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Europe Plans Special Tax For Google, Apple, Facebook, and Amazon (theregister.co.uk) 253

An anonymous reader quotes a report from The Register: Bruno Le Maire, France's minister for the economy, has revealed that a plan to levy a special tax on Google, Apple, Facebook, and Amazon will soon be revealed by European authorities. Le Maire told French newspaper Le Journal du Dimanche "A European directive will be unveiled in the coming weeks, the minister reveals, and it will mark a considerable step forward." The minister told the paper that a tax of between two and six per cent has been considered, with the proposal to be "closer to two than six." The proposed tax will be levied on the four companies' turnover, rather than profits. Taxing turnover is hoped to offer a simple way to tax the companies, as all use legal-but-cynical ways to minimize their taxable income. Le Maire added that a turnover tax is seen as being quick to implement and that the four companies know they're going to have to pay more tax in Europe, so may be amenable to such an arrangement.
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Europe Plans Special Tax For Google, Apple, Facebook, and Amazon

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  • Turnover tax? (Score:4, Interesting)

    by SultanCemil ( 722533 ) on Monday March 05, 2018 @10:33PM (#56214401)
    Seems like a horrible idea - what if the company makes a real loss and can't pay the tax? There's a reason that we tax profits.
    • Re:Turnover tax? (Score:4, Insightful)

      by jrumney ( 197329 ) on Monday March 05, 2018 @11:26PM (#56214585)
      Maybe the companies should have thought about that before trying to game the rules against the interests of the people who make the rules.
      • Re:Turnover tax? (Score:4, Insightful)

        by 93 Escort Wagon ( 326346 ) on Monday March 05, 2018 @11:55PM (#56214629)

        Maybe the companies should have thought about that before trying to game the rules against the interests of the people who make the rules.

        There's an old saying - "it takes two to tango".

        But it's nice to know that enlightened European companies never try to take advantage of loopholes in the various European countries' tax laws.

        • by tsa ( 15680 )

          You probably never heard of those cases but the EU has fine quite a few big European companies for billions of euros because they broke the laws too.

          • by Dog-Cow ( 21281 )

            None of the four companies are breaking any tax laws. Or, at least, they aren't being accused of such. Even the Apple case in Ireland was a complaint agains the government of Ireland, not against Apple.

        • Re:Turnover tax? (Score:5, Informative)

          by serviscope_minor ( 664417 ) on Tuesday March 06, 2018 @02:42AM (#56215007) Journal

          There's an old saying - "it takes two to tango".

          A large number of old saying are stupid.

          But it's nice to know that enlightened European companies never try to take advantage of loopholes in the various European countries' tax laws.

          The EU fines and cracks down on Euopean companies all the time. But when they do it to an American company, it's met with a huge outpouring of whining on slashdot.

        • Maybe the companies should have thought about that before trying to game the rules against the interests of the people who make the rules.

          There's an old saying - "it takes two to tango".

          But it's nice to know that enlightened European companies never try to take advantage of loopholes in the various European countries' tax laws.

          Plenty of European companies try to do that. If you had bothered to run a few basic web searches you would have found that out inside of five minutes. To cite just one example the German intelligence service obtained bank data detailing tax evasion of German citizens and organisations and a shit-ton of people and companies ended up having to pay up. Speaking as a European: 'Two thumbs up!!' I'd be just fine with every European intelligence service receiving funding for a permanent department who's only job

        • by mjwx ( 966435 )

          Maybe the companies should have thought about that before trying to game the rules against the interests of the people who make the rules.

          There's an old saying - "it takes two to tango".

          But it's nice to know that enlightened European companies never try to take advantage of loopholes in the various European countries' tax laws.

          They try and then get smacked down hard... every few years someone forgets and get another smacking. It must be nice living somewhere where corporate interests are treated better than citizens.

          I'm sure the EU have a nice name for this tax but it's really the "tax for not paying your tax, tax".

