G20 countries agree to work on new rules to curb corporate tax loopholes

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The coalition of countries known as the G20 will be working to make tech companies like Apple and Google pay a fairer amount of tax, after agreeing there is a need to implement new tax rules to prevent major organizations from working around existing laws to pay as little tax as possible.




Agreed in principle on Sunday, the finance ministers of G20 countries agreed to create a list of common rules to eliminate tax loopholes currently abused by tech companies to reduce their corporate taxes. At the summit at Fukuoka, Japan, the agreement consists of "two pillars" that could change how taxes are calculated for the targeted firms.

The first pillar, Reuters reports, is to divide the rights to tax a firm based on where its goods and services are sold in the world, regardless of where its headquarters are based, or even if the company doesn't have any presence in the country at all.

The second measure, if the first is worked around by the firm somehow, addresses the use of so-called tax havens, by the application of a global minimum tax rate. No actual figures have been determined for each at this time.

"We welcome the recent progress on addressing the tax challenges arising from digitization and endorse the ambitious program that consists of a two-pillar approach," a communique from the G20 stated. "We will redouble our efforts for a consensus-based solution with a final report by 2020."

Japanese Finance Minister Taro Aso, who also acted as chair for the meetings, advised "I feel we need both pillars at the same time for this to work. The proposals are still a little vague, but they are gradually taking shape."

While there is a consensus on the agreement, there is still some unrest between the United States, the United Kingdom, and France, with the former's government concerned that US-based firms will be unfairly targeted in the tax code updates. "The U.S. Has significant concerns with the two corporate taxes proposed by France and the UK," said U.S. Treasury Secretary Steven Mnuchin on Saturday.

A number of key EU countries recently blocked a draft proposal of tax reform that would have affected firms operating within the European Union, but that hasn't stopped individual countries from seeking their own changes.

Apple is largely expected to be a major target for the tax reform, as evidenced by an EU investigation that ruled it didn't pay enough tax to Ireland, prompting a payment of $15 billion to the country. Both the Irish government and Apple are contesting the ruling by the European Commission.

Apple CEO Tim Cook has maintained Apple pays "all the taxes we owe," and that it even follows "the spirit of the laws."
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Comments

  • Reply 1 of 22
    dewmedewme Posts: 2,098member
    “Abused by tech companies?” Really!? It’s ironic and moronic that these tax loopholes are being presented as tech companies preying on innocent host countries that are powerless to protect themselves from these evil capitalists. We have to call BS on this.

    A more accurate narrative is that these countries are vying against one another for the business opportunities and jobs that these tech companies bring to their localities. These countries lure businesses to invest in their communities by offering sweetheart deals and tax incentives. These countries  knew what they were doing and they knew that they were screwing their neighbors and other countries with the deals they entered into for their own self interests. Now with the EU and increased nationalism their shady little deals are having the light of day shined on them and they are turning on the companies that they lured into their schemes. What a bunch of hypocrites. 
    edited June 9 steven n.emig647macseekerplanetary paulbeowulfschmidtjbdragonmwhite
  • Reply 2 of 22
    rob53rob53 Posts: 2,051member
    All this will do is cause prices to go up to cover excess taxes with governments getting more money. What will they do with this money? I’m sure it won’t be used to lower individual income taxes or to provide things that benefit the country’s population. It will line the pockets of politicians and rulers as well as local corporations. 
    planetary paulmwhitecat52
  • Reply 3 of 22
    irelandireland Posts: 17,617member
    The laws need to be written to ensure companies pay their fair share. The average person on the street certainly does.
    croprmuthuk_vanalingamspice-boyauxioCarnage
  • Reply 4 of 22
    SpamSandwichSpamSandwich Posts: 31,191member
    Guess where companies won’t be locating their businesses in the future? That’s right, the G20.
    jbdragoncat52
  • Reply 5 of 22
    elijahgelijahg Posts: 947member
    Guess where companies won’t be locating their businesses in the future? That’s right, the G20.
    So Apple is going to move out of the US, UK, India, Germany, Japan and China? Alright then. 

