European Union proposals could tax Apple and other tech giants between 2 percent and 6 per...

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The European Union will soon release proposals to change the way it taxes major tech companies operating within the continent, French Finance Minister Bruno Le Maire has revealed, with firms including Apple potentially being taxed at a rate of between 2 percent and 6 percent in the future.




In an interview with French newspaper Le Journal du Dimanche, spotted by Reuters, Le Maire advised "a European directive will be disclosed in the coming weeks." The change will be a "considerable step" that will involve a tax range between 2 percent to 6 percent, but Le Marie notes the tax rates will skew towards the lower end of the scale.

The tax may also be calculated differently, switching from the current system based on profits to one that is based on revenue, if aspects of an earlier draft proposal ends up being used in the final version.

A draft document from the European Commission, seen by Reuters last month, proposed a levy of between 1 percent and 5 percent of a company's "aggregated gross revenues." A crucial part of these draft proposals would be that the levy would be based on where the customer is located for each transaction, not the location of the company itself.

The proposal is an attempt to curtail the measures taken by major firms to minimize the amount of tax paid. Typical strategies involve routing EU-derived profits through offices registered in countries with low tax rates, including Luxembourg and Ireland.

While critics demading changes to European tax law may consider the proposals do not go far enough, Le Maire suggests this to be a "starting point" for reform. "I prefer a text that will be implemented very quickly rather than endless negotiations. We will fine tune it later."

A scheme to tax based on the customer's location may have prevented Apple's ongoing tax battle with Europe from ever taking place. Apple was hit with a demand by the European Commission for 13 billion euro ($16 billion) in back taxes to be paid to Ireland, ruling that Ireland provided illegal tax benefits for many years.

In its investigation, the European Commission found Irish taxes on Apple's European profits hit as low as 0.005 percent in 2014, and as low as 1 percent in 2003. It was also ruled the tax arrangement between Apple and Ireland was "reverse engineered" on the fly to guarantee the smallest possible tax bill.

Despite protests from both Ireland and Apple, a payment from Apple to an escrow account set up by the country is expected to start in the second quarter of 2018, continuing into the third quarter. Progress has been so slow, the European Commission filed a complaint against the Irish government for its failure to collect the funds, but the Commission says it is willing to withdraw the court case if the full amount is collected.
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Comments

  • Reply 1 of 51
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    gatorguymdriftmeyerfeudalistmuthuk_vanalingampropodvannygeebloodshotrollin'red[Deleted User]spice-boylamboaudi4
  • Reply 2 of 51
    chasmchasm Posts: 753member
    All this hullabaloo, and they end up coming up with a tax rate not wildly different from what Apple pays now. Compare this to Apple's US tax rate of ~25 percent, and kiss all those imaginary jobs you thought would "come back" to the US goodbye (it's okay, they were never going to come back in the first place).
    netmagewatto_cobra
  • Reply 3 of 51
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    It’s only morally repugnant because the tax system was developed by politicians, each of which hopes to include an element that benefits their respective constituents. 

    The only real real solution is to tax the transaction (sales tax) at a rate that satisfies government revenue requirements, and cease trying to tax profits. This is the difference between taxing consumption vs taxing production. Taxing production increases production costs and sets the stage for tax law manipulation, while taxing consumption provides tax revenue in the jurisdiction where the transaction takes place. 

    In order to tax foreign imports and lower the cost of domestic production many countries have established value added taxes (an overly complex sales tax). 

    The biggest problem with with tax compliance is the creators, all of which are constituent motivated. Understand that not all constituents are equal (think “Animal Farm”) with the more equal bearing the most political motivation. 
    steven n.jony0netmagedesignrmac_dogrob53anantksundaram
  • Reply 4 of 51
    The EU already has a tax based on revenue. It's called VAT (Value Added Tax).

    In addition, the European Commission does not have the right to raise taxes. That privilege is - for the time being - reserved to the sovereign treasuries of the EU member states.

    This is a case of the EU massively overstepping its competencies and a Commission that, yet again, acts without any democratic mandate.

    I'm very glad that the UK has voted to kick it to the kerb.
    randominternetpersonnetmagebshankdesignrchristophbgeorgie01watto_cobrajbdragonindyfxanantksundaram
  • Reply 5 of 51
    Wow. Even at 6% income tax, this is FAR FAR below the 30% tax rate for Corporations in the United States. And this is FAR FAR below the 36% income tax for individuals making over $125,000.

    Obviously, someone has to pay taxes. And individuals pay lots more in tax (including VAT) than people in the U.S.
    edited March 4
  • Reply 6 of 51
    steven n.steven n. Posts: 1,047member
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    "Morally repugnant?" I put overly complex tax laws created to benefit a few constituents morally repugnant and morally responsible to use those laws to pay fewer taxes.

