The US has been trying to get multinationals based in the US to pay taxes on revenue generated outside of the country for years. Now Europe is going after multinationals, as well.
The New York Times reports today that several European nations, particularly France and the UK, are pushing to collect taxes from US companies such as Amazon.com and Google that conduct their business primarily on the Internet. Though the companies are in compliance with EU tax laws, governments struggling to balance their budgets are taking a second look at tax codes.
The US has been fighting a similar battle on two fronts: state taxes and corporate income taxes. Some US states have been able to collect taxes from Internet sales when a shipper (such as Amazon.com) has a physical presence in the state. Corporate tax efforts have been less successful. International companies are in full compliance with US laws when they bank their revenue in foreign countries, and companies such as Amazon, Apple, Cisco, Google, and General Electric pay virtually no US taxes on that revenue. (See: It's Only a Holiday if You Actually Pay Taxes.)
Several remedies have been suggested by the US, including amnesty or one-time-only charges for companies that want to repatriate their cash. (See: Apple, Cisco, Google, Seek Tax Relief to Repatriate Cash.) Detractors reject the proposals, saying the revenue derived from such moves would have little or no effect on the nation's debt crisis. They are absolutely right. The US -- like many other nations -- is beyond a onetime fix. Closing tax loopholes has been a popular campaign promise in the US, but little progress has been made. Now it will be a race to see which government collects those international taxes first.
Clearly, the US fiscal cliff and the EU's debt crisis are fueling those efforts, and maybe it does take a global economic crisis to spur tax reform. But it shouldn't. Either the tax codes are equitable, or they're not. The furor over multinationals' revenue implies the tax laws are OK until somebody really needs the money. According to the NYT, companies like Google and Amazon.com "pay little or no taxes in Europe, despite generating billions of dollars in revenue on the Continent."
Business models such as the Internet do change tax implications, and tax codes should be updated accordingly. The Internet is still a relatively new business model, and it's understandable that it may take a while for tax codes to catch up. However, globalization isn't new. Tax loopholes should be identified and closed when questions first arise. "While some American corporate leaders have been lobbying in Washington for another tax holiday, lawmakers in Europe are moving to collect a greater share of multinationals' taxes," the NYT says.
Though it's tough to have a lot of sympathy for multinational corporations sitting on piles of cash, their revenue shouldn't be the spoils of an international tax war.
Here is an idea all those companies that do not want to pay any tax in a country, they do not get to trade anything to or in that country.
If the these huge companies do start paying billions in tax though, get rid of all the lobbyists and give them a seat in the national parliament, senate or congress where they can influence things directly. Would cut out all the "campaign contributions" or employing politicians when they end their political careers and all the various dodges and wheezes they use to get their own way.
Well yes I am joking but things are getting totally out hand and farcical.
Maybe we need a new party, the coffee party to get Starbucks to pay some tax over here in the UK.
Year 2011 Starbucks UK turnover 398mill pounds uk corporation tax none, 2011 Google UK turnover corp tax 6 mill. Amazon 2010 uk turnover 3.3 billion corp tax none.
Although it may seem unfair to chase the multinationals for paying more tax, if governments have no other option to raise the cash they need, they are going to come up with creative ways to collect money. At least the Western governments are trying to gather tax based on income.
Some governments really have very unfair taxation systems. They simply increase the indirect taxes to raise more money. İ know a country where a car buyer pays the tax of a tax, which sounds ridiculous but it is still in force! The same country also applies very high import taxes on all items coming from abroad.
At the end of the day, taxes are the most effective tools for a government to raise money and they will use it in every way possible if need be.
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Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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