    I agree some kind of change is needed, as companies are able to claim the money they collect from consumers isn't actually profitable in countries they collect it in. Starbucks for example charges its UK branches rental on its cafes that's exactly the same as the profit they make. So they apparently make no money. Apparently. It's legal, but it's not ethical and should be fixed. Tax codes are way overcomplicated and that overcomplexity allows loopholes to be found.
    gatorguymuthuk_vanalingamh2p
  • Reply 6 of 22
    hentaiboyhentaiboy Posts: 974member
    "The second measure, if the first is worked around by the firm somehow, addresses the use of so-called tax havens, by the application of a global minimum tax rate"

    I wonder if this will also apply to Fat Cat individuals?
  • Reply 7 of 22
    rerollreroll Posts: 47member
    Just looked it up for France: 2200 jobs from Apple. If France has let Apple pay less taxes in exchange of jobs, then it wasn’t that effective...
    hydrogengatorguyjbdragon
  • Reply 8 of 22
    fred1fred1 Posts: 329member
    Why just tech companies? Starbucks fr’instance also skirts tax laws, at least in Europe, by using the famous “Dutch-Irish sandwich”, having to do with low import duties in The Netherlands and low corporate tax rates in Ireland.

    We all know, including the lawmakers, that the companies will just pass on the extra expense to their customers, like the cigarette companies in the US did with the big fine they were levied. And no one will notice if, for example, the cost of a monitor stand goes up to $1200. They’ll pay it.
  • Reply 9 of 22
    gatorguygatorguy Posts: 20,748member
    rob53 said:
    All this will do is cause prices to go up to cover excess taxes with governments getting more money. What will they do with this money? I’m sure it won’t be used to lower individual income taxes or to provide things that benefit the country’s population. It will line the pockets of politicians and rulers as well as local corporations. 
    Companies would presumably be charging what the market will bear already. They couldn't therefor raise price even more due to paying a "fairer" share of taxes compared to smaller firms without negatively affecting sales. Your claim that it will all be passed on to consumers if they have to pay corporate tax doesn't hold water. It will simply be a tiny bit less after-tax profit in GAFA's already Brobdingnagian silk-lined purses, not higher consumer prices because of it. 

    Notice too that even tho Apple is the single richest of the tax-abatement techs and avoids the largest amount of corporate tax dollar-wise they aren't even mentioned in the source article until the very last paragraph? No Apple isn't always picked on.
    edited June 10 auxioelijahgCarnage
  • Reply 10 of 22
    dewme said:
    “Abused by tech companies?” Really!? It’s ironic and moronic that these tax loopholes are being presented as tech companies preying on innocent host countries that are powerless to protect themselves from these evil capitalists. We have to call BS on this.

    A more accurate narrative is that these countries are vying against one another for the business opportunities and jobs that these tech companies bring to their localities. These countries lure businesses to invest in their communities by offering sweetheart deals and tax incentives. These countries  knew what they were doing and they knew that they were screwing their neighbors and other countries with the deals they entered into for their own self interests. Now with the EU and increased nationalism their shady little deals are having the light of day shined on them and they are turning on the companies that they lured into their schemes. What a bunch of hypocrites. 
    Exactly.  Politicians enacted these laws and loopholes to either benefit their corporate contributor friends, or entice businesses to locate there, or both, and then cry about "evil capitalists" when their constituency gets upset about those companies actually take advantage of the laws that the politicians created.  

    So moves like the one in this article just give the politicians the ability to renege on those deals, leaving the companies they promised holding the bag, with no recourse whatsoever.
    cat52
  • Reply 11 of 22
    gatorguygatorguy Posts: 20,748member
    dewme said:
    “Abused by tech companies?” Really!? It’s ironic and moronic that these tax loopholes are being presented as tech companies preying on innocent host countries that are powerless to protect themselves from these evil capitalists. We have to call BS on this.

