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back to article Worldwide tax crackdown planned against tech globocorps

The G20 has backed an action plan from the OECD that would fundamentally rejig international rules on taxation. Major multinationals like Google, Apple and Amazon have excused their legal tax-dodging antics by shrugging their shoulders and telling governments that if they don't like it, they'll have to change the rules, and the …

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Anonymous Coward

And Russia will be the first to sign up!

I can see Comrade Putin thinking through all the money that would flow to Russia if he refuses to apply these new rules, and of course all the benefits that would accrue therefrom!

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Anonymous Coward

Re: And Russia will be the first to sign up!

Some time ago there was all this about companies just following the rules made by stupid governments. Now those governments try to amend the rules, as they should, and all you can come up with is Russia. Pathetic, try North Korea next.

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Holmes

Re: And Russia will be the first to sign up!

Taxation is the way to make sure that you won't find a job.

Neither will you find the service that is supposed to be provided by the income generated by taxation.

However, your minister will have a brand-new shiny car.

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Anonymous Coward

Re: And Russia will be the first to sign up!

Yeah, but how many companies would seriously move to Russia, considering your ownership of a company marks you out for imprisonment in a Gulag, should you utter anything that Putin doesn't like. They're also going about rolling back any laws which could be considered progressive - it's no longer ok to be gay in Russia. The police are utterly corrupt. There is no free speech. The crime rate is astronomical. etc. etc.

For me to think about moving a company to Russia, the tax would have to be paid to me by the government, even then the prospect of five years in a salt mine don't fill me with positive thoughts.

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Coffee/keyboard

Re: And Russia will be the first to sign up!

Er ... if they aren't taxed how does Russia make more than peanuts?

The problem is that even the "Havens" are making very little out of these rich companies.

There are Russian companies based in Ireland, not for tax reasons, but for safety! Unless you are making or selling in Russia you wouldn't put your financial "eggs" in that basket.

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Not holding my breath

The announcement sounds nice and will probably quiet down us unwashed masses, but I am a bit skeptical that any legislation will come out of this, which probably explains why the private sector is receptive to it.

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FAIL

Not a chance

Since we can't agree on tax harmonisation even within Europe - look at the varying rates of tax on alcohol and tobacco, as well as things like corporation tax - then there's no chance of global agreement.

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Holmes

Re: Not a chance

Luckily we can't agree. I can still have my ethanol at 15% VAT (a nice tax on the little man, that).

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Holmes

the tax man cometh.

why all the fuss, there is a simple solution very easy to enforce, tax is payable on income in whichever country profit is made, regardless of where the business/individual is registered.... simple

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FAIL

Re: the tax man cometh.

Were you asleep/away for the Starbucks bit....

Tax is paid on profit - not income and when the likes of Starbucks spend several millions to "Licence the use of marketing materials" (i.e use the logo) then the profit is erroded - legally if somewhat imorally.

I call fake on this - lovely idea which will not be implmented this side of several general elections.

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Silver badge

Re: the tax man cometh.

I understand that corporate income tax is taxed based on net income, but has anyone done a study on the pros and cons of changing it to one based on gross income, removing or limiting the deduction for business expenses?

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Bronze badge

Re: the tax man cometh.

Charles

Sort of, yes. But it's not that simple. If you wish to tax at the turnover line then you will destroy utterly many of our manufacturers who are not multi-national. They can have huge turnovers but only a tiny profit because of the marginal cost of making [product X] can be vast. Think of a generic beige box PC, it's a commodity with pennies in profit per unit but quite a high intrinsic selling price. You sell bucketloads to make any real money. Taxing turnover would wipe out those pennies, and kill the maker, then the sector. That's a bigger problem than Google doing a Dutch Sandwich.

You need to bear in mind that corporate taxation is very different, for very sound reasons, from personal taxation. Most of the things you would call "tax deductible" are common sense, such as the material used in making [product X]. The problem comes with multinationals who, as another notes, simply send bills to high tax regime outposts from low tax regimes to move profit there.

In theory you could sort this by having one global tax rate, the same in every last jurisdiction. It would work, but there is no way all 200+ jurisdictions would agree to it. Ever.

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Re: the tax man cometh.

I figured such a system would result in collateral damage, but your description helps visualize this. The system WOULD be disadvantageous to industries with unavoidably high costs of operation. That's why I qualified my earlier statement. Perhaps not removing the business expense deduction altogether but limiting it to distinguish between honest costs of operation and dodges. But here too will I acknowledge this as a "hard" problem where there may not be a cut-and-dry solution.

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Silver badge

No, this will just force people with billions of dollars to move their businesses to places where the G20 does not hold sway.

If you think they are going to happily hand over their cash to governments because of a change in the rules, dream on.

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Flame

Well, once the rest of the gov.uk internet monitoring is all in place they can impose VAT, import duties and tariffs on downloads. As for the physical goods, I don't see Amazon doing a "free" next day delivery from outside the EU.

No doubt part of the legislation will be to tighten up on the allowable tax exemptions on licensing payments with regard to the "Starbucks Shuffle" such that if a company is claiming 99% of it's income is going outside the tax jurisdiction on intangibles that they claim to be making a loss, then they get forced into bankruptcy.

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Pirate

Hmmm... loot!

French ministers talking about the titsup "french economy" by taxation... Why is it titsup? Look at taxation and the cancer of government control and spending ... 50% of GDP generated by government farts, quite a lot of them fueled by the printing press, means DEATH any way you slice it.

Then you hear them say "social contract" and you picture a fat mafiosi talking about the good of "our community". Or you think about what happened when you last invoked that "contract" and tried to find a hospital on a weekend.

vomit_chan.jpg

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Silver badge

Re: Hmmm... loot!

Yes 50% of GDP generated by a government owned profitable nuclear power industry, a profitable government owned aerospace business, a profitable government owned space program even.

Far better to have 50% of GDP be a bailout to crooked gamblers in the city.

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Silver badge

Re: Hmmm... loot!

Oh... "profitable" and "government owned".

Care to show the numbers?

Additional hint: "50% of GDP" does not mean "generated". It means "outlays that go on the credit card"

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Yag

"Care to show the numbers?"

Even if I agree about the stupid "MOAR TAXES" of the current french government and the need to cull the herd of civil servants (well, they're not that civil and some of them don't really serve), you asked for numbers, so...

- EADS -> 15% owned by the french state, via Sogeade

- AREVA -> 14.3 % owned directly by the french state, 2.5% more indirectly (CDC) and an extra 2.5% via EDF

- EDF and its 73 nuclear reactors (15 in the UK) -> 85% owned by the french state

- Arianespace -> 35%, via CNES (down from the 60% on its inception)

Shall I continue? I covered the nuclear power industry, aerospace business and space programs.

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The companies will just elect to pay taxes in the counties they would be least taxed in, so that is UK well and truly fuxxored.

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FAIL

Whack a mole.

The global megacorps ain't that stupid, there will ALWAYS be that one last place who doesn't sign the treaty and they WILL base their tax offices there to avoid the global crackdown.

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Meh

Re: Whack a mole.

I'm sure if we just imposed, pay tax at profit earned source or we remove your rights to do business in the country. Change would happen overnight.

You wouldn't need every country to sign up just the UK, German and France in Europe would do; with a GDP of about $7 trillion companies couldn't afford not to do business with us.

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Paris Hilton

Wake me up if and when it happens......until then, I'll snooze comfortably.

Truth is, many are at it, including major vendors, distributors and resellers.

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