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The point here is that those sales in any country benefit also from the public infrastructures: even where there is the least use of the public money, those inf
by GlobalFrog 7y ago
The point here is that those sales in any country benefit also from the public infrastructures: even where there is the least use of the public money, those infrastructures play a big role in allowing any company, national or foreign, to exercise their activity and make profits. Most of the countries in the world have their internet/telecom networks setup by private companies, but they are helped a lot by the public sector. Those investments help the internet giants to operate and again, to make profits, so my view is that they should be taxed just the same as the local companies. Even in the US, the public sector is mandatory when there are big infrastructures to be put in place. Which is for example a reason why the foreign automakers can be taxed in the USA, because they benefit from this.
If you think that all exports to any country should be taxed only in the country of origin, no foreign company would be be taxed in the USA anymore for any of their export there, and going back to my example, no german automaker should be taxed for their cars (invented, developped and engineered in Germany) in the USA. Given that they benefit from the public spending on the roads and so on, that wouldn't be fair also.
So in a way, this french digital tax is just the same as the USA not allowing the deferred taxation of foreign income, albeit about a single sector. Therefore, I don't quite see why the USA are seeing it as unfair, given they are doing the same thing.
Actually, what all countries should do is to have the exact same law as the USA, to be able to tax all companies (internet giants included) for the real profits they make locally, by removing intra-corporation licenses or fees that allow for the tax evasion to work. But obviously, those companies would probably find another scheme to do that, so I am really wondering whether taxing the income and not the profits is such a bad idea. It would have to be offset by a mechanism on the real expenses excluding intra-corp ones.
- derriz 7y agoI agree with a lot of what you say here. Corporations benefit greatly from public infrastructure and they should pay taxes for the benefits they derive from it. A sales tax or VAT achieves these goals. But you misunderstand my argument - I have never claimed that Apple only pay corporation tax in the US. My arguement is that Apple should (and do) pay taxes based on where the work/value was done. In a post above I suggest that an $800 iPhone could consist of something like: $50 for the French shop selling it, $80 French sales tax, $30 French logistics and distribution, $40 Irish localization, $40 Chinese manufacturing, $300 US engineering and and management. Leaving $300 or so profit. International tax law says that each of the countries involved in this supply chain: USA, China, Ireland and France only get to tax the value added in that country. This is why nearly all the profit is taxable in the US and very little is taxable in in France (and Ireland for that matter) as logistics does not hadd a huge amount of value. And I disagree with you that all the $300 profit in this example should be taxable in France just because the sale occurred in France.
- JanSt 7y agoSo Ireland added $35+bn worth of PROFIT/year through its irish subsidy? And the rest of the EU basically nothing? Ireland‘s illegal Apple tax deal was ok? France says internet giants circumvent their tax system (and it‘s obvious they do). It‘s France right to try to stop that.
- derriz 7y agoNo - it's about $4bn by my calculation. See https://www.irishtimes.com/business/technology/apple-records-global-sales-of-119bn-in-ireland-1.3283066 https://www.irishtimes.com/business/technology/apple-records... on Apple's Irish tax bill. This is probably a reasonable margin given that the vast bulk of the revenue accrues from low margin logistics and packaging. France can tax whatever it wants. But it should later complain if this provokes a tit-for-tat reaction from the US or other trading partners if they decide to tax French imports. I know it's not a popular argument here but I genuinely fear a future world with escalating tarrifs and trade barriers and I think there is a huge amount of FUD spread about how international trade works.
- JanSt 7y agoCould you give your calculations? Because every source shows other numbers than your calculation. http://economic-incentives.blogspot.com/2016/03/apple-sales-internationalby-numbers.html http://economic-incentives.blogspot.com/2016/03/apple-sales-... You can also read up the numbers in official EU documents: http://ec.europa.eu/competition/state_aid/cases/253200/253200_1851004_674_2.pdf http://ec.europa.eu/competition/state_aid/cases/253200/25320... >Commissioner Margrethe Vestager, in charge of competition policy, said: "Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014." https://europa.eu/rapid/press-release_IP-16-2923_en.htm https://europa.eu/rapid/press-release_IP-16-2923_en.htm