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I 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 i

by derriz 7y ago

I 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 ago
So 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 ago
  No - 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 ago
    Could 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
    - derriz 7y ago
      The numbers are in the article I linked. You're quoting a number from the Vestager ruling as if it were generally accepted but it has been contested and currently up to the European Court of Justice to decide whether she was correct in her interpretation. France tried something similar against Google and it was thrown out twice by French courts - https://www.reuters.com/article/us-france-google-tax/google-exempt-from-back-taxes-in-france-appeals-court-confirms-idUSKCN1S123F https://www.reuters.com/article/us-france-google-tax/google-... - because the attempt to tax Google for value generated in the US does not comply with international transfer pricing rules.
Faark 7y ago
> 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. But the mechanism we use to determine value is markets. Unless apple allows me to buy the same phone hardware without logo and slap my own initials on it, we can never know the value generated by this step. As such, we have to treat everything done internally / without markets as a single black box and tax it accordingly. The problem is this black box spanning across tax jurisdictions with no good way to determine where what share lies. The easy fix would be require all transactions between countries to be between independent companies on a market. I don't ever see this happening (for good reason), so different countries will have to work together to find ways everyone gets a fair share.

by derriz 7y ago

JanSt 7y ago

So 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 ago
No - 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 ago
  Could 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
  - derriz 7y ago
    The numbers are in the article I linked. You're quoting a number from the Vestager ruling as if it were generally accepted but it has been contested and currently up to the European Court of Justice to decide whether she was correct in her interpretation. France tried something similar against Google and it was thrown out twice by French courts - https://www.reuters.com/article/us-france-google-tax/google-exempt-from-back-taxes-in-france-appeals-court-confirms-idUSKCN1S123F https://www.reuters.com/article/us-france-google-tax/google-... - because the attempt to tax Google for value generated in the US does not comply with international transfer pricing rules.

Faark 7y ago

> 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. But the mechanism we use to determine value is markets. Unless apple allows me to buy the same phone hardware without logo and slap my own initials on it, we can never know the value generated by this step. As such, we have to treat everything done internally / without markets as a single black box and tax it accordingly. The problem is this black box spanning across tax jurisdictions with no good way to determine where what share lies. The easy fix would be require all transactions between countries to be between independent companies on a market. I don't ever see this happening (for good reason), so different countries will have to work together to find ways everyone gets a fair share.