EU Plans to Add 3% Tax On Tech Giants' Revenue Based on Customers' Location

[Raevenlord]

"Treat equally that which is equal, treat differently that which is different" seems to be the motto of the new EU proposal for increased taxation on tech giants. The proposal, which will be presented just this Wednesday (March 21st), could lead to increased taxation to tech giants that do business with EU customers by as much (or as little, depending on your point of view) as 3% of their gross revenue (the value still isn't final, but should stay within 1% and 5%). It isn't clear how the customer location business will be defined, but it seems that the EU believes its citizens provide increased revenues for companies than other citizens in other parts of the less developed world do.

This move specifically aims to capture real growth and value of digital-first companies, such as Facebook and Amazon. These are types of companies that the EU feels aren't being taxed proportionally (meaning, they currently provide less than they should to public coffers) to the true value they derive from the region. As most EU matters, any tax proposal will need the unanimous approval of all 28 current members before turning into law, so one country alone could block it.



View at TechPowerUp Main Site

 

[FordGT90Concept]

...it seems that the EU believes its citizens provide increased revenues for companies than other citizens in other parts of the less developed world do.

If that's the language they used to promote the idea, holy pompous. It's not like EU is going to send that 3% to enrich those "less developed" countries. You also don't see countries like USA and China trying to pull off a stunt like this.

Was Amazon directly named? Most of their revenue comes from sales of physical goods. What's this going to mean for companies like Valve, GOG, and Netflix which are completely digital?

Instead of looking ways to rob more people of more money, maybe they should try to find a way to stop spending so much money so they don't have to collect it in the first place. If this measure passes, it's yet another step in the wrong direction for the EU.

 

[yotano211]

If that's the language they used to promote the idea, holy pompous. It's not like EU is going to send that 3% to enrich those "less developed" countries. You also don't see countries like USA and China trying to pull off a stunt like this.

Was Amazon directly named? Most of their revenue comes from sales of physical goods. What's this going to mean for companies like Valve, GOG, and Netflix which are completely digital?

Instead of looking ways to rob more people of more money, maybe they should try to find a way to stop spending so much money so they don't have to collect it in the first place. If this measure passes, it's yet another step in the wrong direction for the EU.

The same is kinda or going to be needed in some states in the US, like Oklahoma. This state has to increase taxes all around, the state is very heavy in the red for the year.

 

[R0H1T]

If that's the language they used to promote the idea, holy pompous. It's not like EU is going to send that 3% to enrich those "less developed" countries. You also don't see countries like USA and China trying to pull off a stunt like this.

Was Amazon directly named? Most of their revenue comes from sales of physical goods. What's this going to mean for companies like Valve, GOG, and Netflix which are completely digital?

Instead of looking ways to rob more people of more money, maybe they should try to find a way to stop spending so much money so they don't have to collect it in the first place. If this measure passes, it's yet another step in the wrong direction for the EU.

The US does its bit by penalizing companies like BP, VW et al to the tune of tens of billions of dollars, no one else does that. As for China, they don't allow competition in the first place ~ they kill foreign companies slowly but surely, making them irrelevant like Amazon China or Google.

Well how about corporations don't stash their $200 billion in Ireland, what's the excuse for not paying their fair share? As for the fair share, it's totally up to the EU (or US) as to how much they tax them.

It's always fascinating how EU vs US debate goes wrt taxation & corporate greed. That's not to say that people in other parts of the world like their overlords, but we also believe that corporations aren't nearly as goody two shoes that they're made out to be. In essence megacorps & govt are two sides of the same coin.

 

[FordGT90Concept]

Spoiler: This is all off topic...

The same is kinda or going to be needed in some states in the US, like Oklahoma. This state has to increase taxes all around, the state is very heavy in the red for the year.

Correct me if I'm wrong but Oklahoma's economy is mostly derived from oil and agriculture. Both are dictated by their respective price and Oklahoma has little impact on either. Oklahoma needs to try to diversify its economy more or at least grow parts of the economy that aren't stagnate.

The US does its bit by penalizing companies like BP, VW et al to the tune of tens of billions of dollars, no one else does that.

BP = Disaster relief and clean up. If BP dumped 4.9 million barrels of oil in the North Sea, how would you feel about it? Remember, Haliburton was complicit as well.
VW = You don't *defeat* regulations, you *comply* with them. EU would be no more gentle on Ford or GM if they tried to pull the same stunt in their territory.

As for China, they don't allow competition in the first place ~ they kill foreign companies slowly but surely, making them irrelevant like Amazon China or Google.

The auto industry is doing well in China. Tech is harder because it's easier for home-grown businesses like Alibaba to reach the Chinese than foreign companies like Amazon. The language barrier has a lot to do with that.

Well how about corporations don't stash their $200 billion in Ireland, what's the excuse for not paying their fair share? As for the fair share, it's totally up to the EU, or US in case pf Apple.

