Well the term "the transaction took place" is a grey grey area, however in general sales taxes should take place where the customer is, yes.
In the EU it is clearly defined in the EU VAT regulations. For all e-commerce sites the transaction is taking place in the country of the buyer, and the VAT of the country of the buyer is applied, unless the buyer is VAT registered (= a business). In the latter case, VAT should only be charged if the buyer and the seller reside in the same country; if not no VAT must be charged. As the European iTunes Store is officlally located in Luxembourg, EU residents outside Luxembourg that are VAT registered customers, should not pay any VAT for iTunes Store purchases
Apple is trying to avoid VAT registered people stating that iTunes is only targeted at end customers, but this is nonsense. While the music in the iTunes store could be perceived as personal, some apps in the App Store are clearly business oriented and it is not up to Apple to decide in which context an app is used. In the article it is not clear if the announced change of the policy for 2015 will also include a change for VAT registered users, which would very welcome. Apple is the only company I know of that is making my life as an app developer hard getting to redeem the VAT I have paid
In the EU it is clearly defined in the EU VAT regulations. For all e-commerce sites the transaction is taking place in the country of the buyer, and the VAT of the country of the buyer is applied, unless the buyer is VAT registered (= a business). In the latter case, VAT should only be charged if the buyer and the seller reside in the same country; if not no VAT must be charged. As the European iTunes Store is officlally located in Luxembourg, EU residents outside Luxembourg that are VAT registered customers, should not pay any VAT for iTunes Store purchases
Apple is trying to avoid VAT registered people stating that iTunes is only targeted at end customers, but this is nonsense. While the music in the iTunes store could be perceived as personal, some apps in the App Store are clearly business oriented and it is not up to Apple to decide in which context an app is used. In the article it is not clear if the announced change of the policy for 2015 will also include a change for VAT registered users, which would very welcome. Apple is the only company I know of that is making my life as an app developer hard getting to redeem the VAT I have paid
Try being an Android-only app developer, then you'll see real difficulties.
The EU originally stated that a company should operate from one country in the EU (of which companies chose the tax havens Ireland and Luxembourg) and then charge VAT set by the country they are based in, not the where the customer resides. When companies started avoiding paying heaps of tax using this EU-sanctioned method, politicians got annoyed, so the EU and the same politicians started trying to blame the companies for using the EU-sanctioned VAT system/loophole. They claimed the companies should "have the morals to pay tax in the country they operate in", ultimately ending up voluntarily paying much more tax.
Why would any company voluntarily pay more than required, when it's in the interests of the company to pay as little tax as possible? If they paid more tax than necessary, the shareholders wouldn't be too happy for sure.
Another example of the horribly over-bureaucratic EU not understanding nor abiding by its own laws.
Not just the EU. The UK is clamouring for corporation tax from apple. Sales tax makes some sense. Taxing corporations where they aren't is illegal lunacy.
However it's consumers not companies who pay sales tax.
In the EU it is clearly defined in the EU VAT regulations. For all e-commerce sites the transaction is taking place in the country of the buyer, and the VAT of the country of the buyer is applied, unless the buyer is VAT registered (= a business). In the latter case, VAT should only be charged if the buyer and the seller reside in the same country; if not no VAT must be charged. As the European iTunes Store is officlally located in Luxembourg, EU residents outside Luxembourg that are VAT registered customers, should not pay any VAT for iTunes Store purchases
Apple is trying to avoid VAT registered people stating that iTunes is only targeted at end customers, but this is nonsense. While the music in the iTunes store could be perceived as personal, some apps in the App Store are clearly business oriented and it is not up to Apple to decide in which context an app is used. In the article it is not clear if the announced change of the policy for 2015 will also include a change for VAT registered users, which would very welcome. Apple is the only company I know of that is making my life as an app developer hard getting to redeem the VAT I have paid
You really aren't getting the existing or proposed laws.
Let's get real. There should be a sales tax of exactly zero since the location is the Internet and the burden on local resources is minimal at best (a fraction of the local currency for electricity, which is already paid for). Taxes on files delivered electronically should always be zero and these laws are simple extortion of businesses and customers.
My recommendation to EU customers? Buy everything you need now and buy nothing next year.
Restricting taxation to physical goods would be anti-competitive e.g game stores vs Steam, Barnes & Noble vs Amazon. Aren't you pro-competition?
There's more infrastructure to the internet than you're making out too. Law enforcement has to protect goods sold online, the network backbone has to be protected, the customers have to be educated to earn money to pay for goods and so on.
Let's say it's a 10 euro app, but the VAT is 20% in Country A. That means €2 goes to the Government A, with Apple and the developer splitting the remaining €8 percentage-wise 30-70, resulting in €2,40 to Apple and €5,60 to the app developer.
