6 ms·

Germany approves global minimum corporate tax

36 points by Innervisio 3y ago

java-man 3y ago
This will never happen here in the US - a much smaller amount will get spent on lobbying with a dazzling effect.
- dekayed 3y ago
  I believe the US does already have this (went into effect last year, maybe). It applies to corporations which have a revenue over $1B.
  - java-man 3y ago
    I stand corrected! I was wrong. Goes in effect this year [0]. [0] https://www.pwc.com/us/en/services/tax/library/corporate-book-minimum-tax-to-be-effective-for-2023.html https://www.pwc.com/us/en/services/tax/library/corporate-boo...
gustavus 3y ago
[flagged]
- Proven 3y ago
  [dead]
- genman 3y ago
  You are getting downvoted for your own ignorance.
- bestouff 3y ago
  USA already does this.
- rawgabbit 3y ago
  Airbus.
- RandomLensman 3y ago
  It's an OECD initiative, not an EU one.
  - sveme 3y ago
    Needs to be on top. All people that claim that this means companies will leave Germany forget that the whole OECD including the USA agreed to this. That‘s the global part in the title.
- matsemann 3y ago
  Where someone produces something is actually not that relevant for how/where taxes are paid. If you buy something in the US produced in China, the US gov still gets its money through sales tax / VAT, import fees etc. Is that parasitically extracting of value? But for tech, this doesn't happen. Leaving a hole in tax system.
- ahoka 3y ago
  Exports and imports of United States in 2021 The total value of exports (FoB) was 1,753,137 million. The total value of imports (CIF) was 2,932,976 million. Overall Exports and Imports for European Union 2021 The total value of exports (FOB) is US$ 2,576,314 million. The total value of imports (CIF) is US$ 2,510,166 million. I guess so?
- throw_a_grenade 3y ago
  https://nitter.net/kamilkazani/status/1721239370873688463 https://nitter.net/kamilkazani/status/1721239370873688463
- megasteel32 3y ago
  [flagged]
User23 3y ago
The most interesting part to me is that Germany is attempting to tax worldwide income. The USA does this of course, although there are tax treaties that can reduce US taxes on some foreign earnings. The USA can get away with this because most companies simply can’t exit the US so there will be assets to seize and so on. On the other hand Amazon or Google or even Apple could just nope out of Germany and preserve their rest of world income.
- smotched 3y ago
  They cant nope out of the entire EU though.
- Eddy_Viscosity2 3y ago
  I think Amazon and Apple noping out of Germany and EU would be a huge opportunity for new businesses to get a foothold. It would be great to get some competition back in the marketplace.
  - dmitrygr 3y ago
    I keep hearing “this is an huge opportunity” on every such discussion, and I keep wondering if people who say this are delusional or just clueless. You are NOT going to just magically get a new mobile os and a hardware maker from this. That is the sort of thing that needs billions in capital and a decade of work. Nobody will invest that, cause with Apple gone, the politicians who “took our iPhones away from us - their constituents” will be gone soon, and then so will the law. Thus there won’t BE a decade to develop a euroPhone and euroPhoneOS. And people who’d invest billions know all this. And won’t waste the billions…
    - Eddy_Viscosity2 3y ago
      Maybe. It could just mean that other players adapt to the new laws and eat their lunch because even if the profits made with the new laws may become less on a percentage basis, there is still a sh*t-ton of money on the table. Also, I'd still rather this than the policy of 'let the big corporations do whatever they want and don't pass laws they don't like'.
golemotron 3y ago
They shouldn't be surprised if corporations leave their market. I'm philosophical about this. The world is moving toward smaller more fragmented economies. On the negative side, supply chains will have to adjust and the world economy will become less dynamic. On the plus side, local economic ecosystems will develop. Diversity.
- AnthonyMouse 3y ago
  > They shouldn't be surprised if corporations leave their market. This is really just basic math. If your country isn't a larger percentage of their market than this would increase their global tax rate, staying in your country would cause them to lose money. It's also not obvious how they would expect to enforce this, or prevent it from leading to restructuring. If a German company buys widgets from China for $9 and sells them for $10, 90% of the revenue is going to China, but the Chinese company has no operations in Germany. If that means the foreign company (and so 90% of the revenue) isn't subject to your jurisdiction, that's what everybody is going to do. If you try to collect the tax at the border, all you've done is switched to VAT and you might as well do it formally instead of doing something unnecessarily complicated but equivalent. And it creates a new arbitrage opportunity where some country nominally taxes you at a particular rate but then you get the money back or some other equivalent value using whatever means causes it to not be considered taxable income.