    I do agree this is the right way for the EU to address the tax issues they are having. Instead of making stuff up and applying it to past performance, CHANGE THEIR LAWS!!!
    netmagewatto_cobra
  • Reply 7 of 51
    steven n.steven n. Posts: 1,047member

    Wow. Even at 6% income tax, this is FAR FAR below the 30% tax rate for Corporations in the United States. And this is FAR FAR below the 36% income tax for individuals making over $125,000.

    Obviously, someone has to pay taxes. And individuals pay lots more in tax (including VAT) than people in the U.S.
    This is on revenue and not profit or taxable income. Pears to grape fruits to Bermuda Grass comparison .
    muthuk_vanalingamwatto_cobra
  • Reply 8 of 51
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    And I think, whatever you are paying in taxes is not enough, therefore it is tax avoidance and morally repugnant! You should pay double of what you paid last time! How despicable!
    jony0tallest skildesignrrandominternetpersonMacsplosionwatto_cobra
  • Reply 9 of 51
    dee_deedee_dee Posts: 11member
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    As a corporation, Apple is required to pay as little tax as possible within the law.  Failing to do so would invite a lawsuit by shareholders.  It sounds like you have more of a problem with capitalism then Apple.  Secondly, the EU countries already collect 20% tax on iPhones etc - which you'd think is enough, but of course greedy politicians always want more money to piss down the drain.
    jony0netmagedesignrmacseekeranton zuykovwatto_cobrajbdragon
  • Reply 10 of 51
    gatorguygatorguy Posts: 19,031member
    dee_dee said:
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    As a corporation, Apple is required to pay as little tax as possible within the law.  
    No they are not. There is zero requirement for anyone, corporation or not, to aggressively seek out creative ways to possibly avoid taxation. I don't know how that claim took on a life of its own but it has.  
    muthuk_vanalingamcropravon b7[Deleted User]
  • Reply 11 of 51
    asdasdasdasd Posts: 5,102member
    chasm said:
    All this hullabaloo, and they end up coming up with a tax rate not wildly different from what Apple pays now. Compare this to Apple's US tax rate of ~25 percent, and kiss all those imaginary jobs you thought would "come back" to the US goodbye (it's okay, they were never going to come back in the first place).
    It’s a tax on revenue not profits. Which is insane. 
    watto_cobra
  • Reply 12 of 51
    lkrupplkrupp Posts: 6,283member
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    Great. Much as you “love Apple’s products” are you willing to pay a higher price for them to cover those higher taxes? What? You think Apple and the others will simply absorb those higher taxes and not pass them on to you? You the consumer pay for everything or didn’t you know that? 

    Do you take every tax deduction your are legally allowed to take? If you do then you are morally repugnant by your own standard.
    edited March 4 netmagenouserradarthekatmacxpresswatto_cobraanantksundaram
  • Reply 13 of 51
    asdasdasdasd Posts: 5,102member
    The EU already has a tax based on revenue. It's called VAT (Value Added Tax).

    In addition, the European Commission does not have the right to raise taxes. That privilege is - for the time being - reserved to the sovereign treasuries of the EU member states.

    This is a case of the EU massively overstepping its competencies and a Commission that, yet again, acts without any democratic mandate.

    I'm very glad that the UK has voted to kick it to the kerb.
    That’s right. There’s a tax on revenue already. The difference is it isn’t really paid by the company, it is paid by the consumer and collected by the company. 


    it looks like this tax comes from the company’s actual earnings. Which means that potentially a loss making company may owe taxes in some countries, which can only see them leave those countries. It’s not clear whether this is an additional corporation tax to the existing  corporation (HQ) tax, or can be deducted from it. It’s also interesting that the EU seeks to be targeting US companies. Surely BMW will also pay this tax to France, Ireland etc. No mention of that. 

    And of course this is both a raid on US revenue, and a totally new competency for the EU itself. Apple is now tax compliant, as it has agreed to repatriate taxes to the US. If taxes are already paid in Europe  then fewer are owed in the US. Thisleads to a trade or tax war. 
    radarthekat
  • Reply 14 of 51
    asdasdasdasd Posts: 5,102member

    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    It’s only morally repugnant because the tax system was developed by politicians, each of which hopes to include an element that benefits their respective constituents. 

    The only real real solution is to tax the transaction (sales tax) at a rate that satisfies government revenue requirements, and cease trying to tax profits. This is the difference between taxing consumption vs taxing production. Taxing production increases production costs and sets the stage for tax law manipulation, while taxing consumption provides tax revenue in the jurisdiction where the transaction takes place. 

    In order to tax foreign imports and lower the cost of domestic production many countries have established value added taxes (an overly complex sales tax). 