It's not quite 2 euros on a 10 euro app as the tax is assumed to be included already i.e ex-VAT price x 1.2 = 10 so ex-VAT price = 10/1.2 = 8.33 or 1.67 tax:
It'll have a fairly minimal impact in terms of amount overall (<5% difference) and not everyone pays VAT. Most of the App Store revenue goes to the top 100 developers. $10b was paid out to developers in 2013. The top 100 developers take over $7b. The VAT threshold is around 100,000 euros so if the $3b is split evenly, that's 30,000 developers worldwide. In reality, it will be far less than that as the revenue won't be split evenly.
Apple has over 9 million registered iOS developers but from direct sales, there's not enough money paid out to support over 100,000 developers full-time worldwide.
These kind of taxes are ones that affect the top 1% who can easily afford a <5% difference in their tax bill but the taxes are always portrayed as being against the little guys with the intention of getting average consumers and small businesses annoyed at the government for holding them down. As far as paperwork is concerned, someone making over 100,000 euros can afford an accountant.
Restricting taxation to physical goods would be anti-competitive e.g game stores vs Steam, Barnes & Noble vs Amazon. Aren't you pro-competition?
There's more infrastructure to the internet than you're making out too. Law enforcement has to protect goods sold online, the network backbone has to be protected, the customers have to be educated to earn money to pay for goods and so on.
That's the dream you want to believe but you can replace 'EU' with any country or continent and be able to justify the statement:
It's not quite 2 euros on a 10 euro app as the tax is assumed to be included already i.e ex-VAT price x 1.2 = 10 so ex-VAT price = 10/1.2 = 8.33 or 1.67 tax:
It'll have a fairly minimal impact in terms of amount overall (<5% difference) and not everyone pays VAT. Most of the App Store revenue goes to the top 100 developers. $10b was paid out to developers in 2013. The top 100 developers take over $7b. The VAT threshold is around 100,000 euros so if the $3b is split evenly, that's 30,000 developers worldwide. In reality, it will be far less than that as the revenue won't be split evenly.
Apple has over 9 million registered iOS developers but from direct sales, there's not enough money paid out to support over 100,000 developers full-time worldwide.
These kind of taxes are ones that affect the top 1% who can easily afford a <5% difference in their tax bill but the taxes are always portrayed as being against the little guys with the intention of getting average consumers and small businesses annoyed at the government for holding them down. As far as paperwork is concerned, someone making over 100,000 euros can afford an accountant.
Marvin, arguing about the necessity for smaller government with you, a person in favor of big government, is akin to banging one's head against a rock. In your experience, you most likely personally benefit from big government programs or intervention (...student? ...recipient of government subsidies of one kind or other?). Either way, we've gone 'round and 'round on this subject many times and I'll not provide page after page of rebuttals since you already know my positions and I've no interest in revisiting the minutiae with you right now.
arguing about the necessity for smaller government with you, a person in favor of big government, is akin to banging one's head against a rock.
We don't have to agree. You don't define the terms big and small. The US government employs ~20m people out of ~300m total (~150m work force), the UK government employs ~5m people out of ~60m total (~30m work force).
You never seem to indicate what 'small' would be except for some vague reference to whatever keeps the constitution enforced. You don't like the idea of public schools or hospitals or any form of social security. Government can become too big and I think that when the government has to take 50% or more of your income then it's becoming burdensome. But it's not as if the government exists for its own end. It is the size it is to address social problems that exist. The larger the social need, the larger the government has to become. You seem to think that cutting taxation and suffocating government revenue will force it to downsize and everything will just work out but Kansas tried that and it didn't work.
Cutting taxation doesn't suddenly cause old people to die more quickly or children to grow up faster and get out of school sooner to start businesses. It just serves to make life harder for people who are already at a disadvantage.
Your idea of Germany or other more prosperous countries splitting away from the EU would be like suggesting throwing Mississippi out of the US but the target is only ever the EU as if it's run significantly differently from the US. Whose example should the EU be following exactly in order to improve quality of life, education, businesses and services?
you most likely personally benefit from big government programs or intervention
Everyone who went to a public school benefited from what you call big government as did everyone who drives on public roads, has used a public library or public transport, has had a picnic in a public park and so on.
Taxation is an economic balancing act, not a direct payment for supplied services.
I can understand the thought process because people who think about everything in terms of their own self-interest will ask 'why should I pay for something that I'm not getting any use out of?'. 'If I don't use a bridge to send a digital file, why should I pay tax to support the costs of the bridge?'. In terms of sales tax, it's the customer that makes use of it, not the seller and it's the customer that pays it.
It's the same principle as insurance, if people don't use the services provided then they've spent money on it for no benefit. The only way it works though is on the basis that as many people as possible pay and as few people need to use it so that it brings down the costs but everyone would benefit when they do need it.
