4 ms·

This isn't true - public corporations are obliged to publish accurate accounts which include the profits of their subsidiaries. Even an very basic overview lik

by derriz 7y ago

This isn't true - public corporations are obliged to publish accurate accounts which include the profits of their subsidiaries. Even an very basic overview like https://www.apple.com/newsroom/2019/04/apple-reports-second-quarter-results/ https://www.apple.com/newsroom/2019/04/apple-reports-second-... includes "international" profits. The confusion here is cause by the (internationally unique as far as I know) American tax rule that allowed US corporations to defer paying their US corporate tax bill. The tax liability still exists. Effectively the rule gave US corporations with large amounts of international profit an indefinite interest free loan. I'm guessing that the rule was introduced (or at least not suspended earlier) because it acted as a sort of subsidy for US corporations to grow international markets for their products. While the form of this subsidy is unique, many countries indirectly subsidize overseas expansion for companies founded in their jurisdiction, for example by funding export insurance schemes and the like.

derriz 7y ago
I'm getting downvoted for responding to the claim "internet giants always declare zero profit" - which can be trivially refuted by cursory search. Alphabet declared a profit of about 7 billion dollars for Q1, 2019 - which is not zero. Apple declared around 11 billion for the same period - also non-zero. Facebook declared 3.5 billion, etc. etc. So no, internet giants do NOT declare zero profit.
- luckylion 7y ago
  > So no, internet giants do NOT declare zero profit. Right, but this is about France, where they didn't declare a profit of 7 billion dollars. Let's refrain from trying to be technically correct by not looking at the context of comments and then arguing against a straw man.
- JanSt 7y ago
  You are downvoted because you are ignoring the context. This is not about declaring zero profit in the US but in many EU countries - i.e. France. Now these countries fight back. https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_against_Apple_in_Ireland https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_agai... ps: I didn't downvote you
- nindalf 7y ago
  > internet giants do NOT declare zero profit Could you tell me their profits in France, Germany, Spain, Italy and then compare it to their profit in Ireland? The point here is not that they make no profit. It's that the Irish subsidiary charges the French, German, Spanish and Italian subsidiaries a "license" fee equal to the profit that each of them makes. So all of these subsidiaries make 0 profit, the Irish subsidiary makes a fat profit. But the kicker is that in Ireland their effective tax rate is nearly 0. So they pay no tax on all their European profits.
  - derriz 7y ago
    If you're interested, you can estimate the profit on revenue in all countries relatively easily by multiplying the country revenue by the overall margin. These numbers tell you how much profit _Apple USA_ made in those countries. Say Apple USA typically makes $300 on an $800 iphone sold in Germany. Where should this $300 be taxed? To me, it seems perfectly reasonable that most of it is taxed in the US, since the iPhone was invented, developed, engineered in the US and ultimately the business and product was created in the US. And indeed this is how international corporation tax works by decades of rules on transfer pricing and how corporations are allowed to assign expenses and value along international supply chains. If you demanded that Apple pay full German corporation on ALL of the profits made by Apple in Germany, then you are claiming that the innovation, engineering and design that occurred in the US contributed ZERO value to the iPhone. And even if you did that, it would not change Apple's tax liability (much) as it would just mean shifting corporation tax rights from the US to Germany. It's not strange that all the European calls for shifting the right to tax corporates from the countries where they do the most work/create the value to other countries only seem to apply to "internet giants" but not "car giants" or "aviation giants" or "food giants" which whould result in European countries having to give up large amounts of corporation tax income to other countries.
