4 ms·

Isn't the US levying corporate tax on worlwide income anyway (since the last tax reform). So it's "only" a matter of deciding whether those taxes should be pai

by tonfa 5y ago

Isn't the US levying corporate tax on worlwide income anyway (since the last tax reform). So it's "only" a matter of deciding whether those taxes should be paid in US vs. other countries (and if the intellectual property was developped mostly in the US, it seems fair for the US to get most of it).

breakfastduck 5y ago
That isn't fair at all. If you're opening a location in another country, and that location takes X in revenue, the tax should be paid in that country. Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US?
- oblio 5y ago
  > Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US Random guess, they're American :-) Facebook, Google & co. are absolutely ravaging local economies, pardon me, disrupting legacy economies all over the world and a small chunk of that ends up as compensation in the US. The rest of that, FAANG are just sitting on it like a dragon hoarding gold, as far as I can see.
  - nivenkos 5y ago
    And the EU loves it! Absolutely no support or protection for local companies, Linux, etc. Where is our Baidu, Samsung, Yandex, or Sony, etc.? The whole continent is practically a vassal state of the US, under German administration.
    - breakfastduck 5y ago
      I’ve always found the “Brexit means the UK will become a US vassal” angle amusing for exactly that reason.
  - tonfa 5y ago
    I'm not from US. And it works the same for most countries, it just happens that those companies are based on the US and very visible, but if there is a EU corp that's heavily successful and all the development is done in EU why wouldn't the profit be booked in EU? (Other countries mostly have sales, that's what sales/vat are for) If instead of being a digital company it was a physical good company, would it be so controversial? E.g. goods are designed/produced in Italy, shipped and sold abroad (as a start in totally independent shops). Who should book the profit? Usually that will be the manufacturer and the local foreign stores have a much smaller margin. If now those shops are arm-length subsidiary, why should it be different?
    - breakfastduck 5y ago
      Why should it be different? Because you're extract money from a foreign country, utilizing their economy and giving nothing back in return for the infrastructure that's allowing you to make the money - that's why.
      - tonfa 5y ago
        That might be fair, but should be applied uniformly (that's a very different internet than the internet of the old days though). Would end up with every digital company having to register in country before accepting any user from that country (with maybe a facilitated process where they can self declare their per-country revenue). People already complain about the arbitrary geo-fencing, but that might indeed be inevitable.
        breakfastduck 5y ago
        Having users from a country != selling user data to businesses based in that country, though.
    - oblio 5y ago
      For physical goods the local ratio is much, much higher. Transport, storage, sales, whatever. Digitals goods are, comparatively, just teleported wherever, with minimal local interaction.
- DebtDeflation 5y ago
  >If you're opening a location in another country, and that location takes X in revenue, the tax should be paid in that country. It all hinges on how "location takes x in revenue" is defined. The simplified version of how all these transfer pricing tax avoidance schemes work is this: The good is produced in Country X (e.g., US) then sold to a subsidiary in the tax haven Country Y (e.g., Ireland or some Caribbean Island) for just a tiny amount of profit over cost, and so they owe taxes to Country X on that de minimis profit. The subsidiary in Country Y then sells the good to Country Z (e.g., the rest of the world) for the retail price, and so they earn almost all their profit in Country Y and so pay taxes there, but it's a tax haven so the actual tax rate is minimal. Logic would dictate that the profit should be recognized in the jurisdiction where the good was produced or the one where it was sold to the end customer or some combination of both, but logic does not prevail when it comes to tax law.
ToFab123 5y ago
I would say that it would more fair if tax was paid in the end users home country. This way these worldwide mega cooperation's would help every country where they sell their products instead of all the money goes to the US. In 10 years from now it could easily be China that owns many of these mega cooperation's. Would you find it fair if the tax money from china "MS", china "apple", china x all would go to China and the USA would get zero.
nly 5y ago
Microsoft Ireland isn't a US company and therefore not subject to US laws. Presumably they're free to charge Microsoft USA whatever they want for their services and licensing their IP.
- tonfa 5y ago
  Isn't it a subsidiary of a US company (in the end)? That was the main change of the TCJA, it stopped companies from doing the deferred taxation trick.

