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I'm getting downvoted for responding to the claim "internet giants always declare zero profit" - which can be trivially refuted by cursory search. Alphabet dec

by 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.
    - derriz 7y ago
      No it's not complying with any law. For example, Germany car exporters do not pay corporation tax on the _whole_ supply chain profit in the countries where sales are ultimately made. Of that example $800 retail price, the cost break down (I'm making up these figures) might look something like: $80 German sales tax, $50 for the German retail outlet, $30 Germany logistics and distribution, $50 Ireland internationalization and packaging, $70 Chinese manufacturing, $250 USA engineering and development. I don't see why you feel the correct thing would be for Germany to tax all of the $300 profit, given Ireland, China and particularly the US contributed far more to the value of the finished product. This idea - when a product or service involves international supply chains - that the profit is taxable based on where the value was created has been the basis of interational trade. And there are huge bodies of work and accounting rules on how corporations are allowed to split that $800 up among all the countries involved in the supply chain.
      - mytailorisrich 7y ago
        You mentioned profits in Germany, now you're talking about the whole supply chain's profit or cost... It's difficult to follow your argument. The issue, which I explained, is that they can set prices along the supply chain to arbitrarily end up with 0 profit in Germany (following your example) and all the profit with a notional trading or licensing subsidiary located where tax is lowest.
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

by derriz 7y ago

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.
  - derriz 7y ago
    No it's not complying with any law. For example, Germany car exporters do not pay corporation tax on the _whole_ supply chain profit in the countries where sales are ultimately made. Of that example $800 retail price, the cost break down (I'm making up these figures) might look something like: $80 German sales tax, $50 for the German retail outlet, $30 Germany logistics and distribution, $50 Ireland internationalization and packaging, $70 Chinese manufacturing, $250 USA engineering and development. I don't see why you feel the correct thing would be for Germany to tax all of the $300 profit, given Ireland, China and particularly the US contributed far more to the value of the finished product. This idea - when a product or service involves international supply chains - that the profit is taxable based on where the value was created has been the basis of interational trade. And there are huge bodies of work and accounting rules on how corporations are allowed to split that $800 up among all the countries involved in the supply chain.
    - mytailorisrich 7y ago
      You mentioned profits in Germany, now you're talking about the whole supply chain's profit or cost... It's difficult to follow your argument. The issue, which I explained, is that they can set prices along the supply chain to arbitrarily end up with 0 profit in Germany (following your example) and all the profit with a notional trading or licensing subsidiary located where tax is lowest.

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