Switching the taxation from the seller location to point of sale makes the most sense because the international seller doesn't make use of the infrastructure that allows the customer to make the transaction. This infrastructure is not limited to whatever allows the transaction to take place but a lifetime of services that the customer has benefited from.
We don't have to agree. You don't define the terms big and small. The US government employs ~20m people out of ~300m total (~150m work force), the UK government employs ~5m people out of ~60m total (~30m work force).
You never seem to indicate what 'small' would be except for some vague reference to whatever keeps the constitution enforced. You don't like the idea of public schools or hospitals or any form of social security. Government can become too big and I think that when the government has to take 50% or more of your income then it's becoming burdensome. But it's not as if the government exists for its own end. It is the size it is to address social problems that exist. The larger the social need, the larger the government has to become. You seem to think that cutting taxation and suffocating government revenue will force it to downsize and everything will just work out but Kansas tried that and it didn't work.
Cutting taxation doesn't suddenly cause old people to die more quickly or children to grow up faster and get out of school sooner to start businesses. It just serves to make life harder for people who are already at a disadvantage.
Your idea of Germany or other more prosperous countries splitting away from the EU would be like suggesting throwing Mississippi out of the US but the target is only ever the EU as if it's run significantly differently from the US. Whose example should the EU be following exactly in order to improve quality of life, education, businesses and services?
Everyone who went to a public school benefited from what you call big government as did everyone who drives on public roads, has used a public library or public transport, has had a picnic in a public park and so on.
I can understand the thought process because people who think about everything in terms of their own self-interest will ask 'why should I pay for something that I'm not getting any use out of?'. 'If I don't use a bridge to send a digital file, why should I pay tax to support the costs of the bridge?'. In terms of sales tax, it's the customer that makes use of it, not the seller and it's the customer that pays it.
It's the same principle as insurance, if people don't use the services provided then they've spent money on it for no benefit. The only way it works though is on the basis that as many people as possible pay and as few people need to use it so that it brings down the costs but everyone would benefit when they do need it.
Switching the taxation from the seller location to point of sale makes the most sense because the international seller doesn't make use of the infrastructure that allows the customer to make the transaction. This infrastructure is not limited to whatever allows the transaction to take place but a lifetime of services that the customer has benefited from.
"The top-secret world the government created in response to the terrorist attacks of Sept. 11, 2001, has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work."
The big government versus small government argument has next to nothing to do with the surveillance state and secrecy agencies. People on both sides of the political aisle are critical of the NSA, GCHQ and their like.
The big government versus small government argument has next to nothing to do with the surveillance state and secrecy agencies. People on both sides of the political aisle are critical of the NSA, GCHQ and their like.
Certainly not enough. Those agencies must report to Congress or the President so of course they are in on it together.
I don't see where this affects the developers' revenue. The way that I read it, the VAT is added on after the sale price is set by the developer, so the developer is making the same money no matter where the app is sold. The final price to the consumer - the price listed in the App Store - changes from country to country to reflect different VAT rates. This seems similar (but not identical) to sales tax in the states. Different states charge different sales tax rates, but the product is sold for the same price in different states. The difference is only more noticeable with VAT because it is incorporated into the listed price, where sales tax is added on to the listed price.
In other words, if a person had a $5.00 app that they made $1.50 every time it sold, they still make $1.50, but the app will be listed in the App Store for $5.25 or $6.00 or anywhere in between depending on the local VAT rate.
The only ones impacted are the consumers living in countries with high VAT rates, but that's between them and their elected officials.
Do developers set the price without tax? I thought developers chose a pricing tier which would be the final list price. Unless Apple change the list prices the dev would just get a smaller cut.
The same thing's happened in MS's app store and there you set a list price so are just getting a smaller cut.
Ultimately the devs just paying the tax that they have to pay and it's competition which says what they can charge for the app.
Quote:
Originally Posted by asdasd
Apple should try and phase out the cheap tier over time. The race to the bottom is not a good thing.
For dev's no. For Apple, cheap apps have been great at selling phones.
Quote:
Originally Posted by asdasd
Not just the EU. The UK is clamouring for corporation tax from apple. Sales tax makes some sense. Taxing corporations where they aren't is illegal lunacy.
Why? The theory is if you want to come to a market and do business in that market you should be contributing to the market with the profits you make from that market.
Also a lot of the companies are actually in the place to avoid paying tax. e.g. Starbucks in the UK is a UK company that seemingly has never made a profit.
Why? The theory is if you want to come to a market and do business in that market you should be contributing to the market with the profits you make from that market.
Also a lot of the companies are actually in the place to avoid paying tax. e.g. Starbucks in the UK is a UK company that seemingly has never made a profit.
The way to tax companies doing business in your market is ( from 2015) to use VAT. Which is probably a lot more than the profit for many retailers, since very few are making net profit per sale of 20%. What makes no sense is taxing corporation tax for a non-resident company.