    • That's just a risk of doing business. A tech company with losses so heavy that it cannot pay a ~2% turnover tax likely wasn't going to survive without paying tax either.

      Besides, if I understand the article correctly, this is an offer to the mentioned four tech companies as an alternative to thorough legal probing into their tax avoidance constructs, so they're free to reject it. And as far as I know all four are making a profit.

      • The way I see it is as an acceptable tradeoff for GAFAs. They would not be taxed as much as the next guy, but that's a way to make de deal quickly (read: within the current electoral mandate). If GAFAs oppose this offer, I suspect a future version would be less favorable.

        Something 100% certain: people here in EU (myself including) are sick of tax evasion that cost EU countries fortunes, raise my own taxes & creates unfair competition. This situation is solely due to an obsolete tax system, that needs a

    • what if the company makes a real loss and can't pay the tax?

      If one of those four companies makes a "real loss" and can't pay the tax, then there's either 1) a bigger problem than the tax, or 2) the company is lying about how much they're making.

      EU has the right idea. Tax these multinationals until they learn to behave. Then tax them some more so they don't even think about fucking around again. After that, keep them on a real short leash.

      Now if only we could get governments to do the same thing with bill

    • On companies as successful as these companies I think it's an awesome idea ! There's no way for them to weasel their way out of a tax on turnover.

      If it seems a bit harsh, so is avoiding tax for decades whilst making profits off of people who need schools, hospitals and are facing retirement into poverty!

      • On companies as successful as these companies I think it's an awesome idea ! There's no way for them to weasel their way out of a tax on turnover.

        It's also a lot fairer that taxes are calculated the same for everybody. Why is it that companies get to subtract their costs and pay tax on the result while individuals are taxed on revenue, not profit? To add insult to injury, in addition to only get taxed on money that they were not able to spend, the companies get a lower tax rate than individuals too.

        • Why is it that companies get to subtract their costs and pay tax on the result while individuals are taxed on revenue, not profit?

          Because a business purchases productive output from other businesses, pays wages to workers who produce, and keeps the remaining revenue as profit. Thus the worker produces, and his wage represents the productive output; the suppliers also produce, and so the cost to the business to purchase that input is their productive output; and, of course, the business's profits are tied to nothing except the productive output of the business (which is the same productive output as the business's employees).

          That m

          • Because a business purchases productive output from other businesses, pays wages to workers who produce, and keeps the remaining revenue as profit. Thus the worker produces, and his wage represents the productive output; the suppliers also produce, and so the cost to the business to purchase that input is their productive output; and, of course, the business's profits are tied to nothing except the productive output of the business (which is the same productive output as the business's employees).

            Understood

            That means taxing corporate net profits and not their expenses taxes production: if a table is made, taxing the worker's wages and the corporate profits both of the table manfuacturer and all involved suppliers (including the truckers shipping those supplies) at a rate of 10% gets you 10% of the market price of a table. By taxing strictly and effectively in this manner, an average effective tax rate of 10% collects 10% of GDP and represents 10% of all goods and services produced and sold, in the long run. Taxing corporate revenues ("gross profits"), on the other hand, double-taxes wages at the end of the pipeline; and far more than double-taxes supply everywhere else. This means the more suppliers you have in a chain, the heavier your taxes, and the higher the effective tax rate applied to a product.

            I understand all that perfectly well. It doesn't explain why corporates get taxed on profit while individuals get taxed on revenue.

            Corporate revenue taxation heavily-favors monopolies, notably vertically-integrated monopolies as per Andrew Carnegie.

            That doesn't explain why individuals are taxed on revenue while corporates are taxed only on profits. How is me selling my labour different from a company selling their collective labour?

