
Italy Approves ‘Google Tax’ on Internet Companies - snowbunny
http://www.bloomberg.com/news/2013-12-23/italy-approves-google-tax-on-internet-companies.html?
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toyg
Italy: always at the forefront of legislative innovation to kill the internet.
Piratebay blocks? Check. Fighting encryption and anonimity? Check. Taxing the
crap out of anything that moves? Check. Cutting investments in r&d and
universities across thr board? Check.

And then they wonder why their economy sucks.

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jessedhillon
This is a far too simplistic analysis of a multifaceted issue with no single
answer. It's the kind of thing I'd expect to hear on Fox.

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olefoo
Yes. I believe it's an artefact of the popularity of the site that that type
of comment is becoming more common. We've seen a noticeable increase in
trolling and simplistic bias-driven comments over the past year (i.e. comments
that suggest that the commenter cannot even conceive why someone might not
share their viewpoint).

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Dylan16807
_Google, Starbucks Corp. (SBUX) and Amazon.com Inc. have been criticized for
strategies that shift billions of dollars of profits offshore.[...]

Google last year moved nearly $12 billion to the Bermuda unit, the majority of
its worldwide income, cutting more than $2 billion off its global income tax
bill. Google’s Italian unit last year reported total income taxes of just 1.8
million euros, corporate filings show. _

Google's tax-avoidance has nothing to do with this new law. It's true that
Google shifts profits around to avoid paying taxes where they do their actual
labor. But changing that wouldn't change the fact that Google isn't based in
Italy. For the sake of simplicity let's say that Google stayed in Ireland when
they stopped abusing the system. They would sell all their European ads from
Ireland, and pay a hefty tax with no loopholes. And their tax payments in
Italy... would not change.

This law is strictly anti-outsourcing. It does nothing to stop Google's tax
avoidance, and would still be just as 'needed' even if Google didn't avoid
taxes. Bringing it up muddies the water and serves no purpose other than
making Google look like a bad guy.

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alemhnan
Maybe I'm wrong, but with this law Google is not able to sell ads in Italy. So
if they still want to do that they need to open an Italian company and
therefore pay taxes in Italy. So, for Italy at least, things would change.

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tonfa
Depends, what is taxed in Italy: profit or revenue?

An italian subsidiary would have to pay its mother company for the services it
provides (which is everything, since no user would be serviced from Italy). So
the Italian company could easily make 0 (or very few) profit.

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waps
Doesn't matter. Italy is not a sovereign state, and has no legal control over
inter-EU commerce any more than a US state has. They have signed over the
right to make laws like this to the EU, which seems unlikely in the extreme to
concur with their decision.

So despite being a law, it's (probably) not legal. I find it very hard to
believe that there is anyone in the Italian parliament, which is filled with
lawyers, that doesn't know this. They are merely voting in this law to appease
constituents, and of course the targets of this law (not just Google, but any
internet seller. It's just as much apple or microsoft or kickstarter.com) have
zero incentives to point this out : they simply don't pay, knowing full well
they can't be sued for this.

So constituents are "happy", lawyers get re-elected and nothing changes. There
are no implications, everything will simply remain status-quo.

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znowi
Google became too greedy and this is the result of it. I, for one, in support
of this law. You can't harvest billions of profit worldwide, then sneak it all
through tax heavens and expect it to continue indefinitely. Someone will get
weary of this practice.

As a thought experiment, imagine the US reaction if Google was an Italian
company - making loads of money in the US and paying 0 taxes :)

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was_hellbanned
The point becomes moot if you eliminate corporate income tax. You want
companies to pay salaries, not taxes.

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omonra
How would this help Italian government? All income would flow up to the US and
get eventually taxed there.

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Houshalter
As is the case with other products and services from other countries. Tax the
local businesses that are benefitting from the ads and services.

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omonra
Umm..this is too stupid to argue with, sorry.

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carlob
The biggest problem with this law is not its effect on google: the way it's
written now forbids any Italian internet user from visualizing ads that were
not purchased from an Italian company, and this applies to _all_ websites.

So while Google might be forced to comply, most international websites won't,
rendering them automatically illegal in Italy, which is probably
unenforceable. While I agree with the spirit of making these large
multinational companies pay their fair share of taxes I think this is a rather
ham fisted attempt.

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gioi
Have you read the law? Do it. _Rendering_ is not illegal, but if you're an
Italian company you can _buy_ online ads only from another Italian company.

