Tech Giants Set to Face 3% Tax on Revenue under New EU Plan

Megalith

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The European Union is formulating a plan in which Amazon, Google, and other tech giants would “face a 3 percent tax on their gross revenues based on where their users are located.” The EU feels that these companies should be giving more back due to the profit they are making from its countries and citizens.

The scope of the planned tax would cover companies offering services such as advertising or the sale of user data, according to the draft prepared by the EU’s executive arm. It would also cover services provided by multi-sided digital platforms, which let users find and interact with each other and where users supply goods and services directly to each other.
 
Wow... gross revenue? Guess Amazon purchases are just going to cost more in the EU.

Don't get me wrong, there needs to be some middle ground between profit and revenue so that companies can pull the "we'll just reinvest" bullshit which often funnels money away from the tax stream but 3%? Seems a bit high,
 
At some point I wonder if these companies will just drop Europe and their Draconian taxes.
 
A draft proposal, not even a proposal yet, it's going nowhere.

I get the sentiment, Amazon in crushing companies because they don't pay tax, but the EU is unerringly democratic. Any one member can kill this.
 
At some point I wonder if these companies will just drop Europe and their Draconian taxes.

In that case, they would have to also abandon their customers here in the EU and it's much much cheaper to pay a tax in the EU than to give up profits from EU customers.

Getting a free pass for tax avoidance that borders on tax cheating is not a constitutional right here...
 
At some point I wonder if these companies will just drop Europe and their Draconian taxes.
Posted EU regional tax rate is still lower than the US. Now the US is an oligarchy, so very few companies actually pay taxes. If the price of admission is to kill your own democracy with ceaseless corporate corruption and adopt a ruinous form of government then those companies can eat shit. The people need to matter at some point, we've been taxing the middle class out of existence since the 80s, we're running out.

And low and behold, these companies will pass the tax on to the EU customers!
So the people who consume more would pay more? People who consume less would pay less? What kind of communistical devil worship is that? People who like to save money by spending less on frivolous shit, would be double rewarded... That's terrible! The people need to be ecouraged to CONSUME! CONSUME! CONSUME!
 
If you think 3% is high in taxes... You would've hated living in America's golden age when taxes were 85-93% for those in the tech giants shoes back then.

And there were so many deductions, write-offs and tax shelters nobody paid anywhere close to that.

When the rates where flatten, and many of these tax shelters and deduction eliminated, tax revenue went up, and the rich paid significantly more.
 
I guess they really want to drive out businesses. With a penalty this high, many companies will quit doing business in Europe.
 
If you think 3% is high in taxes... You would've hated living in America's golden age when taxes were 85-93% for those in the tech giants shoes back then.

This is a tax on REVENUE, not profit. Considering many tech companies operate at 6-10% profit from their revenue, this is like a 30-50% tax on their profit, and this is ON TOP of their regular income taxes. Nobody could make a profit of any type under situations like that.
 
I think the EU doesn't realize how powerful the curators of information(google, Amazon,Facebook) really are. Can you imagine if the EU lawmakers started having child porn on their Facebook pages? or if their google searches started returning irrelevant hate speech? or getting packages from amazon prime containing contraband?

The whole concept of tax puzzles me. I think I rather prefer the Chinese plan to abolish money. They are starting to restrict access to public services if you have 'bad karma'. Eventually, I can imagine everyone in China living in a world where the govt AI tracks their behavior. Access to everything could be provided based how many good deeds you did. Inheritance, money, cheating will amount to nothing. Of course the data needs to be transparent. If there is someone who is really 'successful' I'd like to look at his/her history to see what they did.
 
Good. These guys seem to be able to get by paying close to zero taxes in the US. The US needs a policy like this. Amazon paid zero in taxes in 2017. But I can expect the majority of people on this forum to defend them while they themselves pay taxes.
 
This is a tax on REVENUE, not profit. Considering many tech companies operate at 6-10% profit from their revenue, this is like a 30-50% tax on their profit, and this is ON TOP of their regular income taxes. Nobody could make a profit of any type under situations like that.

This may sound a little conspiracy theory-ish but that might just be their plan. Look at all the companies that are getting hit. Most, if not all, are based in the United States. They could put in the tax, rake in some cash, and kill the EU side of these businesses. Then some other company from their side of the Atlantic moves into the void that was created.
 
Good. These guys seem to be able to get by paying close to zero taxes in the US. The US needs a policy like this. Amazon paid zero in taxes in 2017. But I can expect the majority of people on this forum to defend them while they themselves pay taxes.
Blame politicians and the 2,500 or so page tax code(it's not actually 70k pages) they've created, full of legal loopholes that any large company would be stupid to ignore.
 
This is a tax on REVENUE, not profit. Considering many tech companies operate at 6-10% profit from their revenue, this is like a 30-50% tax on their profit, and this is ON TOP of their regular income taxes. Nobody could make a profit of any type under situations like that.

That's what they get for constantly cheating on income taxes - if they paid income tax properly, nobody would be coming with these ideas...
 
Blame politicians and the 2,500 or so page tax code(it's not actually 70k pages) they've created, full of legal loopholes that any large company would be stupid to ignore.

Those loopholes are usually created by changes to laws that corporate lobbyists help put there - after making necessary campaign contributions...
 
Those loopholes are usually created by changes to laws that corporate lobbyists help put there - after making necessary campaign contributions...
And it's still the politicians that write it up and pass it into law. Again, the corporations would be stupid to not try but that doesn't mean the politicians just automatically have to do things as they're basically the ones with the final say. Just because lobbyists exist(and they exist for all sorts of special interest groups) does not excuse the politicians of the responsibility of doing their job. A large part of the population being apathetic to the issue instead of holding the appropriate feet to the fire is how this has happened.
 