Starbucks is taking the piss a bit, as it is clearly transfer pricing, since it is clearly brewing coffee in the UK. However most companies mentioned by the economically illiterate British Press are not based in the UK and don't, and can't ever, owe corporation tax there. Amazon for instance makes it's revenues from the people when they buy from the website, the cost of the distribution ( that is the warehouses based in the UK) is a *cost* not a revenue generator, something which would be obvious if they out sourced their storage.
The UK is the last country to want to do this, as it is a major player in Web Services, and distribution of content and IP. If you believe that Google owe taxes in the UK because most of the "sales" are in the UK ( although the IP and Servers are not) then where should the producers of Grand Theft Auto be charged corporation tax, since most of the revenue is made outside the UK? And what about App devs, as well as paying VAT should they also pay corporation taxes in every country they sell to?
Even these VAT changes, demanded by the British press, will hit small British websites hard, and the story in the next month will be how bad the EU is with it's nasty new taxes.
The way to tax companies doing business in your market is ( from 2015) to use VAT. Which is probably a lot more than the profit for many retailers, since very few are making net profit per sale of 20%. What makes no sense is taxing corporation tax for a non-resident company.
Starbucks is taking the piss a bit, as it is clearly transfer pricing, since it is clearly brewing coffee in the UK. However most companies mentioned by the economically illiterate British Press are not based in the UK and don't, and can't ever, owe corporation tax there. Amazon for instance makes it's revenues from the people when they buy from the website, the cost of the distribution ( that is the warehouses based in the UK) is a *cost* not a revenue generator, something which would be obvious if they out sourced their storage.
The UK is the last country to want to do this, as it is a major player in Web Services, and distribution of content and IP. If you believe that Google owe taxes in the UK because most of the "sales" are in the UK ( although the IP and Servers are not) then where should the producers of Grand Theft Auto be charged corporation tax, since most of the revenue is made outside the UK? And what about App devs, as well as paying VAT should they also pay corporation taxes in every country they sell to?
Even these VAT changes, demanded by the British press, will hit small British websites hard, and the story in the next month will be how bad the EU is with it's nasty new taxes.
VAT's different to corporation tax in that its gets paid even if nobody makes a profit. It's also really the buyer paying it rather than the seller.
I agree it's a bit of an awkward demand. Amazon isn't in the UK but the person buying the product is in the UK and there buying it from a UK website so I think there's an argument that the sale happened in the UK. How you determine how much profit they actually made in the UK seems slightly impossible to me.
Google however has an even stronger case for paying tax's in the UK. They have a UK based ads team that sells to UK customers although they claim the transaction doesn't happen with them. If I saw someone in the UK and agreed to buy something from them I'd consider that to be doing business in the UK. Equally if the makers of Grand Theft Auto sell to someone outside the UK from outside the UK then there's a case for them paying corporation tax outside the UK.
App devs are slightly different (note, I've only ever sold apps on Windows Phone, the way Apple work could be different), they don't sell to consumers. When you buy an app your buying it from that store, not the developer. Apple/MS/Google are producing a new instance of the app and providing it to you (well a license anyway). The developer then receives royalties for the app. What country corporation tax should be paid for those royalties is beyond me.
VAT's different to corporation tax in that its gets paid even if nobody makes a profit. It's also really the buyer paying it rather than the seller.
I agree it's a bit of an awkward demand. Amazon isn't in the UK but the person buying the product is in the UK and there buying it from a UK website so I think there's an argument that the sale happened in the UK. How you determine how much profit they actually made in the UK seems slightly impossible to me.
Google however has an even stronger case for paying tax's in the UK. They have a UK based ads team that sells to UK customers although they claim the transaction doesn't happen with them. If I saw someone in the UK and agreed to buy something from them I'd consider that to be doing business in the UK. Equally if the makers of Grand Theft Auto sell to someone outside the UK from outside the UK then there's a case for them paying corporation tax outside the UK.
App devs are slightly different (note, I've only ever sold apps on Windows Phone, the way Apple work could be different), they don't sell to consumers. When you buy an app your buying it from that store, not the developer. Apple/MS/Google are producing a new instance of the app and providing it to you (well a license anyway). The developer then receives royalties for the app. What country corporation tax should be paid for those royalties is beyond me.
Like Windows, Apple is an agent. You pay them as the distribution agent their 30%.
the presence of Google salesmen doesn't prove much, presumably British web services have sales teams abroad. The UK drives a lot of content on the Web.
It proves that Google are liars, since they at one point claimed to have no sales staff based in the UK.
AFAIK no one connected with Google ever claimed they had no UK sales staff.
What I did find was a staffer claim in front of Parliament that their UK sales staff made no sales in the UK and thus owed no additional taxes, something that would have to be based on some ridiculous technicality if true. In any event it's a lousy argument to use for tax avoidance even if it's possibly legal.
