4 ms·

It's because for an international company there is really no clear cut way to say what is tax evasion and what is not. If your company is incorporated in France

by yoz-y 8y ago

It's because for an international company there is really no clear cut way to say what is tax evasion and what is not. If your company is incorporated in France, has offices in Ireland and serves customers all over the world, how do you calculate where to pay what? Sovereign countries are free to set their tax rate to 0 in order to attract companies there.

gzeus 8y ago
But shouldn't they like pay taxes for where the customer is from? Suppose a guy from US purchases the service, shouldn't tax be paid there. Isn't that how its supposed to work? Taking only in terms of Giants.
- izacus 8y ago
  It gets really hairy in cases like Google and Facebook, where the guy paying the service might be a US agency paying to show ads to YouTube/FB users in Europe.
- yoz-y 8y ago
  Note that there already is a tax that people are paying 'where the customers are'. It's the VAT, which is one of the biggest sources of income for a state.
- Veelox 8y ago
  To complicate the situation, a French citizen, living in Spain, the sole owner of a company incorporated in Ireland, buys software from an American company to run for a customer in Brazil. Which country/countries should be able to tax the revenue?
  - johneth 8y ago
    The company would pay corporation tax in Ireland. The French citizen, if resident in Spain, would probably pay taxes in Spain (generally countries tax residents). The customer may need to pay sales tax on the purchase to Brazil, if Brazil has such a thing. But I agree with your point - it does get quite complicated and bureaucratic.
    - cheerlessbog 8y ago
      In the example above the American company presumably has most of its employees in the US and ought to pay significant tax there somehow.
      - iguy 8y ago
        It will: the process of paying employees is heavily taxed. Who writes the check and what the nominal salary is doesn't matter too much... between the cost to the company, and the employee getting to spend the money, the government gets what 30-40%? That's a lot. And it's hard to avoid, you can't move a hundred engineers to the Bahamas at the stroke of a pen.
    - sbacic 8y ago
      > The company would pay corporation tax in Ireland. You'd assume that, but you could also very well be wrong. Depending on tax treaties and the "effective place of management" principle, he could be liable for corporation tax in Spain or in both Spain and Ireland. One reason why tax laws get very complicated very fast is because every country wants to tax everything it can which inevitably means that two different countries end up taxing the same thing. To avoid this, you get double taxation treaties and loopholes.
sjwpv 8y ago
>Sovereign countries are free to set their tax rate to 0 in order to attract companies there. Then those companies should only sell products and services in those countries. Otherwise, something should be done about it. I'm not saying it's easy, but it can be improved.
- awestroke 8y ago
  So exporting should be illegal?
  - kartan 8y ago
    Doing business with tax havens should be illegal. A tax Haven creates an agreement between companies and a country to steal another country tax reveneu. Tax havens produce close to nothing, so they have very small exports. It's just a legal arrangement that has nothing to do with production.
    - chongli 8y ago
      Tax havens are often highly desirable tourist destinations. Making it illegal to do business with them would anger a lot of tourists and is, frankly, a violation of freedom of movement.
    - xondono 8y ago
      You are assuming that somehow that tax revenue is theirs in the first place. What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland? Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because here in Spain the legal framework is unclear. All escape rooms in this country are in a legal greyish area.
      - kartan 8y ago
        > You are assuming that somehow that tax revenue is theirs in the first place. The big corporations that evade taxes are using the economic power, infrastructure and legal systems of countries without contributing to any of them. That is money that the corporations owe to the citizens of those countries. > What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland? I see your point, they are centred about maximizing profit. But, there are other goals as well. The goal of improving the taxation system is related to broad social issues like wealth redistribution. It has nothing to do with the only goal is to maximize short term profits for companies. > Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because here in Spain the legal framework is unclear. All escape rooms in this country are in a legal greyish area. This is one of the many reasons regulations take a long time to be in place for new kinds of business: https://www.news.com.au/world/europe/five-girls-locked-in-homebased-escape-room-died-from-asphyxiation/news-story/0b01b902e87a8e3011dc861abaf636ae https://www.news.com.au/world/europe/five-girls-locked-in-ho... I hope that your friends find a good way to start escape rooms in the end. If it is their passion they will succeed. Regulations may be slow, but regulations get set and then people can do business safely for everyone involved.
platz 8y ago
I'm pretty sure Google does not have a problem figuring out that the source of it's profits are not occuring in Ireland.
- roenxi 8y ago
  There is no science to what the 'correct' level of tax is, and assigning which part of a multinational corporation is responsible for what dollar of profit is genuinely complicated. As long as they are playing by the rules, no company has an obligation to try and guess what level of tax is fair for them to pay. Since they are taxed according to their interpretation of the situation (as represented in their account books) there isn't anything wrong with choosing an interpretation that is tax effective.
  - platz 8y ago
    Oh, I am not implying the "rules" are correct by any means either. Yes, I am saying that just because the rules/laws permit a thing, doesn't mean it isn't broken. The whole point of courts is to decide what broken laws mean, governments to fix holes in the laws, and people to decide who the government is.
- yoz-y 8y ago
  I'm merely stating why "make avoiding taxes illegal" is not a clear cut thing. Apple got to pay over 11 billion of back taxes to Ireland and another 500 million to France for example, so if there is clear fraud it's easy. The difficulty is to have a legal framework and not just some judge saying "I'll know it's porn when I see it". This being said I am not a lawyer.
- kyrra 8y ago
  It's not that simple? How do you tax a German company paying an Irish company to show ads in France?
  - platz 8y ago
    much like the trolley problem and driverless cars, you can easily get lost in the weeds in a legitimate, complex theoretical question, when for a concrete problem a simple answer can easily be obtained. In fact, the theoretical question obscures or acts as cover for the concrete case. For driverless cars, you just apply the brakes. For google, do you outlaw "The double Irish with a Dutch sandwich"

by yoz-y 8y ago

gzeus 8y ago

But shouldn't they like pay taxes for where the customer is from? Suppose a guy from US purchases the service, shouldn't tax be paid there. Isn't that how its supposed to work? Taking only in terms of Giants.