    - mytailorisrich 7y ago
      > If you demanded that Apple pay full German corporation on ALL of the profits made by Apple in Germany That's just complying with the law. The rest of your comment is irrelevant and is not how taxation works. This is solely an issue of accounting and tax rules that allow an international company to effectively be taxed wherever this suits it best, i.e. where the rate is lowest, be reporting no or very low profits in countries with higher rates because 'profit' depends on many parameters which an international company can tweak. This is very difficult to prevent legally because the rules companies use are reasonable when running a business and thus cannot realistically be removed. The only solution left is therefore to tax what cannot be tweaked: revenue.
- js4ever 7y ago
  Read the whole conversation here, all posts against leftist agenda are being massively downvoted....
  - JanSt 7y ago
    Complying with the tax laws is now a leftist agenda? Calling out Apple getting an illegal tax deal in Ireland (below normal tax rate, against EU law) is leftist agenda? I think complying with rules is a very conservative thing to do.
    - js4ever 7y ago
      Complying with tax laws is exactly what apple and other big companies are doing right now. Leftist and Communist countries invent new taxes everyday (france have a 75% revenue tax, this is the closest thing to communism in the world) Only reason to support this stupid move by the french president is leftist agenda. Hopefully president trump have defeated this stupid move with retaliation taxes on france if they insist on this path... And they backed off :)
      - JanSt 7y ago
        > france have a 75% revenue tax, this is the closest thing to communism in the world Hacker News is not a place to spread fake news. France has a corporate tax rate of (at most) 33.3% on PROFIT. Average is more like 28% on profit.
        js4ever 7y ago
        Fake news??? What are you talking about? Please take few minutes to search on google before saying it's fake news... My message clearly said there is a 75% revenue tax in france and it's true. Why are you talking about corporate tax when i explicitly mentioned the 75% revenue tax? https://en.m.wikipedia.org/wiki/Taxation_in_France https://en.m.wikipedia.org/wiki/Taxation_in_France
        7y ago
luckylion 7y ago
> public corporations are obliged to publish accurate accounts Those aren't for taxation, though. It's "our global company made profits in country X". The taxation is interested in the actual taxable profits in country X, and those are close to zero, because of said tactic (license fees, consulting fees etc). It's really well documented, and there's little incentive to change the whole tax system to account for tax-evasion strategies.
- derriz 7y ago
  Those are US corporate accounts and absolutely are used as the basis for US taxation. The fact that a corporation can make billions of dollars of profit but not have to immediately pay corporation tax on the profit was a quirk of US corporate tax law. Those tax liabilities really do exist. Just because you don't pay tax immediately (say on your salary) doesn't mean you are paying zero tax.
  - luckylion 7y ago
    > Those are US corporate accounts and absolutely are used as the basis for US taxation. And this is about France. Not the US. US taxation doesn't matter to France. It's not their jurisdiction, they don't get a share of it, they cannot influence it. France. not US. France.