            When an entity is taxed on revenue (regardless of whether that entity is incorporated or not) then that entity will have to adjust their spending behaviour to compensate for the tax o

            • by tippen ( 704534 )

              That means taxing corporate net profits and not their expenses taxes production: if a table is made, taxing the worker's wages and the corporate profits both of the table manfuacturer and all involved suppliers (including the truckers shipping those supplies) at a rate of 10% gets you 10% of the market price of a table. By taxing strictly and effectively in this manner, an average effective tax rate of 10% collects 10% of GDP and represents 10% of all goods and services produced and sold, in the long run. Taxing corporate revenues ("gross profits"), on the other hand, double-taxes wages at the end of the pipeline; and far more than double-taxes supply everywhere else. This means the more suppliers you have in a chain, the heavier your taxes, and the higher the effective tax rate applied to a product.

              I understand all that perfectly well. It doesn't explain why corporates get taxed on profit while individuals get taxed on revenue.

              Evidence would suggest otherwise...

            • I understand all that perfectly well. It doesn't explain why corporates get taxed on profit while individuals get taxed on revenue.

              So, I stated that taxing corprations on profit taxes actual production, while taxing people on income also taxes actual production, and you don't understand why this is done?

              All individual income is profit. Corporate net profits are the same thing as individual gross wage income.

              How is me selling my labour different from a company selling their collective labour?

              A company's "labor" is its net operating profits. The rest of the "labor" being sold by that company is your labor. The revenue essentially floats through the company to the producer--the worker.

              I'm curious why my cost of existence is not exempt from taxes the way a corporate's cost of existence is exempt from taxes.

              Because your "existence" is

        • Why is it that companies get to subtract their costs and pay tax on the result while individuals are taxed on revenue, not profit?

          In theory, individuals also get deductions so that they're only paying taxes on "profit" instead of gross income. And in theory, there's no difference between theory and practice.

    • Seems like a horrible idea - what if the company makes a real loss and can't pay the tax? There's a reason that we tax profits.

      Seems like a great idea - these are the companies pushing hardest for social justice "to ensure equality". Make them pay an equal percentag share of the taxes.

    • by Njovich ( 553857 )

      Lots of countries have revenue taxes. You should price your products so that you can afford to pay it. To answer your question, if you cannot pay your debts you go bankrupt.

    • by Luckyo ( 1726890 )

      To quote one of the major local business owners, "if you can't make your business profitable after paying all relevant taxes and fees, you need to look at your business idea. You're doing something wrong".

    • The trade-war has begone.
      As countries are getting more nationalized they are seeing foreign countries as a risk, so they are doing as much as they can to milk as much from the imports as possible until they can setup their own competition.
      As of right now Europe doesn't really have a big name in Software Services. Siemens is the biggest one, but they are not as much a software services as an industrial manufacturing company like General Electric is in the United States. But it is mostly software services th

  • This will just give the accountants a new challenge on how to cook the books...

  • Watch the mergers (Score:5, Interesting)

    by Harlequin80 ( 1671040 ) on Monday March 05, 2018 @10:42PM (#56214447)

    There is now a huge incentive to merge your organisation. There will be an active push now to drive down revenue while holding profit levels the same. The best way to do this is to create massive verticals.

    • Till they get slapped in the nose with antitrust action. *bam*
    • There is now a huge incentive to merge your organisation. There will be an active push now to drive down revenue while holding profit levels the same. The best way to do this is to create massive verticals.

      Well, gee, if only there was a plan to tax turnover not profit then.

      • No, he's right. If you have an organization that passes a million dollars's worth of steel through a bunch of intermediate suppliers--mine, refine, distribute, shape, etc.--you tax the cost of that steel and all profits made and taxes paid on that steel at every supplier. That first labor and profit get taxed again, and again, and again, each time being paid by different hands, until it finally gets to the consumer.

        That means long supply chains geometrically increase the cost of a product, and so verti

  • by Ungrounded Lightning ( 62228 ) on Monday March 05, 2018 @10:50PM (#56214469) Journal

    It will be interesting if some of these services try just dropping their presence in the countries in question. Close any offices, shut down any data centers, not take adds from or sell services to any operation in the country in question.