EDIT: Thanks TimGriff
I see the technicality now. While Google admitted to having sales staff in the UK they say they were employees of their Irish subsidiary and any sales were made by the Irish company, not anyone working for a UK based company. Ridiculous IMO but probably legal based on everything written about tax avoidance efforts by some of the huge techs (and other multinationals).
the presence of Google salesmen doesn't prove much, presumably British web services have sales teams abroad. The UK drives a lot of content on the Web.
Google claimed either this year or last that they didn't sell Google Ads in the UK despite having a team of people that seemingly did that. Instead they claimed the sales team were entirely based in Ireland and therefore should by paying Irish taxes rather than whatever UK tax they were avoiding.
British web services may well have sales teams abroad and I've got nothing against other countries charging the same tax's.
At the moment the tax systems between countries don't work because its not a case that a US company is paying tax to the US for profits it made in the UK. There not paying the tax anywhere. The idea a company would actually have to pay tax to the market it generated the profit in makes it a lot harder to move the tax bill to a unrelated country that just happens to have a nicer tax rate. Although I still have no idea how you would actually work out the profit.
Google claimed either this year or last that they didn't sell Google Ads in the UK despite having a team of people that seemingly did that. Instead they claimed the sales team were entirely based in Ireland and therefore should by paying Irish taxes rather than whatever UK tax they were avoiding.
British web services may well have sales teams abroad and I've got nothing against other countries charging the same tax's.
At the moment the tax systems between countries don't work because its not a case that a US company is paying tax to the US for profits it made in the UK. There not paying the tax anywhere. The idea a company would actually have to pay tax to the market it generated the profit in makes it a lot harder to move the tax bill to a unrelated country that just happens to have a nicer tax rate. Although I still have no idea how you would actually work out the profit.
I doubt if they lied. The presence of the sales teams is largely meaningless, most paying users of google just find it online and fill in a form specifying what they want for keywords, or what add they want to appear and where. And nothing is stopping that team moving to Ireland, and bringing their phones, getting familiar with RyanAir or both.
When is revenue really generated by Google? It is when a user clicks on a pay per click, or eyeballs a pay per view. That's based on the content which is driving the user to the web service ( the other search results in this case). Thats not UK based.
If the UK starts to play this game it will lose. Maybe not with Ireland, but if some HMRC official gets too officious ( and the working of the new law is ridiculously vague) and claims revenue from a company based in a larger country the repercussions could be huge.
Comments
Well the term "the transaction took place" is a grey grey area, however in general sales taxes should take place where the customer is, yes.
In the EU it is clearly defined in the EU VAT regulations. For all e-commerce sites the transaction is taking place in the country of the buyer, and the VAT of the country of the buyer is applied, unless the buyer is VAT registered (= a business). In the latter case, VAT should only be charged if the buyer and the seller reside in the same country; if not no VAT must be charged. As the European iTunes Store is officlally located in Luxembourg, EU residents outside Luxembourg that are VAT registered customers, should not pay any VAT for iTunes Store purchases
Apple is trying to avoid VAT registered people stating that iTunes is only targeted at end customers, but this is nonsense. While the music in the iTunes store could be perceived as personal, some apps in the App Store are clearly business oriented and it is not up to Apple to decide in which context an app is used. In the article it is not clear if the announced change of the policy for 2015 will also include a change for VAT registered users, which would very welcome. Apple is the only company I know of that is making my life as an app developer hard getting to redeem the VAT I have paid
Try being an Android-only app developer, then you'll see real difficulties.
Not just the EU. The UK is clamouring for corporation tax from apple. Sales tax makes some sense. Taxing corporations where they aren't is illegal lunacy.
However it's consumers not companies who pay sales tax.
You really aren't getting the existing or proposed laws.
Restricting taxation to physical goods would be anti-competitive e.g game stores vs Steam, Barnes & Noble vs Amazon. Aren't you pro-competition?
There's more infrastructure to the internet than you're making out too. Law enforcement has to protect goods sold online, the network backbone has to be protected, the customers have to be educated to earn money to pay for goods and so on.
That's the dream you want to believe but you can replace 'EU' with any country or continent and be able to justify the statement:
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
It's not quite 2 euros on a 10 euro app as the tax is assumed to be included already i.e ex-VAT price x 1.2 = 10 so ex-VAT price = 10/1.2 = 8.33 or 1.67 tax:
http://www.flexicoder.com/blog/index.php/2010/06/payments-from-apple-company-vat-return/
It'll have a fairly minimal impact in terms of amount overall (<5% difference) and not everyone pays VAT. Most of the App Store revenue goes to the top 100 developers. $10b was paid out to developers in 2013. The top 100 developers take over $7b. The VAT threshold is around 100,000 euros so if the $3b is split evenly, that's 30,000 developers worldwide. In reality, it will be far less than that as the revenue won't be split evenly.
