3 ms·

Historically, it has always been understood that companies only pay income tax in their country of residence. BMW isn't taxed on its US income by the US, just l

Historically, it has always been understood that companies only pay income tax in their country of residence. BMW isn't taxed on its US income by the US, just like Google isn't taxed on its German income by Germany. I think it's more accurate to say that the so-called "Google tax" is actually a tariff on Internet services. Traditionally, tariffs were only levied on imported goods but the concept works for services as well. That said, if a country unilaterally imposes tariffs, it shouldn't be surprised to see retaliatory tariffs in return.

krzyk 7y ago
It depends what you mean by "understood". For me it is obvious that BMW should pay taxes in US for cars sold in US. Are they taxfree there? And Google should pay tax in country where they sell given good - assuming a tax can be goods based.
- tzs 7y ago
  > For me it is obvious that BMW should pay taxes in US for cars sold in US. Are they taxfree there? He was talking specifically about income tax, not other taxes such as sales taxes or import taxes.
jacquesm 7y ago
You can't really compare BMW and Google. Google provides a service, BMW sells goods. Services are usually taxed at the point of delivery, goods are usually taxed at the point of import or on the manufacturers net profits based on where they are based. Either way, taxes are paid, directly or indirectly. With Google the situation is such that all their income is abroad, and the service is free so not taxable. This is arguably a situation that the present day tax regime did not foresee so an adjustment is logical. A similar thing has happened inside the EU with respect to transnational sales tax. See MOSS.
kazagistar 7y ago
The concept of residence no longer makes any sense when a company is just a pile of associate shell companies across the globe and its residence is whatever tax haven lets them pay the least. Maybe instead of retaliatory tariffs, we should try to actually tax the massive tax evading tech giants in the USA properly.

krzyk 7y ago

It depends what you mean by "understood". For me it is obvious that BMW should pay taxes in US for cars sold in US. Are they taxfree there? And Google should pay tax in country where they sell given good - assuming a tax can be goods based.

tzs 7y ago
> For me it is obvious that BMW should pay taxes in US for cars sold in US. Are they taxfree there? He was talking specifically about income tax, not other taxes such as sales taxes or import taxes.

jacquesm 7y ago

You can't really compare BMW and Google. Google provides a service, BMW sells goods. Services are usually taxed at the point of delivery, goods are usually taxed at the point of import or on the manufacturers net profits based on where they are based. Either way, taxes are paid, directly or indirectly. With Google the situation is such that all their income is abroad, and the service is free so not taxable. This is arguably a situation that the present day tax regime did not foresee so an adjustment is logical. A similar thing has happened inside the EU with respect to transnational sales tax. See MOSS.

kazagistar 7y ago

The concept of residence no longer makes any sense when a company is just a pile of associate shell companies across the globe and its residence is whatever tax haven lets them pay the least. Maybe instead of retaliatory tariffs, we should try to actually tax the massive tax evading tech giants in the USA properly.