    Sure it might hurt their bottom line a tad. But it would cause severe pain to the countries' own businesses.

    Trade wars usually consist of both sides shooting themselves in the foot. But they can consist of shooting the other guy in the leg while only blowing off a couple of your own toes. It would be interesting to see a trade war like event where one side is a multinational corporation rather than a country's government.

    • Re: (Score:3, Interesting)

      by b0s0z0ku ( 752509 )
      Europe would be better off without American giant corps siphoning off its residents' data. The world survived for all but the last few decades without those cloud crappers, Europe will be just fine without FB/Google/Apple/Amazon.
    • It will be interesting if some of these services try just dropping their presence in the countries in question.... Sure it might hurt their bottom line a tad. But it would cause severe pain to the countries' own businesses.

      Yeah, it's been really horrible for Tencent, Baidu and QQ that Google, et al have been kept out. China's really suffered, and there haven't been any way to communicate, and they're not keeping all that money and control in their country.

    • by Kjella ( 173770 )

      Trade wars usually consist of both sides shooting themselves in the foot. But they can consist of shooting the other guy in the leg while only blowing off a couple of your own toes. It would be interesting to see a trade war like event where one side is a multinational corporation rather than a country's government.

      It depends on whether these companies hold something unique or whether it'll basically just be a market up for grabs, in most case it's the latter. It's pretty easy to be China's Google, eBay, Facebook or Amazon if the "real deal" withdraws from the competition. As long as you can give lip service to free market economy while really stacking the deck, I'd say the government wins this one hands down. A government can afford to be sub-optimal, for example after we in Norway gave the Nobel Peace Prize to Liu X

      • by jabuzz ( 182671 )

        The stupid thing is there are no real trade barriers to USA made cars being sold in the EU. At least no more than EU cars being sold in the US that is. There is a bit of import duty both ways. Then there is the fact that if a USA made car is to be sold in the EU it has to comply with EU regulations for safety etc. Similarly EU made cars have to comply with USA regulations, whoopdy do. Now it may be that EU regulations are tougher, but there is *NOTHING* stopping USA manufactures complying with them and the

    • by AmiMoJo ( 196126 )

      Sure it might hurt their bottom line a tad.

      If by "a tad" you mean "billions of Euros profit from a market of 500m Europeans" then yes it would, and I really doubt they would throw that away over having to pay their fair share of tax.

    • It will be interesting if some of these services try just dropping their presence in the countries in question.

      Interesting to the shareholders who will punish the companies doing so severely. The benefits of doing business in an economy of 700m wealthy people dramatically outweigh the cost of doing business.

      It's the reason western companies are falling over themselves to do business with repressive regimes, while companies in China are doing their dambdest to get access to America despite the threats of an actively hostile government towards them.

      The solution to paying a bit of tax is not to forgo even more profit a

      • For some reason, libertarians seem to think all businessmen are sitting there, getting angry about taxes and letting spite guide them. As opposed to businessmen sitting there going, "And if I do this, I get 2 new pools at my Aspen guest house".

    • It will be interesting if some of these services try just dropping their presence in the countries in question. Close any offices, shut down any data centers, not take adds from or sell services to any operation in the country in question.

      Sure it might hurt their bottom line a tad. But it would cause severe pain to the countries' own businesses.

      But they'll never do that because:

      1. They're making too much money.
      2. They're making too much money.
      3. They're making too much money.
      4. They rely on legal protections to keep making that money.
      5. They will give the market to their competition.

      The EU is worth more than the US, I've got to love that American fantasy that companies will simply up sticks and leave profitable markets because they have been asked to pay their tax. Remember that the reason Google left China wasn't that it was unprofitab

      • The minute that Apple or Facebook pull out of the EU, the EU revokes all of their patent, trademark and copyright protection.
        There is no law that would allow for that.