Apple has over 9 million registered iOS developers but from direct sales, there's not enough money paid out to support over 100,000 developers full-time worldwide.
These kind of taxes are ones that affect the top 1% who can easily afford a <5% difference in their tax bill but the taxes are always portrayed as being against the little guys with the intention of getting average consumers and small businesses annoyed at the government for holding them down. As far as paperwork is concerned, someone making over 100,000 euros can afford an accountant.
Restricting taxation to physical goods would be anti-competitive e.g game stores vs Steam, Barnes & Noble vs Amazon. Aren't you pro-competition?
There's more infrastructure to the internet than you're making out too. Law enforcement has to protect goods sold online, the network backbone has to be protected, the customers have to be educated to earn money to pay for goods and so on.
That's the dream you want to believe but you can replace 'EU' with any country or continent and be able to justify the statement:
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
It's not quite 2 euros on a 10 euro app as the tax is assumed to be included already i.e ex-VAT price x 1.2 = 10 so ex-VAT price = 10/1.2 = 8.33 or 1.67 tax:
http://www.flexicoder.com/blog/index.php/2010/06/payments-from-apple-company-vat-return/
It'll have a fairly minimal impact in terms of amount overall (<5% difference) and not everyone pays VAT. Most of the App Store revenue goes to the top 100 developers. $10b was paid out to developers in 2013. The top 100 developers take over $7b. The VAT threshold is around 100,000 euros so if the $3b is split evenly, that's 30,000 developers worldwide. In reality, it will be far less than that as the revenue won't be split evenly.
Apple has over 9 million registered iOS developers but from direct sales, there's not enough money paid out to support over 100,000 developers full-time worldwide.
These kind of taxes are ones that affect the top 1% who can easily afford a <5% difference in their tax bill but the taxes are always portrayed as being against the little guys with the intention of getting average consumers and small businesses annoyed at the government for holding them down. As far as paperwork is concerned, someone making over 100,000 euros can afford an accountant.
Marvin, arguing about the necessity for smaller government with you, a person in favor of big government, is akin to banging one's head against a rock. In your experience, you most likely personally benefit from big government programs or intervention (...student? ...recipient of government subsidies of one kind or other?). Either way, we've gone 'round and 'round on this subject many times and I'll not provide page after page of rebuttals since you already know my positions and I've no interest in revisiting the minutiae with you right now.
And yet you continue to post the anti-tax, anti-state nonsense. What does "burden on local resources" have to do with sales tax?
Taxation is an economic balancing act, not a direct payment for supplied services.
We don't have to agree. You don't define the terms big and small. The US government employs ~20m people out of ~300m total (~150m work force), the UK government employs ~5m people out of ~60m total (~30m work force).
You never seem to indicate what 'small' would be except for some vague reference to whatever keeps the constitution enforced. You don't like the idea of public schools or hospitals or any form of social security. Government can become too big and I think that when the government has to take 50% or more of your income then it's becoming burdensome. But it's not as if the government exists for its own end. It is the size it is to address social problems that exist. The larger the social need, the larger the government has to become. You seem to think that cutting taxation and suffocating government revenue will force it to downsize and everything will just work out but Kansas tried that and it didn't work.
Cutting taxation doesn't suddenly cause old people to die more quickly or children to grow up faster and get out of school sooner to start businesses. It just serves to make life harder for people who are already at a disadvantage.
Your idea of Germany or other more prosperous countries splitting away from the EU would be like suggesting throwing Mississippi out of the US but the target is only ever the EU as if it's run significantly differently from the US. Whose example should the EU be following exactly in order to improve quality of life, education, businesses and services?
Everyone who went to a public school benefited from what you call big government as did everyone who drives on public roads, has used a public library or public transport, has had a picnic in a public park and so on.
I can understand the thought process because people who think about everything in terms of their own self-interest will ask 'why should I pay for something that I'm not getting any use out of?'. 'If I don't use a bridge to send a digital file, why should I pay tax to support the costs of the bridge?'. In terms of sales tax, it's the customer that makes use of it, not the seller and it's the customer that pays it.
It's the same principle as insurance, if people don't use the services provided then they've spent money on it for no benefit. The only way it works though is on the basis that as many people as possible pay and as few people need to use it so that it brings down the costs but everyone would benefit when they do need it.
Switching the taxation from the seller location to point of sale makes the most sense because the international seller doesn't make use of the infrastructure that allows the customer to make the transaction. This infrastructure is not limited to whatever allows the transaction to take place but a lifetime of services that the customer has benefited from.
"The top-secret world the government created in response to the terrorist attacks of Sept. 11, 2001, has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work."
http://projects.washingtonpost.com/top-secret-america/articles/a-hidden-world-growing-beyond-control/
You have your head completely buried in sand on this one, Marvin.
The big government versus small government argument has next to nothing to do with the surveillance state and secrecy agencies. People on both sides of the political aisle are critical of the NSA, GCHQ and their like.
