
UK threatens to tax Facebook and Google if they dont do more to combat extremism - SirLJ
http://www.businessinsider.com/uk-minister-threatens-to-tax-facebook-google-over-online-extremism-2017-12
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SimonPStevens
So is this effectively "combat extremism for us and we'll give you a free pass
on all that tax you've been dodging".

I'd rather they just paid the tax.

~~~
ryanlol
Due to the nature of the tax dodging, it's not quite that.

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midgetjones
It would be nice if they were paying tax in the first place

~~~
jimnotgym
I came here to say the same thing. If they want to enjoy the benefits of
operating in a securely governed nation with mature infrastructure then they
can damn well chip in to help pay for it

~~~
devmunchies
"Operating in"? They are just online websites accessible by anyone with
internet. If they have paying customers in Europe then it'd make sense to pay
taxes on just that revenue. But saying that a company has to pay taxes just
because it gets traffic is a little extreme.

~~~
pimmen
I would say that they're "operating in the UK" when UK companies buy ad space
from Facebook and Google which they later distribute to consumers in the UK.

They do have offices in the UK and it's not like they're just playing ping
pong there.

~~~
jimmywanger
Would you also be operating in the UK if you supplied parts/goods to a UK
based retailer that sold your goods in the UK?

~~~
pimmen
Yep, if I had an office and employees in the UK hooking me up with these
retailers. Facebook and Google do have offices in the UK selling ad spaces and
even some developers in the UK.

What's your definition of "operating in"?

~~~
jimmywanger
The office pays tax and employees in the UK already pay personal income tax.
To avoid double taxation, it's very difficult to establish how much revenue
should be charged to a particular tax jurisdiction.

Legally, "operating in" means whatever you claim as your home country.
Otherwise, it turns into a morass.

However, tax laws are NP complete. Every time you try to close a loophole you
introduce unforseen interactions with other pre-existing laws. How do you
think the double Irish got established? Totally legal, and not taking
advantage of it would be foolish.

~~~
jimnotgym
> The office pays tax and employees in the UK already pay personal income tax

What do you mean the office pays tax? Yes employees do, but it is the nature
of that business that headcount is low in proportion to revenues, so this is
not a big number. This is an argument against all corporation tax btw, is that
what you meant? corporations should pay no tax because they have employees
that should pay it?

> To avoid double taxation, it's very difficult to establish how much revenue
> should be charged to a particular tax jurisdiction.

It really isn't hard to find out where the revenue was, when you buy Facebook
advertising you choose who you want it shown to. It wouldn't be very useful if
my UK window cleaning service was shown to Indian users. So the service was
delivered in the UK. It gets complicated you start using brand licensing deals
between your group to move profits around. Or even more obscure, Starbucks UK
buys its coffee beans from that famous coffee producing country, Switzerland
for an obscene markup. Personally I am in favour of heavy restriction for
anything over market value.

> legally, "operating in" means whatever you claim as your home country

'Operating in' does not mean that at all. Operating in is where you are making
sales, or have operations. You are operating in at least all of the countries
where you have employees. I think you are thinking about 'headquartered in'