    A more accurate narrative is that these countries are vying against one another for the business opportunities and jobs that these tech companies bring to their localities. These countries lure businesses to invest in their communities by offering sweetheart deals and tax incentives. These countries  knew what they were doing and they knew that they were screwing their neighbors and other countries with the deals they entered into for their own self interests. Now with the EU and increased nationalism their shady little deals are having the light of day shined on them and they are turning on the companies that they lured into their schemes. What a bunch of hypocrites. 
    Exactly.  Politicians enacted these laws and loopholes to either benefit their corporate contributor friends, or entice businesses to locate there, or both, and then cry about "evil capitalists" when their constituency gets upset about those companies actually take advantage of the laws that the politicians created.  

    So moves like the one in this article just give the politicians the ability to renege on those deals, leaving the companies they promised holding the bag, with no recourse whatsoever.
    You believe France enacted their tax laws so that Ireland would get some advantage, or that Australia wrote theirs so that a major tax haven and business center could be set up in Singapore and tax obligations moved to Ireland? How did France and Australia benefit? 
    edited June 10 elijahgCarnage
  • Reply 12 of 22
    xbitxbit Posts: 243member
    Good. Let Amazon et al compete on a level playing field with smaller national companies.
    spice-boyelijahg
  • Reply 13 of 22
    jbdragonjbdragon Posts: 2,135member
    It was the Government that created the loopholes. Now they're mad about them being used? It's the duty of any and all company's to pay as little of taxes as you legally can. That's the job of YOU and ME as a individual to also pay as little taxes as possible. Who wants to just pay more than they should?

    The fact is Corporations don't pay taxes, YOU pay it for them. So wanting these company's to pay more in taxes, is really just you having to pay more money to get their product. It's what politicians would call a around about way to tax the people, while still looking good and looking like they're on your side. Those EVIL corporations, we'll get them!!!! But really, it's just a around about way to tax YOU the people even more money. They still look good and get re-elected.

    So I'm all for jacking taxes up and closing the loopholes in the G20 countries. it doesn't effect me. If you all want to pay more money for products, go right ahead.
    edited June 10
  • Reply 14 of 22
    gatorguygatorguy Posts: 20,748member
    jbdragon said:

    So wanting these company's to pay more in taxes, is really just you having to pay more money to get their product...
    If you all want to pay more money for products, go right ahead.
    See post 9 for an explanation why in general you would be wrong.
    edited June 10
  • Reply 15 of 22
    auxioauxio Posts: 1,998member
    jbdragon said:

    So I'm all for jacking taxes up and closing the loopholes in the G20 countries. it doesn't effect me. If you all want to pay more money for products, go right ahead.
    Right.  Because when the government is making cuts to public services, it's sold to people as "trimming the fat" or "finding efficiencies in the system".  Yet when it's done to corporations, the only possible way they could afford it is by raising the price of their products.

    The big sell job: corporations are lean, mean, well-oiled, efficient machines while government is a bloated and inefficient.  Nothing to see with the big bonuses/perks given to senior management or the share earnings.  Can you imagine the outrage if someone working for the government was given perks like those?
    StrangeDaysbigtdselijahg
  • Reply 16 of 22
    spice-boyspice-boy Posts: 837member
    Oh boy here we go again. Corporate defenders are here to make sure we are aware of how unfair it is that billion dollar (and one Trillion dollar) corporation has the right to pay as little tax as possible. "if we tax them they will take their ball and bat home and nobody will get to play with their products and services ever again".....

    Trickle down economics was a scam when it was introduced in the 1980's and it is almost a constitutional amendment in some peoples minds, a proven beneficial law which helps maintain a large middle class when it has the opposite affect. The world should not have to rely on the charitable foundations of Bill Gates, Warren etc... to help the poorest and hungriest people. If those with more money than is imaginable paid a healthy amount of tax the way the rest of us do their would be money available to cure and treat diseases, eradicate hunger, build and maintain PUBLIC schools. Hopefully enough people will wake us one day to see this anti-tax propaganda for what it is, a way to cheat society and let those with the most get even more.