- lern_too_spel 3y ago
  This is simply approval of an international treaty. Corporations would have to leave 140 markets to avoid it. https://taxfoundation.org/blog/global-tax-agreement/ https://taxfoundation.org/blog/global-tax-agreement/
- alphanullmeric 3y ago
  This is an EU country. Their response to not liking your overreach is to make it illegal to complain, mantle it illegal to leave.
perryizgr8 3y ago
I hope they realise that every tax levied on a corporation will simply get passed on to the consumer eventually. I don't think these additional taxes make any sense along with a personal income tax. It should be one or the other.
- appplication 3y ago
  The logical extension of this argument seems to be that the most consumer friendly policy would be to not tax corporations at all. I’m not sure I would agree with that.
  - zemvpferreira 3y ago
    I personally would. Corporations are not people and shouldn't be treated as such. Taxing personal income after receiving dividends or salary seems like a much better option all-around.
    - tryptophan 3y ago
      And is also much simpler and clearer to implement.
    - thelastgallon 3y ago
      Or, don't tax people's income; just tax corporations on profit/revenue. The wealthiest 0.1% have negligible income; the middle class bears the brunt of taxation. All companies run on corporate welfare. They refuse to do anything without significant funding from Govt. Big 3 Auto got many bailouts, $250B in profits but don't have any money to build charging stations/network or invest in making an EV that people would like to buy. Big Telcos took 100s of billions for broadband access, which they never delivered. Oil companies get trillions in subsidies every year[2]. Middle class pays all the taxes, both direct and indirect. Indirect taxes are inflation, people's hard-earned-and-saved money loses 98% of value in a few decades, thanks to Govt printing massive amounts of money and giving it to Corporations (privatizing profits and socialize losses). And we also pay for substantially degraded quality of life from externalities, pollution (air pollution kills 10M/year [3]), PFAS, climate change, lead, etc. And no, the top 1% is not wealthy, its the top 0.1% that matters. Media talks about the top 1%, these are usually people who worked their ass off sacrificing everything for 2+ decades to get to a decent income but, but thats temporary. Most of them are going to fall out of that income bracket, with layoffs, with burnout, the sacrifices made catch up to you, you either get physical or mental health issues. [1] Profits at the “Big 3” auto companies—Ford, General Motors, and Stellantis— skyrocketed 92% from 2013 to 2022, totaling $250 billion. Forecasts for 2023 expect more than $32 billion in additional profits: https://www.epi.org/blog/uaw-automakers-negotiations/ https://www.epi.org/blog/uaw-automakers-negotiations/ [2] https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel-subsidies-surged-to-record-7-trillion https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel... [3] https://www.nytimes.com/2022/07/08/opinion/environment/air-pollution-deaths-climate-change.html https://www.nytimes.com/2022/07/08/opinion/environment/air-p...
freefaler 3y ago
It'll still be possible to game that system because there information needed to enforce it should be given by the company itself. The game of where to put the profit and where to put the loss by big corporation with multiple companies registered around the world is the way effective taxes are lowered now. Apple has been doing that for years and the bigger the company the easier is to do it. The easiest way to avoid paying this is to shift the profits to another "consulting", "licensing", "distribution" deal. You pay this company almost all your profit and put the expenses in your P&L. Now you need to pay the tax only to what you've chosen to pay. Even with GAAP standards there are ways to do it. The "transfer pricing" quagmire exists for a reason, it's almost impossible to claim that this/that "licensing" deal isn't priced properly. It looks like this is a populist move to claim "we're taxing the rich", but it won't work as expected unless all the information from all the countries goes into 1 centralized place to be analysed. In Germany there is lot's of bad decisions and this is one of them. (like the one to shut down their reactors and burn coal instead).

