Formally proposed EU tax plan could cost Apple millions

Posted:
in General Discussion edited March 21
The European Commission has proposed measures to "to ensure that all companies pay fair tax in the EU," a move that will undoubtedly affect Apple.




The European Commission has announced its proposal for a reform to change the way social media, online content providers and other Internet-related companies are taxed. The proposal, which had been rumored previously, would require companies to pay taxes throughout the EU, rather than directly from where they place their European headquarters.

The proposal includes two major policy prescriptions: "Reform corporate tax rules so that profits are registered and taxed where businesses have significant interaction with users through digital channels," and the levying of "an interim tax which covers the main digital activities that currently escape tax altogether in the EU." It is meant to establish "a real link between where digital profits are made and where they are taxed."

The EC proposal does not mention any specific companies, but states that the common reform will apply to companies with "7 million euros [$8.6 million] in annual revenues in a Member State" and "more than 100,000 users in a Member State in a taxable year," as well as "over 3000 business contracts for digital services are created between the company and business users in a taxable year." These criteria would seem to apply to Apple in most, if not all, EU member states.

The interim tax would apply to companies with "total annual worldwide revenues of 750 million euros ($922 million) and EU revenues of 50 million euros ($61.5 million.)" Apple, is well over both of those numbers.

The proposal still must be submitted to the European Parliament for ratification.

Apple has long located its European headquarters in Ireland and used that country to minimize the tax it pays across the EU. the legal maneuver led to a dispute over taxation and collections with the European Commission that has been ongoing since 2016.

Comments

  • Reply 1 of 16
    spice-boyspice-boy Posts: 630member
    I wish states would start charging for purchases from online websites like Amazon while local brick and mortar stores sales have suffered forcing many family operated businesses to close. Bezos the richest man in the world because he built an empire on tax evasion. 
    randominternetperson
  • Reply 2 of 16
    evilutionevilution Posts: 1,332member
    "pay fair tax"

    Yeah, good one. Funny.

    You pay tax on the money you make and then you pay tax on the things you buy.
    How is taking 2 bites of my money "fair" considering that they do nothing for it?
    racerhomie3SpamSandwich
  • Reply 3 of 16
    The EU is nuts.
    Lets hope Italy leaves them fast.
    SpamSandwich
  • Reply 4 of 16
    anton zuykovanton zuykov Posts: 1,023member
    spice-boy said:
    I wish states would start charging for purchases from online websites like Amazon while local brick and mortar stores sales have suffered forcing many family operated businesses to close. Bezos the richest man in the world because he built an empire on tax evasion. 
    Sure, but why? You are protecting something that can't compete. I agree that it would be good if local businesses were protected, but how can you make sure that you are not protecting shitty businesses with shitty practices, from the competition? It would hurt the consumers.
    SpamSandwichavon b7
  • Reply 5 of 16
    stukestuke Posts: 74member
    This is a no-brainer and Apple’s not dumb. Watch the price of Apple products change to cover the new duties. Of course it will be mixed in with exchange rates so as not to be sooooo transparent that is what happened. 
    edited March 21
  • Reply 6 of 16
    The proposed rate is 3% of revenue DERIVED from the EU. 

    Compare red that to Apple’s current effective revenue tax rate (~6%) and post tax reform rate (~5%). 

    The EU members make up the difference with a pseudo national sales tax called a Value Added Tax (VAT). 

    National sales taxes axes are easier to manage and insure that economic activity is taxed vs taxing profits is subject exploitation of unintended loopholes.  If all countries implemented a national sales tax it would eliminate tax avoidance strategies and generate tax revenue where the revenue was generated. 

    The US is the only major economy that does not have a national sales tax.  This causes US produced goods to be more expensive (embedded production taxes) that are then taxed at the retail level (VAT).  The opposite is true of goods imported into the US (no or very low embedded taxes and no national sales tax).
  • Reply 7 of 16
    SpamSandwichSpamSandwich Posts: 30,274member
    EU members will be paying more for everything. Congrats, fools!
    anton zuykov
  • Reply 8 of 16
    anton zuykovanton zuykov Posts: 1,023member
    The proposed rate is 3% of revenue DERIVED from the EU. 

    Compare red that to Apple’s current effective revenue tax rate (~6%) and post tax reform rate (~5%). 

    The EU members make up the difference with a pseudo national sales tax called a Value Added Tax (VAT). 

    National sales taxes axes are easier to manage and insure that economic activity is taxed vs taxing profits is subject exploitation of unintended loopholes.  If all countries implemented a national sales tax it would eliminate tax avoidance strategies and generate tax revenue where the revenue was generated. 