by derriz 7y ago

derriz 7y ago

I'm getting downvoted for responding to the claim "internet giants always declare zero profit" - which can be trivially refuted by cursory search. Alphabet declared a profit of about 7 billion dollars for Q1, 2019 - which is not zero. Apple declared around 11 billion for the same period - also non-zero. Facebook declared 3.5 billion, etc. etc. So no, internet giants do NOT declare zero profit.

luckylion 7y ago
> So no, internet giants do NOT declare zero profit. Right, but this is about France, where they didn't declare a profit of 7 billion dollars. Let's refrain from trying to be technically correct by not looking at the context of comments and then arguing against a straw man.
JanSt 7y ago
You are downvoted because you are ignoring the context. This is not about declaring zero profit in the US but in many EU countries - i.e. France. Now these countries fight back. https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_against_Apple_in_Ireland https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_agai... ps: I didn't downvote you
nindalf 7y ago
> internet giants do NOT declare zero profit Could you tell me their profits in France, Germany, Spain, Italy and then compare it to their profit in Ireland? The point here is not that they make no profit. It's that the Irish subsidiary charges the French, German, Spanish and Italian subsidiaries a "license" fee equal to the profit that each of them makes. So all of these subsidiaries make 0 profit, the Irish subsidiary makes a fat profit. But the kicker is that in Ireland their effective tax rate is nearly 0. So they pay no tax on all their European profits.
- derriz 7y ago
  If you're interested, you can estimate the profit on revenue in all countries relatively easily by multiplying the country revenue by the overall margin. These numbers tell you how much profit _Apple USA_ made in those countries. Say Apple USA typically makes $300 on an $800 iphone sold in Germany. Where should this $300 be taxed? To me, it seems perfectly reasonable that most of it is taxed in the US, since the iPhone was invented, developed, engineered in the US and ultimately the business and product was created in the US. And indeed this is how international corporation tax works by decades of rules on transfer pricing and how corporations are allowed to assign expenses and value along international supply chains. If you demanded that Apple pay full German corporation on ALL of the profits made by Apple in Germany, then you are claiming that the innovation, engineering and design that occurred in the US contributed ZERO value to the iPhone. And even if you did that, it would not change Apple's tax liability (much) as it would just mean shifting corporation tax rights from the US to Germany. It's not strange that all the European calls for shifting the right to tax corporates from the countries where they do the most work/create the value to other countries only seem to apply to "internet giants" but not "car giants" or "aviation giants" or "food giants" which whould result in European countries having to give up large amounts of corporation tax income to other countries.
  - mytailorisrich 7y ago
    > If you demanded that Apple pay full German corporation on ALL of the profits made by Apple in Germany That's just complying with the law. The rest of your comment is irrelevant and is not how taxation works. This is solely an issue of accounting and tax rules that allow an international company to effectively be taxed wherever this suits it best, i.e. where the rate is lowest, be reporting no or very low profits in countries with higher rates because 'profit' depends on many parameters which an international company can tweak. This is very difficult to prevent legally because the rules companies use are reasonable when running a business and thus cannot realistically be removed. The only solution left is therefore to tax what cannot be tweaked: revenue.
js4ever 7y ago
Read the whole conversation here, all posts against leftist agenda are being massively downvoted....
- JanSt 7y ago
  Complying with the tax laws is now a leftist agenda? Calling out Apple getting an illegal tax deal in Ireland (below normal tax rate, against EU law) is leftist agenda? I think complying with rules is a very conservative thing to do.
  - js4ever 7y ago
    Complying with tax laws is exactly what apple and other big companies are doing right now. Leftist and Communist countries invent new taxes everyday (france have a 75% revenue tax, this is the closest thing to communism in the world) Only reason to support this stupid move by the french president is leftist agenda. Hopefully president trump have defeated this stupid move with retaliation taxes on france if they insist on this path... And they backed off :)
    - JanSt 7y ago
      > france have a 75% revenue tax, this is the closest thing to communism in the world Hacker News is not a place to spread fake news. France has a corporate tax rate of (at most) 33.3% on PROFIT. Average is more like 28% on profit.
      - js4ever 7y ago
        Fake news??? What are you talking about? Please take few minutes to search on google before saying it's fake news... My message clearly said there is a 75% revenue tax in france and it's true. Why are you talking about corporate tax when i explicitly mentioned the 75% revenue tax? https://en.m.wikipedia.org/wiki/Taxation_in_France https://en.m.wikipedia.org/wiki/Taxation_in_France
        7y ago

luckylion 7y ago

> public corporations are obliged to publish accurate accounts Those aren't for taxation, though. It's "our global company made profits in country X". The taxation is interested in the actual taxable profits in country X, and those are close to zero, because of said tactic (license fees, consulting fees etc). It's really well documented, and there's little incentive to change the whole tax system to account for tax-evasion strategies.

derriz 7y ago
Those are US corporate accounts and absolutely are used as the basis for US taxation. The fact that a corporation can make billions of dollars of profit but not have to immediately pay corporation tax on the profit was a quirk of US corporate tax law. Those tax liabilities really do exist. Just because you don't pay tax immediately (say on your salary) doesn't mean you are paying zero tax.
- luckylion 7y ago
  > Those are US corporate accounts and absolutely are used as the basis for US taxation. And this is about France. Not the US. US taxation doesn't matter to France. It's not their jurisdiction, they don't get a share of it, they cannot influence it. France. not US. France.