    The biggest problem with with tax compliance is the creators, all of which are constituent motivated. Understand that not all constituents are equal (think “Animal Farm”) with the more equal bearing the most political motivation. 
    Hmm.  The European countries already have a consumption tax, VAT is generally around 20% on electronic goods in most of these countries. VAT isn’t revenue for the company. It’s not booked as normal revenue, the business that sells onto the final (non VAT collecting) consumer is basically a collector of VAT.  It’s collected and paid per quarter (gross vat minus any VAT paid by the business. That’s often zero as businesses can use their VAT number to buy goods free of VAT. So it is only sales to individuals or very small companies where VAT is charged). 

    This tax is new, and it seems to be a tax on actual revenue. If Apple sells a 700 Euro device to its wholesalers, the consumer country wants 14-42 per device sold regardless of profits. This may not seem very high until you realise that most companies (not Apple) make about 10% margins on electronic goods and some far less. 
    edited March 4 propodavon b7
  • Reply 15 of 51
    tallest skiltallest skil Posts: 43,399member
    Madrajin said:
    this type of tax avoidance is morally repugnant.
    Learn what morality is, and then give 100% of your income to the government to make up for Apple’s “transgressions.”
    A move to tax on revenue will fix this shenanigans.
    A flat 15% tax regardless of the size or type of industry sounds good to me.
    designr
  • Reply 16 of 51
    It’s only morally repugnant because the tax system was developed by politicians, each of which hopes to include an element that benefits their respective constituents. 
    No, that is what politicians are SUPPOSED to do: represent their constituents' interests.  It's morally repugnant when they don't.
  • Reply 17 of 51
    bshankbshank Posts: 139member
    Wow. Even at 6% income tax, this is FAR FAR below the 30% tax rate for Corporations in the United States. And this is FAR FAR below the 36% income tax for individuals making over $125,000.

    Obviously, someone has to pay taxes. And individuals pay lots more in tax (including VAT) than people in the U.S.
    Apple is a U.S.based company so the EU cannot tax Apple like the U.S. can. That’s a big part of the debate you and many others seem to be missing
    watto_cobra
  • Reply 18 of 51
    radarthekatradarthekat Posts: 2,525moderator
    lkrupp said:
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    Great. Much as you “love Apple’s products” are you willing to pay a higher price for them to cover those higher taxes? What? You think Apple and the others will simply absorb those higher taxes and not pass them on to you? You the consumer pay for everything or didn’t you know that? 

    Do you take every tax deduction your are legally allowed to take? If you do then you are morally repugnant by your own standard.
    THIS!
    watto_cobra
  • Reply 19 of 51
    asdasdasdasd Posts: 5,102member
    lkrupp said:
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    Great. Much as you “love Apple’s products” are you willing to pay a higher price for them to cover those higher taxes? What? You think Apple and the others will simply absorb those higher taxes and not pass them on to you? You the consumer pay for everything or didn’t you know that? 

    Do you take every tax deduction your are legally allowed to take? If you do then you are morally repugnant by your own standard.
    In general tax avoidance is where people or companies game the system ie use a loop hole not designed as such by legislators. It’s not expensing something or taking a deduction on pension or charity contributions. That’s a design. 

    On the second point companies tend to sell at a price that generates demand. That’s econ 101. 
    gatorguyavon b7propod
  • Reply 20 of 51
    lkrupp said:
    Madrajin said:
    Much as a love Apple’s products, this type of tax avoidance is morally repugnant. A move to tax on revenue will fix this shenanigans. Large multinationals have got away with paying almost no corporation tax in the same markets that domestic companies have to pay full dues for years.
    Great. Much as you “love Apple’s products” are you willing to pay a higher price for them to cover those higher taxes? What? You think Apple and the others will simply absorb those higher taxes and not pass them on to you? You the consumer pay for everything or didn’t you know that? 

    Do you take every tax deduction your are legally allowed to take? If you do then you are morally repugnant by your own standard.
    As the director of a small business we pay corporation tax as it was intended. Almost all small companies do. It’s only large corporations that can afford to set up the shell organisations to shuffle profits from one country to another to artificially lower their tax burden in countries with lower tax rates. The crazy thing is that the U.K. has one of the lowest corporation tax rates in Europe. 

    What is morally repugnant is that companies 1000 times smaller than Apple are paying more in taxes that support our services. Corporation taxes are higher than they could be because of this shit that huge companies like Apple pull by not contributing in proportion to their true profits.

    When you look at Apple’s cash mountain it becomes obvious that they can afford to pay the same rate of tax as every local business does.

    I don’t believe that Apple’s prices would increase significantly. It is a tax on profit, not revenue.


    bloodshotrollin'redcropravon b7crowleypropod
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