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carlob
Pardon the italian

17-bis. Al decreto del Presidente della Repubblica 26 ottobre 1972, n. 633,
dopo l'articolo 17 è inserito il seguente: «Art. 17-bis – 1. I soggetti
passivi che intendano acquistare servizi on line sia mediante operazioni di
commercio elettronico sia diretto che indiretto, anche attraverso centri media
e operatori terzi, sono obbligati ad acquistarli da soggetti titolari di una
partita IVA rilasciata dall'amministrazione finanziaria italiana. 2. Gli spazi
pubblicitari on line e i link sponsorizzati che appaiono nelle pagine dei
risultati dei motori di ricerca (servizi di search advertising),
_visualizzabili_ sul territorio italiano durante la visita di un sito internet
o la fruizione di un servizio on line attraverso rete fissa o rete e
dispositivi mobili, devono essere acquistati esclusivamente attraverso
soggetti, quali editori, concessionarie pubblicitarie, motori di ricerca o
altro operatore pubblicitario, titolari di partita IVA rilasciata
dall'amministrazione finanziaria italiana. La presente disposizione si applica
anche nel caso in cui l'operazione di compravendita sia stata effettuata
mediante centri media, operatori terzi e soggetti inserzionisti.

Says here that the law applies to results _visible_ on Italian territory.

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jotm
How about making the country a better place to start a company instead? You
know, so you can attract foreign capital and entrepreneurs, and also reduce
the local brain drain.

No wonder Italians run to Germany, UK and Ireland to start their companies.

Also, good luck enforcing that law.

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raverbashing
You'll be surprised about the hassles to open an (Internet) company in
Germany.

They get the business mostly because they are cheap (and educated workforce,
of course)

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jotm
I don't know from first hand experience, but I've been told that it's
relatively easy to open a UG (their version to an LLC/UK LTD) company and
start working right away. Hiring and managing employees seems to be the
hardest part.

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raverbashing
Yes, the issues are mainly in hiring, labour code, and also privacy and IP
issues.

Privacy is a big deal in Germany.

(And of course, doing all that in German, but in Berlin it's easy to do things
in English. But not everybody speaks English)

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gioi
I'm Italian. Here tax burden for artisans, small business, big companies is
over 50%. What if we could shift part of the taxation from artisans to big
multinationals? What's wrong with this idea?

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yetanotherphd
The problem is that you are erecting trade barriers in order to do this, by
forcing ads to be sold in Italy. And the deeper problem is that every country
would like to shift its tax burdens to "big multinationals" but there are tax
and trade agreements to impose some fairness and order.

If an advertising company really were running some of their operation from
Italy, they should certainly pay tax there (and not, say, in Ireland). But you
can't expect to tax all ads that are purchased by Italians that really are
sold from overseas.

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vkou
Said tax and trade agreements don't impose fairness and order, as much as they
tie every participating nation down in a race to the bottom. Any board of
directors would be considered to be out of their minds if for the sake of a
single, non-critical contract, they signed agreements that completely tied
their hands in how their firm should run. On the other hand, when governments
do it, they are heroes.

Disclaimer: I'm a Canadian working for Google. And I have no opinion on this
particular piece of legislature.

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yetanotherphd
There is a difference between a territorial tax system and tariffs.

If properly implemented, territorial tax systems do not create a race to the
bottom, because countries compete for the quality of service they can offer to
businesses that operate there. In theory, a rich individual could live in a
tiny country with no income tax, but the moment they tried to put that money
to work, they would have to operate in some other country which imposed
territorial taxation.

On the other hand, this law is more like a tariff. It seeks to impose a tax on
value created (i.e. the selling of an ad to an Italian business) whether or
not that value was created in Italy or not.

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anoncow
I don't understand. If I want to use AdWords and if Google is still selling
from Ireland,what do I do? Buying ads from Italianads.com is not going to make
my ads appear on Google.

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davidgerard
The EU objection is pretty solid, sadly.

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alemhnan
The objection reported in the article seems to me quite usual political
boilerplate without real substance. One of the comments says something
interesting: "Europe will have to address the fiscal treatment of
multinationals, and by its nature, this is not a task to be faced on a
piecemeal basis."

That sounds more the real issue of the problem to me.

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belorn
Whats the difference between their goal, and simply adding an duty tax on
imported services?

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shmerl
Looks like they hate free trade.

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walshemj
No just discriminate against non Italians as expats who work in the Italian
Universities will testify.

