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Corporate lawyers would argue this is already happening and they are partially correct its a really tough problem because there are valid points on both sides.

Corporate lawyers would argue this is already happening and they are partially correct its a really tough problem because there are valid points on both sides. Take a simple product. Say all the design and development work happens globally to create IP that is the how of the product. Production and integration into a product happens in southeast asia. Sales happen globally but lets look at a sale in Germany. If you sell it for Y , you manufacture it for X and you have a large sunk cost for the IP you need to recover C, your profit is Y-X - C/units sold. Units sold is unknown until you finish selling the product potentially years later. It's not at all cut and dry which part should get allocated what profit. What Germany is doing with this tax is arbitrarily pushing more of the profit to the end sale, where potentially none of the work to make the product and very minimal to none of the design work may have been done, which isn't necessarily right/fair/justified.

alkonaut 1y ago
Yes, this is arbitrary. So e.g in Germany there would be an argument about how much of the ad revenue Facebook does in Germany should be reduced by R&D costs that happened elsewhere.å
- snapplebobapple 1y ago
  why wouldn't it be reduced by R&D costs that happened elsewhere? if the German flew to wherever the R&D costs were incurred they would certainly be charged and net profit would be figured out accounting for those costs. if a German distributor bought whatever the product was and imported it to Germany they would be charged for those R&D costs and they would show an arms length transaction proving their profit was less by said R&D costs and if the government charged them tax as if they weren't charged for those R&D costs they would go out of business because they would not be profitable/have to spend so much estimating what portion of what they were charged was R&D (because they don't know and can't know for sure).
  - alkonaut 1y ago
    > why wouldn't it be reduced by R&D costs that happened elsewhere? It would be reduced. The profit can’t be 100% of their German as revenue because obviously they have costs elsewhere. But the argument of some countries is now that it also can’t be 0%.

alkonaut 1y ago

Yes, this is arbitrary. So e.g in Germany there would be an argument about how much of the ad revenue Facebook does in Germany should be reduced by R&D costs that happened elsewhere.å

snapplebobapple 1y ago
why wouldn't it be reduced by R&D costs that happened elsewhere? if the German flew to wherever the R&D costs were incurred they would certainly be charged and net profit would be figured out accounting for those costs. if a German distributor bought whatever the product was and imported it to Germany they would be charged for those R&D costs and they would show an arms length transaction proving their profit was less by said R&D costs and if the government charged them tax as if they weren't charged for those R&D costs they would go out of business because they would not be profitable/have to spend so much estimating what portion of what they were charged was R&D (because they don't know and can't know for sure).
- alkonaut 1y ago
  > why wouldn't it be reduced by R&D costs that happened elsewhere? It would be reduced. The profit can’t be 100% of their German as revenue because obviously they have costs elsewhere. But the argument of some countries is now that it also can’t be 0%.