Facebook has a UK registered subsidiary making sales in the UK. The UK is a
good market for a tech company, low regulation, very low corruption, good
broadband and mobile coverage. none of that was free for the UK to install.

~~~
jimmywanger
> What do you mean the office pays tax?

The office pays rent, which presumably goes to the property owner (taxed)

> Yes employees do, but it is the nature of that business that headcount is
> low in proportion to revenues, so this is not a big number.

So corporate income tax should be inversely proportional to how many employees
you have?

For example, if you have a large construction company, and you make your
workers use teaspoons instead of shovels, you should pay fewer taxes? That
sort of logic leads to the depriortization of efficiency and automation.

> It really isn't hard to find out where the revenue was, when you buy
> Facebook advertising you choose who you want it shown to.

Sure. Maybe you're saying "football fans" if you're selling jerseys (either US
or European football).

So the jersey was manufactured in China, sent to the UK, and shipped to
Germany. The advertising company is based in the states (like Facebook or
Google). Which country should Facebook/Google pay taxes to?

Industrial manufacturing targets interests more then geographic location. For
instance, if you're a UK company primarily buying ad space from a US outlet
but primarily selling to China, where should the revenue taxes be sent to?

> Operating in is where you are making sales, or have operations.

How does that work? Most large IT/hosting companies have data centers in
foreign nations. Do they have to split up revenues based on traffic patterns?
(For example, 5% of our traffic goes through London so we have to pay British
taxes on 5% of our hosting revenues.)

> Facebook has a UK registered subsidiary making sales in the UK.

The question is not that simple. Who cares where the sales are being made?
That completely discounts the costs of R&D.

~~~
aries1980
> So the jersey was manufactured in China, sent to the UK, and shipped to
> Germany. The advertising company is based in the states (like Facebook or
> Google). Which country should Facebook/Google pay taxes to?

Germany, where the sale happened. The other countries are transit countries,
and the intermediaries are paid accordingly (e.g. shipping & handling fee for
the UK company), so their taxes. This is very well defined in international
commerce. In the EU, when you ship abroad and you get a review by the tax
admin, you have to prove the goods left the country, otherwise you pay the VAT
(sales tax). These international rules are very well defined by the WTO and
harmonising laws by the EU.

On the other hand, politicians should not blame these companies because they
use the loopholes. Legislators allow these to happen, and the legislators job
is make better laws that are not allow to e.g. transfer money into or have
direct or indirect relationship with tax heavens. It is hard to blame Google
and Facebook, when the royals use tax heavens to stash their cash, or Jean-
Claude Juncker, the president of the EU's EC, made Luxemburg a tax heaven when
he was minister of treasury, finances then prime minister of Luxemburg. The
fish stinks from the head.

~~~
jimmywanger
> Germany, where the sale happened.

Well, that's not clear. The advertising company "sells" ad space from a server
in Jerusalem, but the user logged in from Thailand. Where did the sale occur?

I touched on this earlier. Does Google (for example) have to pay 5% of taxes
to London on ad revenue because 1/20 servers are in England? That incentivizes
them to just move their data centers, which further advantages them because
only large companies can pack up their toys and go home.

If it's mapped to the physical location of the server, most large companies
have enough capital to relocate their servers to a tax haven.

If it's the physical location of the user, how do you determine that with a
high degree of certainty? All users have to do is use a VPN that's located in
St. Martin, and all your efforts will be in vain.

Also, there is also VAT, sales tax, etc etc.

> Legislators allow these to happen, and the legislators job is make better
> laws that are not allow to e.g. transfer money into or have direct or
> indirect relationship with tax heavens.

I would argue that it's this dizzying maze of laws that causes these problem,
because I have said before, laws, especially tax laws, are an NP complete
system.

Legislators have to pass laws to justify their existence. Now they're passing
laws to cover up holes in laws either they or other people passed in a non
digitally connected age. The solution is not better laws, but fewer laws.

~~~
aries1980
> Well, that's not clear. Now I get your point. Of course the ratio of servers
> in a given country should not be the basis of taxation.

The situation of these large companies is they have a web of shelf companies
just to optimise their taxes. E.g. neither Facebook nor Google or Apple does
their core business activity and R&D in Ireland or formerly in Luxembourg.
They simply extract the profit on arbitrary measures.

In classical companies (manufacturing, automotives, media, etc) when there is
a holding company, usually there is a realistic “commission” that the child
companies keep on sales revenue, e.g. 40%. This is an extrapolated number to a
company level based on what the company would pay to an individual salesman in
commission. There are holding companies for intellectual properties in the UK,
e.g. ARM or WPP, BAE Systems, Rolls Royce, etc. If you are interested, I'd
have a look to their quarterly financial reports to see how they divide the
profit among their subsidiaries.