  • A special tax? (Score:5, Insightful)

    by darthsilun ( 3993753 ) on Monday March 05, 2018 @10:50PM (#56214471)

    Why don't they all (U.S. included) just fix their existing tax laws so that these companies can't use loopholes and accounting tricks to launder their profits through countries like Ireland that give them preferential tax treatment?

    Oh, we have an office in Ireland. We sold $100M in Ireland and $10B in the rest of Europe, so we'll just use a bookkeeping sleight of hand to claim all that revenue in Ireland and pay Ireland cents on the Euro. Then we'll "park" all those profits, and the money we didn't pay in the EU in a Cayman Islands bank so that we don't have to bring it into the US and pay US taxes on it. We'll just leave it sitting there indefinitely..

    But it's an asset on their books, so they're happy and their share holders seem to be happy/

    Actually what is good about keeping $100B sitting in a Cayman Island bank? I'm sure it earns interest and all. But it's just sitting there.

    If I was a shareholder I'd be screaming bloody murder for a dividend. A fucking big dividend.

    • Re:A special tax? (Score:4, Interesting)

      by slew ( 2918 ) on Monday March 05, 2018 @11:41PM (#56214607)

      Actually what is good about keeping $100B sitting in a Cayman Island bank? I'm sure it earns interest and all. But it's just sitting there.

      You forgot what these companies did with that money which was sitting in the "bank" (not a literal bank account, but cash equivalent holdings).

      The companies used the money to back bonds sold in the USA. The companies effectively virtually move the money to the states (by borrowing the money from the bond investors) at a rate far lower than if they had to pay tax on that money by repatriating the money.
        This was because since the risk on the bonds was perceived to be low, they discount they had to apply was low (bonds had ~2% yield vs a 20% tax rate).

      If I was a shareholder I'd be screaming bloody murder for a dividend. A fucking big dividend.

      Why would an investor want a large dividend that they would have to pay tax on? It is much more efficient for the company to save 10x the tax rate than for the investor to pay taxes on dividends as long as the stock price is reflecting this savings. The only reason companies issue dividends is that they have no better use for the money, but saving 10x the tax rate on virtually repatriated profit is a good reason to not issue all this profit as a dividend.

    • by AmiMoJo ( 196126 )

      The issue here is that they claim to make very little profit due to having to pay crippling fees to the parent company (that is registered in a tax haven) to use the Amazon or Google branding. Starbucks does it too, they buy all their beans from the parent company and pay them licence fees to use the logo and green styling, and end up making near zero profit in EU countries despite having billions in revenue.

      So the EU plan is to simply tax turnover, rather than profit. Easier than deciding what is legitimat

    • by GuB-42 ( 2483988 )

      There are loopholes because tax laws are complex, and tax laws are complex because the subject is complex.
      The problem with taxes is that you want the state to get the money it needs, with profitable businesses and some amount of self-reliance. And it needs to be done in an environment where actors are selfish. Furthermore, the law needs a semblance of fairness and respect for more treaties than you can count, you can't just tell Google "pay me 10 billions, because I said so".

      Try to close a loophole and you

    • by mjwx ( 966435 )

      Why don't they all (U.S. included) just fix their existing tax laws so that these companies can't use loopholes and accounting tricks to launder their profits through countries like Ireland that give them preferential tax treatment?

      That is what the EU is trying to do. The problem is they need to differentiate between the companies that are using licensing to arrange a Dutch/Irish sandwich and the companies who are genuinely spending money on licensing and fees to overseas companies in order to simply operate. The only fair way to do this is to identify the abusers of the system and punish them, starting with the biggest, most prolific abusers so they can be held up as warnings.

    • Comment removed based on user account deletion
    • Actually what is good about keeping $100B sitting in a Cayman Island bank? I'm sure it earns interest and all. But it's just sitting there.

      Er, just to play contrararian, don't Cayman Island banks invest their deposits in stuff?