That money was earned in EU. It stays there because USA usually has a hefty tax on repatriation of funds. Trump last year did a discount on repatriation which is why a lot of that money came back to the USA and contributed to that 3% growth for 2017. A long term solution to that problem involves major tax reform. Anyone tries to even talk about major tax reform...well...Herman Cain 2012. 'Nuff said.

Why Ireland? Ireland is the most corporate tax friendly country in the EU. I think Delaware is the equivalent in the USA.

It's always fascinating how EU vs US debate goes wrt taxation & corporate greed. That's not to say that people in other parts of the world like their overlords, but we also believe that corporations aren't nearly as goody two shoes that they're made out to be. In essence megacorps & govt are two sides of the same coin.

Corporations do whatever they think they can get away with. VW is exhibit A on that.

 

[R0H1T]

BP = disaster relief and clean up. If BP dumped 4.9 million barrels of oil in the North Sea, how would you feel about it? Remember, Haliburton was complicit as well.
VW = they swore to comply with EPA regulations in the USA and they not only violated that, they did so with malicious intent. What VW did was about the closest thing to murder a corporation can get. You don't *defeat* regulations, you *comply* with them.

Taxes are also a part of these regulations, skirting them intentionally isn't any less devious. Though I'll admit the loopholes, which companies use, were readily paid for by lobbyists who're now a part of modern political system.

The auto industry is doing well in China. Tech is harder because it's easier for home-grown businesses like Alibaba to reach the Chinese than foreign companies like Amazon. The language barrier has a lot to do with that. So does the Great Firewall of China.

I don't think language was the reason why Amazon failed in China, definitely not for Google. One of the many BS reasons that they get away with, even after being a signatory to the WTO.

That money was earned in EU. It stays there because USA usually has a hefty tax on repatriation of funds. Trump last year did a discount on repatriation which is why a lot of that money came back to the USA and contributed to that 3% growth for 2017.

This stuff pays doesn't it ~ don't pay x% taxes, use loophole to stash your cash away. Then when the govt needs money, use generous terms to bring it back & pay less than half (or whatever) instead of what you'd originally have had to.

Corporations do whatever they think they can get away with. VW is exhibit A on that.

Yes so why do they need more tax breaks, loopholes ergo power? If anything they should be taxed more IMO & earning individuals less.

 

[FordGT90Concept]

Spoiler: Off topic...

I don't think language was the reason why Amazon failed in China, definitely not for Google. One of the many BS reasons that they get away with, even after being a signatory to the WTO.

Alibaba = Amazon
Baidu = Google
Both companies have presence in China but they can't beat the homegrown alternative that's designed specifically for the Chinese. Alibaba is basically a small business incubator (Amazon doesn't do that).

How did Google get the crown in USA? By getting more relevant results than Yahoo, MSN, AskJeeves, etc. People don't have much loyalty to search engines because if they know something exists and the search engine can't find it, they'll try another.

Yes so why do they need more tax breaks, loopholes ergo power? If anything they should be taxed more IMO & earning individuals less.

They're not talking about supplanting taxes with this: they're talking about raising more. If it is, in fact, companies like Amazon being effected by this, they'll make up for it some how (e.g. laying off 3% of their staff in EU). If they can afford to, they might just add the 3% on at checkout like a sales tax. It's still coming from the people that shop at Amazon.

Rereading the OP, it sounds like it is a corporate income tax. In other words, the companies can collect the difference any way they feel they can.

 

[RejZoR]

Nonsense. I'd prefer for EU to deal with unethical policies done by these companies, you know, like mass harvesting of user data, censorship, manipulation of access to information and stuff like this. You know, the shit that actually matters.

 

[R0H1T]

Spoiler: Off topic...

Alibaba = Amazon
Baidu = Google
Both companies have presence in China but they can't beat the homegrown alternative that's designed specifically for the Chinese. Alibaba is basically a small business incubator (Amazon doesn't do that).

How did Google get the crown in USA? By getting more relevant results than Yahoo, MSN, AskJeeves, etc. People don't have much loyalty to search engines because if they know something exists and the search engine can't find it, they'll try another.

They're not talking about supplanting taxes with this: they're talking about raising more. If it is, in fact, companies like Amazon being effected by this, they'll make up for it some how (e.g. laying off 3% of their staff in EU). If they can afford to, they might just add the 3% on at checkout like a sales tax. It's still coming from the people that shop at Amazon.

Rereading the OP, it sounds like it is a corporate income tax. In other words, the companies can collect the difference any way they feel they can.

Which they'll continue to do any which way they can. But there are other, more creative ways to tax corporations & ease the burden on common man.

For instance in India after the GST implementation we have a fully digital system tracking the movement of Goods & sercices ~ right from its origin till the end user. Now I know it's far too complicated & the implementation is shoddy but it has real potential. For instance if you've paid GST on certain goods & then use the goods for your own business, like packaged flour in a restaurant, then you can claim a deduction for the amount paid at the time of filing taxes. There's a GSTIN which tracks your business & is necessary to get the deduction.