    The US is the only major economy that does not have a national sales tax.  This causes US produced goods to be more expensive (embedded production taxes) that are then taxed at the retail level (VAT).  The opposite is true of goods imported into the US (no or very low embedded taxes and no national sales tax).
    US does not have a national sales tax either. Also, EU is not a country and VAT changes from country to country (between 20-25%), which is the same way the states impose their own sales tax....
  • Reply 9 of 16
    anton zuykovanton zuykov Posts: 1,023member
    EU members will be paying more for everything. Congrats, fools!
    Idiots do not realize, that when you tax a corporation (aka bureaucratic entity) it is either employees or the consumers that will pick up the tab.
    Stupid is what stupid does. :D
    SpamSandwich
  • Reply 10 of 16
    SpamSandwichSpamSandwich Posts: 30,274member
    EU members will be paying more for everything. Congrats, fools!
    Idiots do not realize, that when you tax a corporation (aka bureaucratic entity) it is either employees or the consumers that will pick up the tab.
    Stupid is what stupid does. :D
    I’m sure everyone in the EU is completely OK with paying a significant premium for the pleasure of having no national sovereignty and having to live under rules crafted by woke politicians.
  • Reply 11 of 16
    singularitysingularity Posts: 1,329member
    EU members will be paying more for everything. Congrats, fools!
    HiIdiots do not realize, that when you tax a corporation (aka bureaucratic entity) it is either employees or the consumers that will pick up the tab.
    Stupid is what stupid does. :D
    I’m sure everyone in the EU is completely OK with paying a significant premium for the pleasure of having no national sovereignty and having to live under rules crafted by woke politicians.
    Quite a lot of people in the EU would be quite happy with rules that help prevent some of the blatent abuses of the tax system that have occurred here. If only some of the national governments would show some of the same backbone and address it.
    muthuk_vanalingam
  • Reply 12 of 16
    SpamSandwichSpamSandwich Posts: 30,274member
    EU members will be paying more for everything. Congrats, fools!
    HiIdiots do not realize, that when you tax a corporation (aka bureaucratic entity) it is either employees or the consumers that will pick up the tab.
    Stupid is what stupid does. :D
    I’m sure everyone in the EU is completely OK with paying a significant premium for the pleasure of having no national sovereignty and having to live under rules crafted by woke politicians.
    Quite a lot of people in the EU would be quite happy with rules that help prevent some of the blatent abuses of the tax system that have occurred here. If only some of the national governments would show some of the same backbone and address it.
    Are they OK with paying more for everything?
  • Reply 13 of 16
    croprcropr Posts: 865member
    The proposed rate is 3% of revenue DERIVED from the EU. 

    Compare red that to Apple’s current effective revenue tax rate (~6%) and post tax reform rate (~5%). 

    The EU members make up the difference with a pseudo national sales tax called a Value Added Tax (VAT). 

    National sales taxes axes are easier to manage and insure that economic activity is taxed vs taxing profits is subject exploitation of unintended loopholes.  If all countries implemented a national sales tax it would eliminate tax avoidance strategies and generate tax revenue where the revenue was generated. 

    The US is the only major economy that does not have a national sales tax.  This causes US produced goods to be more expensive (embedded production taxes) that are then taxed at the retail level (VAT).  The opposite is true of goods imported into the US (no or very low embedded taxes and no national sales tax).
    US does not have a national sales tax either. Also, EU is not a country and VAT changes from country to country (between 20-25%), which is the same way the states impose their own sales tax....
    Additionally, VAT is a consumer tax.  Corporates don't pay VAT.   The newly proposed tax here is a corporate tax
  • Reply 14 of 16
    EU members will be paying more for everything. Congrats, fools!
    HiIdiots do not realize, that when you tax a corporation (aka bureaucratic entity) it is either employees or the consumers that will pick up the tab.
    Stupid is what stupid does. :D
    I’m sure everyone in the EU is completely OK with paying a significant premium for the pleasure of having no national sovereignty and having to live under rules crafted by woke politicians.
    Quite a lot of people in the EU would be quite happy with rules that help prevent some of the blatent abuses of the tax system that have occurred here. If only some of the national governments would show some of the same backbone and address it.

    Abused? If the tax system has allowances, everyone will use them. There is no abuse.
  • Reply 15 of 16
    So much ignorance in these comments.. the corporate taxes that are imposed by the EU are important. To Apple a couple of million is nothing! But to the country that would be benefiting from these taxes, this means better infrastructure, etc.

    Apple, if you want to operate in a country, then you have to contribute to its growth. And as a European I'm already paying a premium for apple products (almost double in USD value).
    edited March 22
  • Reply 16 of 16
    spice-boy said:
    I wish states would start charging for purchases from online websites like Amazon while local brick and mortar stores sales have suffered forcing many family operated businesses to close. Bezos the richest man in the world because he built an empire on tax evasion. 

    You must live in a state where there are no Amazon owned facilities.  I live in Kentucky, and pay state sales tax on items bought from Amazon.

    Most States do charge sales tax on online purchases, but it's the purchaser's responsibility to pay it, and many don't.  A state has little to no legal authority to require a company that has no presence in that state to collect taxes for them; they have to rely on the purchaser's good will.


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