But, we can reverse the question: how less would be the revenue if Facebook or
Google would have no office presence in the country? If they can answer this
question (and they do when they make their quarterly financial reports), then
it is easy to measure how much tax is fair to pay.

> I would argue that it's this dizzying maze of laws that causes these problem

Sure, fewer laws the better. Yet, safe havens for stashing money from
questionable sources are individual cases. Their economy is based on
extracting money made in other countries and the tourism related to stashing
the money. There are plenty of whitepapers with ideas how to resolve this
situation, yet nothing happens, because the people who can make it happen,
personally are not interested in it.

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ben_w
I think this is _probably_ the right approach, but only by accident given how
poor the UK government understanding of all things digital.

Westminster is, after all, being quite unreasonable in expecting foreign
companies to serve as _competent_ police forces for what is basically chit-
chat rather than traditional publishing, and for a user-base roughly 30 times
the UK’s entire population.

~~~
Veen
They aren't "foreign companies"; they're multi-national entities doing
business in the UK. If, in the course of doing business here, they generate
costs for the nation, they should be expected to help out. There's no reason
the UK taxpayer should foot the bill for negative externalities generated by
the business practices of multi-national entities. They can either invest in
whatever it takes to solve the problem themselves, or they can be taxed so
that state can take care of it for them.

~~~
averagewall
Would anyone else honestly blame tech companies for generating the costs of
deradicalizing UK people? Doesn't the blame lie more on the people themselves
or the ones radicalizing them? The UK is free to block access to parts of the
internet if it thinks is people aren't fit to safely access it.

~~~
ben_w
> The UK is free to block access to parts of the internet if it thinks is
> people aren't fit to safely access it.

Really? Wasn’t that the kind of thing us tech geeks have spent the last 20
years arguing _against_?

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Zaheer
Relevant article: [https://theintercept.com/2017/12/30/facebook-says-it-is-
dele...](https://theintercept.com/2017/12/30/facebook-says-it-is-deleting-
accounts-at-the-direction-of-the-u-s-and-israeli-governments/) Discussion:
[https://news.ycombinator.com/item?id=16035721](https://news.ycombinator.com/item?id=16035721)

It's quite alarming how central a role Facebook plays in global affairs and
how it's shaping current events.

~~~
CodeWriter23
Censorship is only part of the picture. Facebook has assumed the role of
Kingmaker, at Global Scale:
[https://www.bloomberg.com/news/features/2017-12-21/inside-
th...](https://www.bloomberg.com/news/features/2017-12-21/inside-the-facebook-
team-helping-regimes-that-reach-out-and-crack-
down?utm_source=google&utm_medium=bd&utm_campaign=HP&cmpId=GP.HP)

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emiliobumachar
Google and Facebook are being dragged, kicking and screaming, into the
position of judge and jury of what is our isn't acceptable speech.

That's over years and by several different governments.

There's tremendous power in that position. I wonder if we'll rationalize after
the fact that these corporations always seeked this power.

~~~
llukas
This is power that each newspaper wields everyday for tens of years. Same for
TV and radio. Why being on internet automatically makes you not responsible
for what you distribute again?

~~~
ghaff
It's different in that newspapers create the content that they publish
themselves.

So far, we've collectively been able to dance around the fact that different
countries have different laws/attitudes/etc. over what sort of things are
acceptable to publish. (And those countries that are far out of the mainstream
are mostly small enough that they're not that important commercially.)

But there are differences between the US and various European countries that
probably can't be swept under the rug forever.

~~~
pimmen
Go back 30 years, when your voice in print media was either starting your own
newspaper or writing a letter to the editor and the comparison holds.

Edit: I meant your way to communicate in the newspaper

~~~
ben_w
Was it that? Or was it talking loudly in public places until you gathered a
crowd, which probably automatically brought you to the attention of the
police?