36 points by Innervisio 3y ago

java-man 3y ago

This will never happen here in the US - a much smaller amount will get spent on lobbying with a dazzling effect.

dekayed 3y ago
I believe the US does already have this (went into effect last year, maybe). It applies to corporations which have a revenue over $1B.
- java-man 3y ago
  I stand corrected! I was wrong. Goes in effect this year [0]. [0] https://www.pwc.com/us/en/services/tax/library/corporate-book-minimum-tax-to-be-effective-for-2023.html https://www.pwc.com/us/en/services/tax/library/corporate-boo...

gustavus 3y ago

[flagged]

Proven 3y ago
[dead]
genman 3y ago
You are getting downvoted for your own ignorance.
bestouff 3y ago
USA already does this.
rawgabbit 3y ago
Airbus.
RandomLensman 3y ago
It's an OECD initiative, not an EU one.
- sveme 3y ago
  Needs to be on top. All people that claim that this means companies will leave Germany forget that the whole OECD including the USA agreed to this. That‘s the global part in the title.
matsemann 3y ago
Where someone produces something is actually not that relevant for how/where taxes are paid. If you buy something in the US produced in China, the US gov still gets its money through sales tax / VAT, import fees etc. Is that parasitically extracting of value? But for tech, this doesn't happen. Leaving a hole in tax system.
ahoka 3y ago
Exports and imports of United States in 2021 The total value of exports (FoB) was 1,753,137 million. The total value of imports (CIF) was 2,932,976 million. Overall Exports and Imports for European Union 2021 The total value of exports (FOB) is US$ 2,576,314 million. The total value of imports (CIF) is US$ 2,510,166 million. I guess so?
throw_a_grenade 3y ago
https://nitter.net/kamilkazani/status/1721239370873688463 https://nitter.net/kamilkazani/status/1721239370873688463
megasteel32 3y ago
[flagged]

User23 3y ago

The most interesting part to me is that Germany is attempting to tax worldwide income. The USA does this of course, although there are tax treaties that can reduce US taxes on some foreign earnings. The USA can get away with this because most companies simply can’t exit the US so there will be assets to seize and so on. On the other hand Amazon or Google or even Apple could just nope out of Germany and preserve their rest of world income.

smotched 3y ago
They cant nope out of the entire EU though.
Eddy_Viscosity2 3y ago
I think Amazon and Apple noping out of Germany and EU would be a huge opportunity for new businesses to get a foothold. It would be great to get some competition back in the marketplace.
- dmitrygr 3y ago
  I keep hearing “this is an huge opportunity” on every such discussion, and I keep wondering if people who say this are delusional or just clueless. You are NOT going to just magically get a new mobile os and a hardware maker from this. That is the sort of thing that needs billions in capital and a decade of work. Nobody will invest that, cause with Apple gone, the politicians who “took our iPhones away from us - their constituents” will be gone soon, and then so will the law. Thus there won’t BE a decade to develop a euroPhone and euroPhoneOS. And people who’d invest billions know all this. And won’t waste the billions…
  - Eddy_Viscosity2 3y ago
    Maybe. It could just mean that other players adapt to the new laws and eat their lunch because even if the profits made with the new laws may become less on a percentage basis, there is still a sh*t-ton of money on the table. Also, I'd still rather this than the policy of 'let the big corporations do whatever they want and don't pass laws they don't like'.

golemotron 3y ago

They shouldn't be surprised if corporations leave their market. I'm philosophical about this. The world is moving toward smaller more fragmented economies. On the negative side, supply chains will have to adjust and the world economy will become less dynamic. On the plus side, local economic ecosystems will develop. Diversity.