by tonfa 5y ago

breakfastduck 5y ago

That isn't fair at all. If you're opening a location in another country, and that location takes X in revenue, the tax should be paid in that country. Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US?

oblio 5y ago
> Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US Random guess, they're American :-) Facebook, Google & co. are absolutely ravaging local economies, pardon me, disrupting legacy economies all over the world and a small chunk of that ends up as compensation in the US. The rest of that, FAANG are just sitting on it like a dragon hoarding gold, as far as I can see.
- nivenkos 5y ago
  And the EU loves it! Absolutely no support or protection for local companies, Linux, etc. Where is our Baidu, Samsung, Yandex, or Sony, etc.? The whole continent is practically a vassal state of the US, under German administration.
  - breakfastduck 5y ago
    I’ve always found the “Brexit means the UK will become a US vassal” angle amusing for exactly that reason.
- tonfa 5y ago
  I'm not from US. And it works the same for most countries, it just happens that those companies are based on the US and very visible, but if there is a EU corp that's heavily successful and all the development is done in EU why wouldn't the profit be booked in EU? (Other countries mostly have sales, that's what sales/vat are for) If instead of being a digital company it was a physical good company, would it be so controversial? E.g. goods are designed/produced in Italy, shipped and sold abroad (as a start in totally independent shops). Who should book the profit? Usually that will be the manufacturer and the local foreign stores have a much smaller margin. If now those shops are arm-length subsidiary, why should it be different?
  - breakfastduck 5y ago
    Why should it be different? Because you're extract money from a foreign country, utilizing their economy and giving nothing back in return for the infrastructure that's allowing you to make the money - that's why.
    - tonfa 5y ago
      That might be fair, but should be applied uniformly (that's a very different internet than the internet of the old days though). Would end up with every digital company having to register in country before accepting any user from that country (with maybe a facilitated process where they can self declare their per-country revenue). People already complain about the arbitrary geo-fencing, but that might indeed be inevitable.
      - breakfastduck 5y ago
        Having users from a country != selling user data to businesses based in that country, though.
  - oblio 5y ago
    For physical goods the local ratio is much, much higher. Transport, storage, sales, whatever. Digitals goods are, comparatively, just teleported wherever, with minimal local interaction.
DebtDeflation 5y ago
>If you're opening a location in another country, and that location takes X in revenue, the tax should be paid in that country. It all hinges on how "location takes x in revenue" is defined. The simplified version of how all these transfer pricing tax avoidance schemes work is this: The good is produced in Country X (e.g., US) then sold to a subsidiary in the tax haven Country Y (e.g., Ireland or some Caribbean Island) for just a tiny amount of profit over cost, and so they owe taxes to Country X on that de minimis profit. The subsidiary in Country Y then sells the good to Country Z (e.g., the rest of the world) for the retail price, and so they earn almost all their profit in Country Y and so pay taxes there, but it's a tax haven so the actual tax rate is minimal. Logic would dictate that the profit should be recognized in the jurisdiction where the good was produced or the one where it was sold to the end customer or some combination of both, but logic does not prevail when it comes to tax law.

ToFab123 5y ago

I would say that it would more fair if tax was paid in the end users home country. This way these worldwide mega cooperation's would help every country where they sell their products instead of all the money goes to the US. In 10 years from now it could easily be China that owns many of these mega cooperation's. Would you find it fair if the tax money from china "MS", china "apple", china x all would go to China and the USA would get zero.

nly 5y ago

Microsoft Ireland isn't a US company and therefore not subject to US laws. Presumably they're free to charge Microsoft USA whatever they want for their services and licensing their IP.

tonfa 5y ago
Isn't it a subsidiary of a US company (in the end)? That was the main change of the TCJA, it stopped companies from doing the deferred taxation trick.