izacus 8y ago
It gets really hairy in cases like Google and Facebook, where the guy paying the service might be a US agency paying to show ads to YouTube/FB users in Europe.
yoz-y 8y ago
Note that there already is a tax that people are paying 'where the customers are'. It's the VAT, which is one of the biggest sources of income for a state.
Veelox 8y ago
To complicate the situation, a French citizen, living in Spain, the sole owner of a company incorporated in Ireland, buys software from an American company to run for a customer in Brazil. Which country/countries should be able to tax the revenue?
- johneth 8y ago
  The company would pay corporation tax in Ireland. The French citizen, if resident in Spain, would probably pay taxes in Spain (generally countries tax residents). The customer may need to pay sales tax on the purchase to Brazil, if Brazil has such a thing. But I agree with your point - it does get quite complicated and bureaucratic.
  - cheerlessbog 8y ago
    In the example above the American company presumably has most of its employees in the US and ought to pay significant tax there somehow.
    - iguy 8y ago
      It will: the process of paying employees is heavily taxed. Who writes the check and what the nominal salary is doesn't matter too much... between the cost to the company, and the employee getting to spend the money, the government gets what 30-40%? That's a lot. And it's hard to avoid, you can't move a hundred engineers to the Bahamas at the stroke of a pen.
  - sbacic 8y ago
    > The company would pay corporation tax in Ireland. You'd assume that, but you could also very well be wrong. Depending on tax treaties and the "effective place of management" principle, he could be liable for corporation tax in Spain or in both Spain and Ireland. One reason why tax laws get very complicated very fast is because every country wants to tax everything it can which inevitably means that two different countries end up taxing the same thing. To avoid this, you get double taxation treaties and loopholes.

sjwpv 8y ago

>Sovereign countries are free to set their tax rate to 0 in order to attract companies there. Then those companies should only sell products and services in those countries. Otherwise, something should be done about it. I'm not saying it's easy, but it can be improved.

awestroke 8y ago
So exporting should be illegal?
- kartan 8y ago
  Doing business with tax havens should be illegal. A tax Haven creates an agreement between companies and a country to steal another country tax reveneu. Tax havens produce close to nothing, so they have very small exports. It's just a legal arrangement that has nothing to do with production.
  - chongli 8y ago
    Tax havens are often highly desirable tourist destinations. Making it illegal to do business with them would anger a lot of tourists and is, frankly, a violation of freedom of movement.
  - xondono 8y ago
    You are assuming that somehow that tax revenue is theirs in the first place. What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland? Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because here in Spain the legal framework is unclear. All escape rooms in this country are in a legal greyish area.
    - kartan 8y ago
      > You are assuming that somehow that tax revenue is theirs in the first place. The big corporations that evade taxes are using the economic power, infrastructure and legal systems of countries without contributing to any of them. That is money that the corporations owe to the citizens of those countries. > What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland? I see your point, they are centred about maximizing profit. But, there are other goals as well. The goal of improving the taxation system is related to broad social issues like wealth redistribution. It has nothing to do with the only goal is to maximize short term profits for companies. > Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because here in Spain the legal framework is unclear. All escape rooms in this country are in a legal greyish area. This is one of the many reasons regulations take a long time to be in place for new kinds of business: https://www.news.com.au/world/europe/five-girls-locked-in-homebased-escape-room-died-from-asphyxiation/news-story/0b01b902e87a8e3011dc861abaf636ae https://www.news.com.au/world/europe/five-girls-locked-in-ho... I hope that your friends find a good way to start escape rooms in the end. If it is their passion they will succeed. Regulations may be slow, but regulations get set and then people can do business safely for everyone involved.

platz 8y ago

I'm pretty sure Google does not have a problem figuring out that the source of it's profits are not occuring in Ireland.

roenxi 8y ago
There is no science to what the 'correct' level of tax is, and assigning which part of a multinational corporation is responsible for what dollar of profit is genuinely complicated. As long as they are playing by the rules, no company has an obligation to try and guess what level of tax is fair for them to pay. Since they are taxed according to their interpretation of the situation (as represented in their account books) there isn't anything wrong with choosing an interpretation that is tax effective.
- platz 8y ago
  Oh, I am not implying the "rules" are correct by any means either. Yes, I am saying that just because the rules/laws permit a thing, doesn't mean it isn't broken. The whole point of courts is to decide what broken laws mean, governments to fix holes in the laws, and people to decide who the government is.
yoz-y 8y ago
I'm merely stating why "make avoiding taxes illegal" is not a clear cut thing. Apple got to pay over 11 billion of back taxes to Ireland and another 500 million to France for example, so if there is clear fraud it's easy. The difficulty is to have a legal framework and not just some judge saying "I'll know it's porn when I see it". This being said I am not a lawyer.
kyrra 8y ago
It's not that simple? How do you tax a German company paying an Irish company to show ads in France?
- platz 8y ago
  much like the trolley problem and driverless cars, you can easily get lost in the weeds in a legitimate, complex theoretical question, when for a concrete problem a simple answer can easily be obtained. In fact, the theoretical question obscures or acts as cover for the concrete case. For driverless cars, you just apply the brakes. For google, do you outlaw "The double Irish with a Dutch sandwich"