
G20 agrees to push ahead with digital tax - dstick
https://www.reuters.com/article/us-g20-japan-tax/g20-agrees-to-push-ahead-with-digital-tax-communique-idUSKCN1T903D
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piokoch
"Britain and France have been among the most vocal proponents of proposals to
tax big"

This is kind of surprising in case of Britain. As long as I remember both
Cayman islands and City of London, two of the best known tax havens, are
British territories so Britain could prevent tax evasion easily.

When it comes to "taxing" those pesky Facebooks and Netflix globally, I am not
sure I understand justification for this.

Companies pay taxes because they use resources and services provided in a
given country (roads and other infrastructure, police protection, courts,
etc.). Facebook does not use any resources in, say, Belgium, so why it should
be taxed there?

If a company located in US, like Facebook, avoids paying taxes there (strange
that someone who pretends to be rather left leaning person like FB owner
escapes taxes, but that's a different story) it is the US problem, not a
global problem and they should sort this out somehow - for instance make FB to
pay directly for services/resources provided by the state, maybe in the global
economy corporate tax does not make much sense any more? I can imagine that
Facebook has some fake office on Caymans, but I hardly believe they would
relocate there data centers and employees to avoid taxes, so making tax
proportional to number of employees in the given jurisdiction, size of the
office, used electricity, etc. might make sense.

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nicoburns
> Companies pay taxes because they use resources and services provided in a
> given country (roads and other infrastructure, police protection, courts,
> etc.).

That's one view. Another is that they pay taxes simply because they have
resources that society needs. If Facebook is trading in the UK (benefitting
from access to the UK market, then I think it is reasonable that they pay tax
in the UK).

~~~
wrong_variable
What about David Cameron, Beckham ...

Every rich person in the UK is incorporated in British overseas territory.
Shouldn't they be the first to be taxed ?

~~~
notahacker
David and Victoria Beckham paid £12.7m tax in the last year. Facebook, which
collected £1.3bn in UK sales, paid £15m...

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GolDDranks
"The U.S. government has voiced concern in the past that the European campaign
for a “digital tax” unfairly targets U.S. tech giants."

How about admitting that the U.S. tech giants unfairly use their monopolistic
powers because the Internet has become a winner-takes-it-all economy.

~~~
shaki-dora
The issue isn’t so much any anti-competitive misbehavior. Even though there
are some specific practices that have landed FAANG in hot waters, those aren’t
really different from any other companies’ of similar size.

Monopolization just happens to be the natural state of any system that has
network effects and where all costs are front-loaded (I. e. write the code
once, scale to billions of users at, if you squint, zero marginal costs).

But neither of these issues are the motivation for calls for a “digital tax”.
Nor is economic nationalism. There have always been industries that were
dominated by one or just a few countries: the US has media/entertainment,
consumer goods manufacturing has almost entirely moved to Asia, etc.

What’s different about “digital” is that requires essentially zero presence or
taxable activity at the consumers’ location. Nobody felt the need to tax
Hollywood’s movies because a ticket to ‘Titanic’ in Austria may have meant 2€
leaving the country, but the bulk of it actually stayed in the local economy,
as (taxed) revenue of the theatre, local distributors, corn growers, and
breweries.

For physical products, this is even more obvious. French champagne served in a
Billings, Montana restaurant is about 50% margin for the venue, 30% for the
US-based distribution chain, and only 20% goes to funny mustaches people in
striped shirts.

~~~
oaiey
A digital tax is basically an equivalent to custom tax. Goods like German cars
have to pay custom taxes during importing them to the US. A Netflix stream
from the US to Germany not. And that is getting fixed.

But it is fair to say: this is not only about taxes. This is also about
countries gain control over global economy.

~~~
dmix
Just because it happens for historical reasons doesn't mean it was a good
idea. Not to mention those are physical things that require tangible resources
to reproduce.

There's so many things I have to pay 20-30% more for in Canada (for ex: $150
for shoes that are $100 in the US) for ridiculous protective import policies
for old non-core industries that do little to help the economy.

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VLM
The best traditional HN bad car analogy I can provide is Illinois State DOR is
angry the new car factories are relocated in the rural south where the
property taxes are low and what tax they do pay goes to the locals and not
Illinois DOR, and they're selling those "foreign" cars in Illinois, so
Illinois is going to add a special registration tax for cars registered but
not manufactured in Illinois.

This is kinda a bad example because Illinois still has a handful of plants
left, although they're doing everything they can to push them out of the state
as fast as possible, I selected them more as an example of a very high tax
state than as a non-mfgr state.