The big government versus small government argument has next to nothing to do with the surveillance state and secrecy agencies. People on both sides of the political aisle are critical of the NSA, GCHQ and their like.
Certainly not enough. Those agencies must report to Congress or the President so of course they are in on it together.
I'm talking about people, which isn't confined to government representatives.
I don't see where this affects the developers' revenue. The way that I read it, the VAT is added on after the sale price is set by the developer, so the developer is making the same money no matter where the app is sold. The final price to the consumer - the price listed in the App Store - changes from country to country to reflect different VAT rates. This seems similar (but not identical) to sales tax in the states. Different states charge different sales tax rates, but the product is sold for the same price in different states. The difference is only more noticeable with VAT because it is incorporated into the listed price, where sales tax is added on to the listed price.
In other words, if a person had a $5.00 app that they made $1.50 every time it sold, they still make $1.50, but the app will be listed in the App Store for $5.25 or $6.00 or anywhere in between depending on the local VAT rate.
The only ones impacted are the consumers living in countries with high VAT rates, but that's between them and their elected officials.
Do developers set the price without tax? I thought developers chose a pricing tier which would be the final list price. Unless Apple change the list prices the dev would just get a smaller cut.
The same thing's happened in MS's app store and there you set a list price so are just getting a smaller cut.
Ultimately the devs just paying the tax that they have to pay and it's competition which says what they can charge for the app.
Apple should try and phase out the cheap tier over time. The race to the bottom is not a good thing.
For dev's no. For Apple, cheap apps have been great at selling phones.
Not just the EU. The UK is clamouring for corporation tax from apple. Sales tax makes some sense. Taxing corporations where they aren't is illegal lunacy.
Why? The theory is if you want to come to a market and do business in that market you should be contributing to the market with the profits you make from that market.
Also a lot of the companies are actually in the place to avoid paying tax. e.g. Starbucks in the UK is a UK company that seemingly has never made a profit.
Why? The theory is if you want to come to a market and do business in that market you should be contributing to the market with the profits you make from that market.
Also a lot of the companies are actually in the place to avoid paying tax. e.g. Starbucks in the UK is a UK company that seemingly has never made a profit.
The way to tax companies doing business in your market is ( from 2015) to use VAT. Which is probably a lot more than the profit for many retailers, since very few are making net profit per sale of 20%. What makes no sense is taxing corporation tax for a non-resident company.
Starbucks is taking the piss a bit, as it is clearly transfer pricing, since it is clearly brewing coffee in the UK. However most companies mentioned by the economically illiterate British Press are not based in the UK and don't, and can't ever, owe corporation tax there. Amazon for instance makes it's revenues from the people when they buy from the website, the cost of the distribution ( that is the warehouses based in the UK) is a *cost* not a revenue generator, something which would be obvious if they out sourced their storage.
The UK is the last country to want to do this, as it is a major player in Web Services, and distribution of content and IP. If you believe that Google owe taxes in the UK because most of the "sales" are in the UK ( although the IP and Servers are not) then where should the producers of Grand Theft Auto be charged corporation tax, since most of the revenue is made outside the UK? And what about App devs, as well as paying VAT should they also pay corporation taxes in every country they sell to?
Even these VAT changes, demanded by the British press, will hit small British websites hard, and the story in the next month will be how bad the EU is with it's nasty new taxes.
The way to tax companies doing business in your market is ( from 2015) to use VAT. Which is probably a lot more than the profit for many retailers, since very few are making net profit per sale of 20%. What makes no sense is taxing corporation tax for a non-resident company.
Starbucks is taking the piss a bit, as it is clearly transfer pricing, since it is clearly brewing coffee in the UK. However most companies mentioned by the economically illiterate British Press are not based in the UK and don't, and can't ever, owe corporation tax there. Amazon for instance makes it's revenues from the people when they buy from the website, the cost of the distribution ( that is the warehouses based in the UK) is a *cost* not a revenue generator, something which would be obvious if they out sourced their storage.
The UK is the last country to want to do this, as it is a major player in Web Services, and distribution of content and IP. If you believe that Google owe taxes in the UK because most of the "sales" are in the UK ( although the IP and Servers are not) then where should the producers of Grand Theft Auto be charged corporation tax, since most of the revenue is made outside the UK? And what about App devs, as well as paying VAT should they also pay corporation taxes in every country they sell to?
Even these VAT changes, demanded by the British press, will hit small British websites hard, and the story in the next month will be how bad the EU is with it's nasty new taxes.
VAT's different to corporation tax in that its gets paid even if nobody makes a profit. It's also really the buyer paying it rather than the seller.
I agree it's a bit of an awkward demand. Amazon isn't in the UK but the person buying the product is in the UK and there buying it from a UK website so I think there's an argument that the sale happened in the UK. How you determine how much profit they actually made in the UK seems slightly impossible to me.