AnthonyMouse 3y ago
> They shouldn't be surprised if corporations leave their market. This is really just basic math. If your country isn't a larger percentage of their market than this would increase their global tax rate, staying in your country would cause them to lose money. It's also not obvious how they would expect to enforce this, or prevent it from leading to restructuring. If a German company buys widgets from China for $9 and sells them for $10, 90% of the revenue is going to China, but the Chinese company has no operations in Germany. If that means the foreign company (and so 90% of the revenue) isn't subject to your jurisdiction, that's what everybody is going to do. If you try to collect the tax at the border, all you've done is switched to VAT and you might as well do it formally instead of doing something unnecessarily complicated but equivalent. And it creates a new arbitrage opportunity where some country nominally taxes you at a particular rate but then you get the money back or some other equivalent value using whatever means causes it to not be considered taxable income.
lern_too_spel 3y ago
This is simply approval of an international treaty. Corporations would have to leave 140 markets to avoid it. https://taxfoundation.org/blog/global-tax-agreement/ https://taxfoundation.org/blog/global-tax-agreement/
alphanullmeric 3y ago
This is an EU country. Their response to not liking your overreach is to make it illegal to complain, mantle it illegal to leave.

perryizgr8 3y ago

I hope they realise that every tax levied on a corporation will simply get passed on to the consumer eventually. I don't think these additional taxes make any sense along with a personal income tax. It should be one or the other.

appplication 3y ago
The logical extension of this argument seems to be that the most consumer friendly policy would be to not tax corporations at all. I’m not sure I would agree with that.
- zemvpferreira 3y ago
  I personally would. Corporations are not people and shouldn't be treated as such. Taxing personal income after receiving dividends or salary seems like a much better option all-around.
  - tryptophan 3y ago
    And is also much simpler and clearer to implement.
  - thelastgallon 3y ago
    Or, don't tax people's income; just tax corporations on profit/revenue. The wealthiest 0.1% have negligible income; the middle class bears the brunt of taxation. All companies run on corporate welfare. They refuse to do anything without significant funding from Govt. Big 3 Auto got many bailouts, $250B in profits but don't have any money to build charging stations/network or invest in making an EV that people would like to buy. Big Telcos took 100s of billions for broadband access, which they never delivered. Oil companies get trillions in subsidies every year[2]. Middle class pays all the taxes, both direct and indirect. Indirect taxes are inflation, people's hard-earned-and-saved money loses 98% of value in a few decades, thanks to Govt printing massive amounts of money and giving it to Corporations (privatizing profits and socialize losses). And we also pay for substantially degraded quality of life from externalities, pollution (air pollution kills 10M/year [3]), PFAS, climate change, lead, etc. And no, the top 1% is not wealthy, its the top 0.1% that matters. Media talks about the top 1%, these are usually people who worked their ass off sacrificing everything for 2+ decades to get to a decent income but, but thats temporary. Most of them are going to fall out of that income bracket, with layoffs, with burnout, the sacrifices made catch up to you, you either get physical or mental health issues. [1] Profits at the “Big 3” auto companies—Ford, General Motors, and Stellantis— skyrocketed 92% from 2013 to 2022, totaling $250 billion. Forecasts for 2023 expect more than $32 billion in additional profits: https://www.epi.org/blog/uaw-automakers-negotiations/ https://www.epi.org/blog/uaw-automakers-negotiations/ [2] https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel-subsidies-surged-to-record-7-trillion https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel... [3] https://www.nytimes.com/2022/07/08/opinion/environment/air-pollution-deaths-climate-change.html https://www.nytimes.com/2022/07/08/opinion/environment/air-p...

freefaler 3y ago

It'll still be possible to game that system because there information needed to enforce it should be given by the company itself. The game of where to put the profit and where to put the loss by big corporation with multiple companies registered around the world is the way effective taxes are lowered now. Apple has been doing that for years and the bigger the company the easier is to do it. The easiest way to avoid paying this is to shift the profits to another "consulting", "licensing", "distribution" deal. You pay this company almost all your profit and put the expenses in your P&L. Now you need to pay the tax only to what you've chosen to pay. Even with GAAP standards there are ways to do it. The "transfer pricing" quagmire exists for a reason, it's almost impossible to claim that this/that "licensing" deal isn't priced properly. It looks like this is a populist move to claim "we're taxing the rich", but it won't work as expected unless all the information from all the countries goes into 1 centralized place to be analysed. In Germany there is lot's of bad decisions and this is one of them. (like the one to shut down their reactors and burn coal instead).