  • by NuclearCat ( 899738 ) on Monday March 05, 2018 @11:04PM (#56214519) Journal
    No problems, just Google will not accept payments directly, for example, and create MicroGoogle France, who provide service surprisingly similar to theirs.
    Or they think those behemoths will give up on their billions just like that?
    • No problems, just Google will not accept payments directly, for example, and create MicroGoogle France, who provide service surprisingly similar to theirs.

      You quite clearly don't actually understand anything about the subject. MicroGoogle France is who they're trying to tax.

  • a turnover tax?
    • by slew ( 2918 )

      a turnover tax?

      Basically a tax on revenue and/or capital appreciation, so it's similar to a Sales Tax, except that is collected from the company internal revenue. That makes is a bit analogous to a Value Add Tax in that it taxes the company in a way that doesn't allow it to subtract expenses (like an income tax).

      • OK, it is a value of sale, sales tax so the company just passes it right through to the consumer. I am good with that. The EU(All Government) does like taxing things that move to death. And if it moves again you tax it more. When that industry is collapsing/dead the tax is at the right level.
      • by HiThere ( 15173 )

        But how does this apply to Google and Facebook? I can understand how it works when you're selling something that is persistent, but not how it works when you're giving away something that isn't persistent. Is it per web page loaded or what?

    • a turnover tax?

      It's also called a "bend over" tax.

      . . . any questions . . . ?

  • I already mentioned years ago on this very site that the EU fines and rulings against American companies were outrageous in comparison to worse and greater offenses made by European companies. This is just the next step, just tax a company simply for being American.
    • I already mentioned years ago on this very site that the EU fines and rulings against American companies were outrageous in comparison to worse and greater offenses made by European companies. This is just the next step, just tax a company simply for being American.

      European companies that break the law are fined similar amounts all the time. It's just that people like you don't hear about it, because it doesn't involve American companies/people so it's not "important".
      Google "e-on gaz du france fine" for one example.

      The EU isn't going after American companies. It's going after companies that break the laws. Which is something America should do, too.

    • by tsa ( 15680 )

      No, the EU is working for its citizens. It fines European companies just as hard as American ones. What does the American government do for its people?

  • by bruce_the_moose ( 621423 ) on Tuesday March 06, 2018 @01:36AM (#56214831)

    ...because they aren't in the same group as the "Big Boys". Samsung too.

  • Are they naming this the "go back to America and give them taxes instead" rule? Because that's what they're doing. Whatever, it closes the loophole so I support it.
  • It’s the year of Diaspora on the desktop!

  • I have a hard time understanding some EU initiatives. For example, encouraging immigration into EU from the 3rd world countries while nothing is organized in place. So that people have to sleep in parks, walk over the mountain passes without proper equipment, etc.

    Or dumbing down the DJI quad-copters. The range of the DJI Spark in the US (FCC) is 2000 meters. In the EU (EC) it is 500 meters https://www.dji.com/products/c... [dji.com] . In reality it is even less, at about 200 meters the warnings began to appear on
    • by mjwx ( 966435 )

      I have a hard time understanding some EU initiatives. For example, encouraging immigration into EU from the 3rd world countries while nothing is organized in place. So that people have to sleep in parks, walk over the mountain passes without proper equipment, etc.

      The EU isn't inviting in people from 3rd world countries, it's simply the easiest place to be smuggled into due to a large land border and the Mediterranean. Most of the refugees are legit, coming from war torn countries (in no small part to US and EU actions in the region). The EU is trying to organise things but they're facing opposition from ultra-nationalist elements within the EU.

      Its similar to the US/Mexico border but about 500 times larger.

      Or dumbing down the DJI quad-copters. The range of the DJI Spark in the US (FCC) is 2000 meters. In the EU (EC) it is 500 meters https://www.dji.com/products/c... [dji.com] . In reality it is even less, at about 200 meters the warnings began to appear on the screen that the video signal is too weak.

      This is because in the EU you're not permitted to lie in a

  • It's expensive.

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