~~~
Shivetya
Nah, I would use the ZEV system. Where if you don't produce it how we like it
you pay a penalty; a tax. (Zero Emissions Vehicle) credits.

The no physical existence loop hole is one worth closing, if you sell goods or
services it should be taxed within the authority the sale occurs. That is
common sense. However the second issue, what is digital and what isn't and how
it can be taxed outside of the same point is a bit worrying, it basically
sounds like, if we don't think you pay enough even following the rules you
will pay this too.

just watch for the exceptions to pile on because you can guarantee members of
the G20 will put them in there, similar to how states and cities whack large
chains by looking at their full sales corporate wide instead of local sales.

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dstick
I for one, am grateful. The world has changed massively the last 30 years and
it’s time for international legislation to catch up :) Curious to see what the
final implementation will look like.

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tedeh
I wonder how this is going to affect small businesses selling digital services
to different countries within the EU while only having one office/country of
incorporation.

"The first pillar is dividing up the rights to tax a company where its goods
or services are sold even if it does not have a physical presence in that
country."

~~~
toyg
That’s an unehlpful principle, imho. It might be more practical to “tax up”,
which is the traditional approach we have followed throughout the ages. We
could build a g20 organism that accumulates revenue from all global companies
and redistributes it on projects that make a difference on an equivalent
scale, in things like energy, transportation, health, environment
preservation, space exploration and so on. Obviously there would be issues of
governance to sort out, as it’s always the case, but we’d be inching forward
towards global cooperation on “humanity scale” - something that we will need,
eventually, if we really want global peace under democratic rule.

~~~
shaki-dora
Even the EU does not have the power to tax. It’s practically impossible that a
rather informal forum like the G20 would be granted such authority.

~~~
toyg
The EU can’t tax directly... yet. It’s inching closer, though, with each
subsequent “sovereign crisis” and the looming inevitability of easier
mechanisms for fiscal transfers.

I agree that it’s unlikely the g20 could or would do this tomorrow; I just
think it’s what we should eventually aim for, and establishing principles
against this so early-on is, imho, a mistake. But I guess I shouldn’t complain
about what is, overall, positive news.

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estebarb
I still don't get global taxes. In real life, how can digital startups keep
track of global taxes? They simply ignore it, comply with them partially
(hoping that Tuvalu doesn't sue them) or what? I understand that Google or
Amazon can hire lawyers all around the world, but for a tiny self funded
startup? it seems like a minefield.

~~~
Daishiman
You outsource the service to a payments provider that does that for you.

The _same_ way global corporations have accounting offices in every country
they operate in, or the same way you buy standardized industrial components
that comply with existing regulations.

It is not ideal, but getting paid overseas is far from the largest barrier
startups have to face.

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motohagiography
Related to a comment I made on another thread about identity, FANG companies
have two leverage points in this discussion. One is they can adjust their
features to the countries in question, as few democratically elected
governments could win an election if their population couldn't have iphones,
amazon delivery, or netflix.

The second is that without the US, sanctions against these companies are
unenforceable, these companies own the digital identities of those
populations, so those countries can only enforce data laws at the discretion
of US authorities. They are increasingly an arm of US policy.

The bargaining chips now are between the US wanting to regulate them
domestically, and foreign countries wanting control and taxation. IMO, the
deal proposed by US legislators will be, "deal with us, or them," where the US
can offer protection and moderate taxation in exchange for more direct
surveillance and policy levers.

The real danger is new foreign tax obligations will likely be leveraged to
break up the founder dictatorship equity model and create a scramble for their
data assets.

~~~
ptah
tongue firmly in cheek: people may actually be motivated to elect officials
that cause them to scale back operations in their countries

