reason we can afford so much stuff.
- ionised 8y ago
  Why should we care whether they are making a profit or not? There are so many ways a company can legally and artificially lower its profit numbers.
  - EpicEng 8y ago
    >Why should we care whether they are making a profit or not? Because it is generally in everyone's best interest for companies to invest in themselves rather than increase margin at all costs. Growth is good. Many companies would simply go under if you tax them on revenue. >There are so many ways a company can legally and artificially lower its profit numbers Then you try to cut those off as much as possible. Like most things in the real world, there's no perfect solution, but we weigh the pros and cons and make a decision.
    - ionised 8y ago
      > Growth is good Given our current economic situation and our effect on our environment I'm not convinced that it is that simple.
      - EpicEng 8y ago
        Well it's not of course, and you're right in a way. It's also not good for a whole host of low margin / capital heavy businesses to tank.
- _Codemonkeyism 8y ago
  The way tech companies are reducing income to zero by shifting around IP and IP license costs it's sadly impossible to tax income. So either tax revenue (or at VAT to digital goods delivered in a country like ads) or close IP license loopholes.
- _Codemonkeyism 8y ago
  "Yet the Nordic countries, which are home to several large digital companies like Sweden-based music streaming service Spotify (SPOT.N) [...]"
kawsper 8y ago
Both Apple and Facebook have announced that they are opening datacenters in Denmark, so that might be part of the equation.
deleted 8y ago
[deleted]

tyu1000 8y ago

Good for them. France and Germany take endless steps to protect their domestic economic interests regardless of what any EU legislation or sense of fairness says, Ireland is well within their rights to do the same.

digianarchist 8y ago
Ireland have already been given some lucky charms by the EU. For example, they were given permission to set their corporate taxes to a ridiculously low 12.5%.
- rusk 8y ago
  Spoken like somebody who knows very little about the topic. The effective tax rate is far lower than this, but also, most countries have an effective tax rate for megacorps far lower than what they advertise once exemptions, subsidies and tax-breaks come into play.
  - dbdjfjrjvebd 8y ago
    Yes but a lot of that is done by allowing large companies to offshore their profits.
    - rusk 8y ago
      No, that's not completely true. It's a part of the picture but there's plenty more strokes going on than that.
      - dbdjfjrjvebd 8y ago
        Hence "a lot" which allows for other processes. We agree.
        rusk 8y ago
        To me “a lot” signifies “most of” which I think understated the amount of other skullduggery going on.

adam_klein 8y ago

The way to go Ireland. A ridiculously stereotypical statement from the French finance minister: “It just remains for me to offer Paschal a beer in a Dublin pub, and then I think we’ll be able to move toward a decision,” he said, referring to his Irish counterpart, Paschal Donohoe

simias 8y ago
I don't really see it that way, to me it sounds like he's trying to sound like he wants to have a friendly discussion with the Irish finance minister (and not sound too coercive or aggressive). People routinely drink beer in Parisian bars and pubs as well, if he's playing on an Irish stereotype it's a very mild one.

dev_north_east 8y ago

"Country looks out for its interest, more on page 2"