This is a tax on REVENUE, not profit. Considering many tech companies operate at 6-10% profit from their revenue, this is like a 30-50% tax on their profit, and this is ON TOP of their regular income taxes. Nobody could make a profit of any type under situations like that.

Well technically they at still making money, even if their profit is taxed 50%...
 
I have no problem with this. Why should american companies be tax sheltered in ireland or wherever and not pay taxes in the US? They were playing games, sometimes they'll get burned. Thanks to the EU for (possibly) reining in the companies back where they belong.
 
Meanwhile as an employee I pay about 55% tax on my gross revenue. So fuck em. It should be at least 30%.
 
Come on, now, EU. Show some mercy. Those massive yachts don't pay for themselves.
 
Wonder if this is in response to the new US tax changes designed to encourage companies to run their money through the US instead of places like Ireland? What politicians seem to forget is wealthy companies and people can afford tax lawyers and CPAs to find the ways to avoid taxes. If Amazon spends 50 million on tax accountants and saves 51 million, for Amazon, it is a $1 million profit. And in some countries, money spent on tax preparation is deductible. So the tax system subsidizes spending money to lower the tax bill. At least for the wealthy. The middle class are left with the standard deduction.
 
Well technically they at still making money, even if their profit is taxed 50%...
This would make their effective tax rate above 80%. In many cases, this would put many companies under the profitable line. Even those that would make a profit wouldn't have enough to reinvest to grow. Such taxes are job killers.
 
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Wonder if this is in response to the new US tax changes designed to encourage companies to run their money through the US instead of places like Ireland? What politicians seem to forget is wealthy companies and people can afford tax lawyers and CPAs to find the ways to avoid taxes. If Amazon spends 50 million on tax accountants and saves 51 million, for Amazon, it is a $1 million profit. And in some countries, money spent on tax preparation is deductible. So the tax system subsidizes spending money to lower the tax bill. At least for the wealthy. The middle class are left with the standard deduction.
In many cases for the poor and middle class, including mine, the standard deduction is more of a deduction than anything an accountant can come up with.
 
Good. These guys seem to be able to get by paying close to zero taxes in the US. The US needs a policy like this. Amazon paid zero in taxes in 2017. But I can expect the majority of people on this forum to defend them while they themselves pay taxes.

Please, stop talking. Amazon has paid taxes and has kept paying taxes. 2016, they paid like $500 mil. Before that $200 mil. Before that $100 mil. Each year, they pay double the amount, cause their revenues keep increase.

2017, they will be paying taxes on the earnings made in 2017. They can't avoid paying taxes. There is no loopholes to allow them to avoid paying taxes on it. What they are doing is deferring the payment, waiting for a good rate. With Trump talking all the business tax cuts, it makes sense for all companies to defer payments in 2017 to see what happens with the tax cuts.
 
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Come on, now, EU. Show some mercy. Those massive yachts don't pay for themselves.
Yeah it's not like those companies didn't work their ass's off to get where they are they are just given free money.

They aren't like the government who can just exist like a parasite leaching off the life around it draining one victim after the next.

Also inb4 but muh roads.
 
Yeah it's not like those companies didn't work their ass's off to get where they are they are just given free money.

They aren't like the government who can just exist like a parasite leaching off the life around it draining one victim after the next.

Also inb4 but muh roads.

If I was a business owner, I would drop the European market like a hot rock.
 
If I was a business owner, I would drop the European market like a hot rock.

Sure, if you want to give up like $20 bil in profits and they still haven't even fully expanded yet. Can easily see Europe profits in the $100 bil mark in 5-10 years.

Pulling out simply means you make less, with a chance of a rival getting to build themselves up and eventually try to move into US territory.
 
At some point I wonder if these companies will just drop Europe and their Draconian taxes.
Despite their protesting, paying lobbyists to protests, and their owners funding think tanks to protest, most large companies actually prefer to pay taxes and make billions of dollars rather than not pay any taxes and lose out on a gigantic market.
 
Sure, if you want to give up like $20 bil in profits and they still haven't even fully expanded yet. Can easily see Europe profits in the $100 bil mark in 5-10 years.

Pulling out simply means you make less, with a chance of a rival getting to build themselves up and eventually try to move into US territory.

With a tax like this, it could easily be $20 billion in revenues, an extra $5 billion in GDPR regulation expenses, and $6 billion in taxes, resulting in a loss of $2 billion from operating there.
 
Despite their protesting, paying lobbyists to protests, and their owners funding think tanks to protest, most large companies actually prefer to pay taxes and make billions of dollars rather than not pay any taxes and lose out on a gigantic market.

Lets have a economic lesson. I will take the car industry since I used to work in it at Chrysler. Our typical profit margin on cars is about 8% some are a bit better some are a bit worse. So since this tax is on gross instead of net now my margin is 5% on average, now I have to decide if it's worth it and how much I invested in the area. If things are needing investment it now looks much better to just move out of that market and dumping the jobs and the vendors I used there as the job losses mount they will come back to me begging to return at far more favorable rates. Margins are far smaller then people think and just passing it on to the people does not always work as sales tend to slump and drives up your base costs as you cant buy the same quantity of materials at that low price thus eating away your margins. Europe is very much a protectionists economy and I think with Trump in power I think more tariffs will be coming as they target American business.
 
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