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blitmap
For what definition of extremism? Anyone who encrypts?

~~~
hardlianotion
I think they are concerned by lack of effective moderation, and by the
inability of these companies to know their customer

~~~
blitmap
At the scale of Google and Facebook, I'm not sure it's possible to
individually "know" their customer.

~~~
gaius
It’s possible for retail banks with tens of millions of customers to KYC, I’m
sure it’s not an insurmountable problem

~~~
jstanley
It's surely possible, but would it be a good thing?

When I first starting posting things online, the general advice was "don't use
your real name", "don't say anything that will reveal where you live", etc.

Now we're not only using our real names but advocating for identity
verification of all commenters? How did this go so wrong so fast?

~~~
tcd
Facebook made the transition plausible; a formal social network, then slowly,
the creep began, where it's now acceptable to use your real name online.

I still heed the advice of the 90's: NEVER use your real name. We still have
that choice thankfully.

~~~
LV-426
> I still heed the advice of the 90's: NEVER use your real name.

Where was this advice given? In my experience, people online in the 1990s
routinely used their real names, and emails (in the late 90s obfuscated or
removed due to spam), on the primary social-network at that time (Usenet), and
people still do to this day.

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noarchy
It seems like what the UK government is saying is:

A. Either we outsource security-related tasks onto you, as companies (which I
think has huge ramifications), or:

B. We shake you down as a penalty (arguments about whether the tax should be
paid already notwithstanding).

The consequences of A, alone, are worth an entire discussion. It means
compromising everyone's security to some extent, and having these companies as
active participants in the security state (or perhaps, more than they already
are...).

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paulus_magnus2
So all this time being "unable to" tax giants was a lie.

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jimmywanger
FTA:

"Ben Wallace, the UK's security minister, described tech companies as
"ruthless profiteers" who were doing too little to help the government combat
terrorists who often take advantage of their platforms."

The most interesting thing are the lines ruthless profiteers and take
advantage of their platforms. The British government subsidizes health care,
public transit and municipal water. Also, they deliberately shape traffic to
create hot spots of pedestrian concentration and increase tax revenue. Are
they doing anything about terrorists using those platforms?

~~~
Veen
> Are they doing anything about terrorists using those platforms?

Yes, via several other publicly funded services: the police, the judiciary,
and the prison service.

~~~
jimmywanger
Those are rehabilitative services, and not preventive services. Huge
qualitative difference.

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MollyR
I'd rather people not reward tax dodging, and enforce people paying their fair
share.

Combating extremism and taxes shouldn't be combined like this, It's morally
repugnant.

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grwthckrmstr
What I'm scratching my head over is...

Why aren't they being TAXED already?

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cloverich
Related: "Project Jigsaw" from Google.

[1]: [https://jigsaw.google.com/](https://jigsaw.google.com/)

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chrismcb
This article didn't say what an "extremist" is... In general, they can go jump
in a lake. It shouldn't be up to Facebook and Google to combat "extremists". I
realize that the UK didn't have free speech. But I believe it is the
cornerstone of civilisation.

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averagewall
Stop radicalization by limiting free speech and spying on everyone's
communications? That's similar to what America did with McCarthyism. Communism
is arguably more deadly and harmful than Islamic extremism but we accept it as
a tolerable non-thought-crime today. Why can't people accept Islamic extremism
in the same way? What happened to the idea of freedom of political thought?

~~~
Veen
> spying on everyone's communications

Facebook and Google already do that — it's part of their business model. What
makes you think it's better when unnacountable corporations do it than when
accountable governments do it?

The UK is not America. There is no absolute guarantee of free speech here.
Inciting and glorifying terrorism is illegal. No one cares about thought
crimes. They care about innocent people being mown down by lorries and
children being blown up at pop concerts.

You can argue that forcing social media to police itself won't be effective at
reducing terrorism and the spread of islamic extremism, but if it is
effective, it seems perfectly reasonable to me.