Google however has an even stronger case for paying tax's in the UK. They have a UK based ads team that sells to UK customers although they claim the transaction doesn't happen with them. If I saw someone in the UK and agreed to buy something from them I'd consider that to be doing business in the UK. Equally if the makers of Grand Theft Auto sell to someone outside the UK from outside the UK then there's a case for them paying corporation tax outside the UK.
App devs are slightly different (note, I've only ever sold apps on Windows Phone, the way Apple work could be different), they don't sell to consumers. When you buy an app your buying it from that store, not the developer. Apple/MS/Google are producing a new instance of the app and providing it to you (well a license anyway). The developer then receives royalties for the app. What country corporation tax should be paid for those royalties is beyond me.
VAT's different to corporation tax in that its gets paid even if nobody makes a profit. It's also really the buyer paying it rather than the seller.
I agree it's a bit of an awkward demand. Amazon isn't in the UK but the person buying the product is in the UK and there buying it from a UK website so I think there's an argument that the sale happened in the UK. How you determine how much profit they actually made in the UK seems slightly impossible to me.
Google however has an even stronger case for paying tax's in the UK. They have a UK based ads team that sells to UK customers although they claim the transaction doesn't happen with them. If I saw someone in the UK and agreed to buy something from them I'd consider that to be doing business in the UK. Equally if the makers of Grand Theft Auto sell to someone outside the UK from outside the UK then there's a case for them paying corporation tax outside the UK.
App devs are slightly different (note, I've only ever sold apps on Windows Phone, the way Apple work could be different), they don't sell to consumers. When you buy an app your buying it from that store, not the developer. Apple/MS/Google are producing a new instance of the app and providing it to you (well a license anyway). The developer then receives royalties for the app. What country corporation tax should be paid for those royalties is beyond me.
Like Windows, Apple is an agent. You pay them as the distribution agent their 30%.
the presence of Google salesmen doesn't prove much, presumably British web services have sales teams abroad. The UK drives a lot of content on the Web.
What I did find was a staffer claim in front of Parliament that their UK sales staff made no sales in the UK and thus owed no additional taxes, something that would have to be based on some ridiculous technicality if true. In any event it's a lousy argument to use for tax avoidance even if it's possibly legal.
EDIT: Thanks TimGriff
I see the technicality now. While Google admitted to having sales staff in the UK they say they were employees of their Irish subsidiary and any sales were made by the Irish company, not anyone working for a UK based company. Ridiculous IMO but probably legal based on everything written about tax avoidance efforts by some of the huge techs (and other multinationals).
http://uk.reuters.com/article/2013/05/01/uk-tax-uk-google-specialreport-idUKBRE94005R20130501
the presence of Google salesmen doesn't prove much, presumably British web services have sales teams abroad. The UK drives a lot of content on the Web.
Google claimed either this year or last that they didn't sell Google Ads in the UK despite having a team of people that seemingly did that. Instead they claimed the sales team were entirely based in Ireland and therefore should by paying Irish taxes rather than whatever UK tax they were avoiding.
British web services may well have sales teams abroad and I've got nothing against other countries charging the same tax's.
At the moment the tax systems between countries don't work because its not a case that a US company is paying tax to the US for profits it made in the UK. There not paying the tax anywhere. The idea a company would actually have to pay tax to the market it generated the profit in makes it a lot harder to move the tax bill to a unrelated country that just happens to have a nicer tax rate. Although I still have no idea how you would actually work out the profit.
Google claimed either this year or last that they didn't sell Google Ads in the UK despite having a team of people that seemingly did that. Instead they claimed the sales team were entirely based in Ireland and therefore should by paying Irish taxes rather than whatever UK tax they were avoiding.
British web services may well have sales teams abroad and I've got nothing against other countries charging the same tax's.
At the moment the tax systems between countries don't work because its not a case that a US company is paying tax to the US for profits it made in the UK. There not paying the tax anywhere. The idea a company would actually have to pay tax to the market it generated the profit in makes it a lot harder to move the tax bill to a unrelated country that just happens to have a nicer tax rate. Although I still have no idea how you would actually work out the profit.
I doubt if they lied. The presence of the sales teams is largely meaningless, most paying users of google just find it online and fill in a form specifying what they want for keywords, or what add they want to appear and where. And nothing is stopping that team moving to Ireland, and bringing their phones, getting familiar with RyanAir or both.
When is revenue really generated by Google? It is when a user clicks on a pay per click, or eyeballs a pay per view. That's based on the content which is driving the user to the web service ( the other search results in this case). Thats not UK based.
If the UK starts to play this game it will lose. Maybe not with Ireland, but if some HMRC official gets too officious ( and the working of the new law is ridiculously vague) and claims revenue from a company based in a larger country the repercussions could be huge.