    PS Apple will not being going away anytime soon, if there tax bill was doubled it would not change a thing at the company and you will get getting slightly improved products on a yearly basis, don't worry daddy is not going away. 
    Carnage
  • Reply 17 of 22
    spice-boyspice-boy Posts: 837member

    Guess where companies won’t be locating their businesses in the future? That’s right, the G20.
    you mean tax shelters the businesses will be located where there are plenty of Shake Shacks and things tech nerds seem too like. 
  • Reply 18 of 22
    auxioauxio Posts: 1,998member
    fred1 said:
    Why just tech companies?
    I agree.  These rules should be across the board for all multinational corporations.
  • Reply 19 of 22
    gatorguy said:
    dewme said:
    “Abused by tech companies?” Really!? It’s ironic and moronic that these tax loopholes are being presented as tech companies preying on innocent host countries that are powerless to protect themselves from these evil capitalists. We have to call BS on this.

    A more accurate narrative is that these countries are vying against one another for the business opportunities and jobs that these tech companies bring to their localities. These countries lure businesses to invest in their communities by offering sweetheart deals and tax incentives. These countries  knew what they were doing and they knew that they were screwing their neighbors and other countries with the deals they entered into for their own self interests. Now with the EU and increased nationalism their shady little deals are having the light of day shined on them and they are turning on the companies that they lured into their schemes. What a bunch of hypocrites. 
    Exactly.  Politicians enacted these laws and loopholes to either benefit their corporate contributor friends, or entice businesses to locate there, or both, and then cry about "evil capitalists" when their constituency gets upset about those companies actually take advantage of the laws that the politicians created.  

    So moves like the one in this article just give the politicians the ability to renege on those deals, leaving the companies they promised holding the bag, with no recourse whatsoever.
    You believe France enacted their tax laws so that Ireland would get some advantage, or that Australia wrote theirs so that a major tax haven and business center could be set up in Singapore and tax obligations moved to Ireland? How did France and Australia benefit? 
    Did I say that?  No, of course not.  So why would you say that I believe that when I clearly said no such thing?
  • Reply 20 of 22
    gatorguygatorguy Posts: 20,748member
    gatorguy said:
    dewme said:
    “Abused by tech companies?” Really!? It’s ironic and moronic that these tax loopholes are being presented as tech companies preying on innocent host countries that are powerless to protect themselves from these evil capitalists. We have to call BS on this.

    A more accurate narrative is that these countries are vying against one another for the business opportunities and jobs that these tech companies bring to their localities. These countries lure businesses to invest in their communities by offering sweetheart deals and tax incentives. These countries  knew what they were doing and they knew that they were screwing their neighbors and other countries with the deals they entered into for their own self interests. Now with the EU and increased nationalism their shady little deals are having the light of day shined on them and they are turning on the companies that they lured into their schemes. What a bunch of hypocrites. 
    Exactly.  Politicians enacted these laws and loopholes to either benefit their corporate contributor friends, or entice businesses to locate there, or both, and then cry about "evil capitalists" when their constituency gets upset about those companies actually take advantage of the laws that the politicians created.  

    So moves like the one in this article just give the politicians the ability to renege on those deals, leaving the companies they promised holding the bag, with no recourse whatsoever.
    You believe France enacted their tax laws so that Ireland would get some advantage, or that Australia wrote theirs so that a major tax haven and business center could be set up in Singapore and tax obligations moved to Ireland? How did France and Australia benefit? 
    Did I say that?  No, of course not.  So why would you say that I believe that when I clearly said no such thing?
    No you didn't specifically say that. So what did you mean when you said "So moves like the one in this article just give the politicians the ability to renege on those deals, leaving the companies they promised holding the bag, with no recourse whatsoever." The presumption would be that you believe these big techs are doing exactly what they were expected to do and politicians were in cahoots with it,  but now countries "are reneging" on those promises.  

    I don't think countries ever expected these hugely profitable companies to craft a way to mostly or entirely avoid paying taxes to them for transactions that take place within their borders so what are they "reneging" on? 
    elijahg
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