Something like this could easily be extended to consumers, so that they pay less income tax at the end of the year. Of course this could be seen as an overarch of big brother, or big govt, but there's ways where consumer isn't worse off at the end.

 

[Nergal]

Pay fair taxes in the place the ethically earned money was generated.

Problem is that "fair" is not defined and ethically is only what corporations can´t get away with.

We all know that the actual money those companies pay on their profits is totally unequal to what smaller, local ones have to pay.
If big govt. don´t step up to tackle this, govt and by extension, people, will loose any power they currently have.

And a 3% tax to compensate is a good start because it would be a first actual action instead of discussing what would be better instead (that may take years to try to implement)

 

[bug]

If anything, this only goes to show yet another aspect where the EU is not actually a union
You don't see the federal government trying to fix Google moving revenue from CA to WI, do you?

 

[Fx]

If that's the language they used to promote the idea, holy pompous. It's not like EU is going to send that 3% to enrich those "less developed" countries.

LOL! This was my exact first thought. This is bogus.

 

[Easo]

LOL! This was my exact first thought. This is bogus.

EU has poured billions upon billions into EU newcomers from Central and Eastern Europe. No, it is not a bogus.

 

[Fx]

EU has poured billions upon billions into EU newcomers from Central and Eastern Europe. No, it is not a bogus.

I say one thing, you say another. Until I see a sheet which itemizes what they take from one to give to another and how much they pocket, I won't assume, believe or lean towards a noble or charitable cause...

 

[windwhirl]

Interesting. Argentina is planning something similar, but since most tech companies don't have any offices in the country, the tax office will add VAT (21%) and income (35%) taxes straight into the credit cards monthly bills...

Honestly, is hard to say what's right or wrong with this. So it will all come down to how they handle this. But it's true that big tech companies don't pay taxes like most other businesses... So in general I think it's OK...

 

[Indra18]

35-49% will more fair-play to usa gov.

 

[Ubersonic]

Finally EU taking serious action on the big corporate tax evaders

 

[bug]

Finally EU taking serious action on the big corporate tax evaders

Yeah, God forbid they clean up the rules to the point abusing becomes impossible. Let's add one more rule on top instead.

 

[Ubersonic]

The US does its bit by penalizing companies like BP, VW et al to the tune of tens of billions of dollars, no one else does that.

Well said, hell in the BP case the US government flat out extorted them by demanding money they didn't owe or they would limit their ability to conduct business in the US in future.

 

[bug]

Well said, hell in the BP case the US government flat out extorted them by demanding money they didn't owe or they would limit their ability to conduct business in the US in future.

Afaik, BP was guilty of gross neglect...

 

[timta2]

Well said, hell in the BP case the US government flat out extorted them by demanding money they didn't owe or they would limit their ability to conduct business in the US in future.

All of that oil, that they spilled, is still there. The fines were nowhere near enough.

 

[R0H1T]

All of that oil, that they spilled, is still there. The fines were nowhere near enough.

Then there's Bhopal, about 2 hours from where I live. The greatest industrial disaster ever, look it up.

As for BP, it was also a victim of lots of frivolous lawsuits & they had to pay/settle all of them even though they shouldn't have had to.

 

[Nergal]

I say one thing, you say another. Until I see a sheet which itemizes what they take from one to give to another and how much they pocket, I won't assume, believe or lean towards a noble or charitable cause...

http://www.europarl.europa.eu/external/html/budgetataglance/default_en.html

Here you go!
Nicely how much money of each country go to which departments; and how much each country receives in their departments

Click on Poland for example
It pays: 3,718.0 M€
It receives: 13,357.7 M€

If you dig you can find the actual detailed numbers.

So are you a believer now?
Or will you look to sources you want to believe to confirm your own believes?

I don´t even care if some EU people get rich on it.
Look at it like a bank, but instead redistributing wealth for the people and protecting them from corporations and other nations.
Perhaps you don´t like the fact that bank-people get rich, but you agree that banks are needed. You could make the same case for the EU.

 

[bug]

I say one thing, you say another. Until I see a sheet which itemizes what they take from one to give to another and how much they pocket, I won't assume, believe or lean towards a noble or charitable cause...

It's not charity. It's the same reason you can have a nice house(country) in a bad neighborhood. It's also why there's union in the first place: help those in need, so that when you're in need, there'll be someone to help you.
Of course, if you look at the status quo today, it seems highly unlikely Central and Eastern European countries will ever be in a position to help anyone else. But that's another story.

 

[Easo]

I say one thing, you say another. Until I see a sheet which itemizes what they take from one to give to another and how much they pocket, I won't assume, believe or lean towards a noble or charitable cause...

It was never supposed to be a charity, but a system where countries work together and help the weaker ones, so that they can do more in the long run.
I do perfectly well see the repaired roads and successful projects for farmers, which would not have been possible otherwise. Also, Nergal just provided you with some numbers.