Apple & other tech giants may face EU universal minimum tax rate in the future

Posted:
in General Discussion edited October 2018
Apple and other major companies should be subjected to a minimum rate of corporation tax in all countries, Germany's finance minister has proposed, in order to prevent technology giants and other multinational organizations from evading taxes, despite the multinationals presently obeying all the laws presently in place.




Finance minister Olaf Scholz insists there needs to be a "worldwide minimum tax level that no state may go below," in relation to corporation tax. The lofty goal, which would require an agreement by practically all countries if it were ever put into practice, would ensure companies would pay governments a considerable amount of tax, regardless of any financial trickery the firms perform to minimize their tax outlay.

Failing to comply with the proposal would be met by tougher measures than are currently available for regulators.

Writing in a guest article for Welt am Sonntag and spotted by Reuters the minister advised the measure was considered alongside similar ideas being discussed by France over the matter, to encourage firms like Apple, Amazon, and Google to pay a fair amount of domestic taxes in each market they operate within, instead of siphoning off revenue through another country with a far lower rate of tax.

Scholz advises the rules would also need to make it harder for firms to shift funds to tax havens, where it could accumulate and avoid most taxes. According to Scholz, the Internet economy is "exacerbating the problem" caused by globalization, and making it easier to place "profits in low-tax locations."

Though seemingly impractical to set up at a global scale, the proposal is part of continued efforts by the European Union to try and get companies like Apple to pay more tax. Europe has tried to harmonize the tax rates across the entire union, but countries like Ireland who offer very low tax rates are resisting such efforts.

Scholz's comments follow after September's denial of a report the ministry had given up on plans to raise taxes on tech firms, allegedly because "demonization" of such firms was "not productive." While the report was based on internal documents, a spokesperson claimed they were "very selectively" cited as one of many options, and assured the finance minister had yet to make a decision on one or more tax instruments.

In March, the European Commission revealed plans that would require large firms to pay taxes all over the E.U., rather than just in the country of their regional headquarters.

Apple is considered to be a major target of the proposals, in part due to its high revenue in Europe that it funnels through its headquarters in Ireland.

A 2016 ruling by the European Commission declared Ireland had to collect billions in back taxes from Apple, after being found to have extended preferential tax treatment to the company. Apple has since paid the entire 13.1 billion euro ($15.3 billion) balance, as well as 1.2 billion euro in interest, into an escrow account controlled by the Irish government.

Both Apple and Ireland are appealing the ruling this fall.
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Comments

  • Reply 1 of 31
    "Financial trickery" that these very same lawmakers put in place in to begin with.

    "But I put that in there for my friends!  I didn't want these other people taking advantage of it!"
    TomEradarthekatjbdragonSpamSandwichentropyschasmwatto_cobra
  • Reply 2 of 31
    Wouldn’t it be simpler to raise the sales tax?

    The issue isn’t tax evasion it’s we (local governments) want more money...

    The tax system doesn’t make a lot of sense.  Was there some kind of “value added” in those countries?  Was there Apple employees that needed social benefit taxes (I.e. unemployment tax) etc.

    I assume physical locations (property- Apple Stores) are already being taxed.  The taxes pay for things like road maintenance, etc.

    What are these additional taxes for?  Besides saying “we want more”?

    TomEjbdragonrandominternetperson
  • Reply 3 of 31
    The idea of having one set tax rate no matter where in the EU you do business is good. Trying to make it worldwide is a pipe-dream.
    rob53chasm
  • Reply 4 of 31
    TomETomE Posts: 141member
    "Now that you are here, we are going to change the rules .  That was our Plan if we spent all the other money.  Switch from Plan A to Plan B."

    jbdragonrinosaurwatto_cobra
  • Reply 5 of 31
    radarthekatradarthekat Posts: 3,093moderator
    DAalseth said:
    The idea of having one set tax rate no matter where in the EU you do business is good. Trying to make it worldwide is a pipe-dream.
    Exactly.  Try getting the 50 US States to agree on a common tax rate.  Each has different needs and goals.  Those trying to attract business want the leeway to cut special deals.  Florida caters to retirees with its favorable tax policy; no income tax at all on regular income.  Trying to get all countries to agree would have to assume there are no countries that would see such a structure as their advantage, by opting out and therefore having the freedom to attract business and investment at advantageous rates.  
    edited October 2018 jbdragon
  • Reply 6 of 31
    GeorgeBMacGeorgeBMac Posts: 4,684member
    We are living in a 21st century world run by governments using tax schemes designed for the 19th & 20th industrialized centuries -- so corporations, whose goal is to maximize bottom line profits, take advantage of any and all weaknesses in those obsolete schemes.

    Those who complain government simply wants more money ignore the fact that societies are built and maintained by those governments -- and they need money to do that with.  And those societies benefit all -- from the poor and disadvantaged to the largest of corporations.   (There's a reason why one does not see an Apple store on every corner in Africa)

    In addition to closing low-tax-rate escape hatches an updated tax scheme needs to account for how automation is replacing human labor:   Steel Mills now operate with a small fraction of labor they once needed but still make the same profit per ton.   That, perhaps more than anything, has created the divide between extreme wealth and extreme poverty throughout the world.

    I have no idea if this scheme is a good or a bad idea.   But something needs to change if we are to maintain stable societies.
    dewmesphericavon b7
  • Reply 7 of 31
    rob53rob53 Posts: 2,047member
    DAalseth said:
    The idea of having one set tax rate no matter where in the EU you do business is good. Trying to make it worldwide is a pipe-dream.
    Exactly.  Try getting the 50 US States to agree on a common tax rate.  Each has different needs and goals.  Those trying to attract business want the leeway to cut special deals.  Florida caters to retirees with its favorable tax policy; no income tax at all on regular income.  Trying to get all countries to agree would have to assume there are no countries that would see such a structure as their advantage, by opting out and therefore having the freedom to attract business and investment at advantageous rates.  
    What I have problems with are all the people who criticize Apple for trying to evade taxes while it's perfectly legal in the US to find, as you mention, a state, county or city that gives corporations and people tax breaks simply by locating in their area. The EU is not in control of their own participating countries and no way will they ever be in control of any non-EU countries. I don't believe the EU was ever chartered to do as many things as they are trying to do right now. After all, the participating countries are still sovereign countries with their own leaders. What they aren't is a global country.
    rinosaur
  • Reply 8 of 31
    maestro64maestro64 Posts: 4,597member
    If a company does not have physical presents in the EU, not sure how this works. Apple is easily they have operations in Ireland and this is done to avoid high duties from importation. But if you look at Facebook, they really do not need to have any physical presents in the EU, anyone in the world can access Facebook in California without an issue. I personally think the EU created the requirement to have personal data stored in the EU not to protect personal data but to be able to tax Facebook and Google due to them have physical presents. 

    This is how Amazon got nailed and now have to collect sales tax for states like PA, PA found out even though Amazion did not have any building in PA, they actuall had people on their payroll working at the warehouses which handle all their order fulfillment.  

    However if Trump gets his way all the duties and tariffs will go away and the EU can not put a tax on US companies selling their products in the EU so Apple could shut down its operations in Ireland and just let people order online and ship products from China. So all transaction are then done outside the EU.  If that happen then the EU can not tax Apple profits if they do not have physical presents in the EU, or just tax an Apple Store front and what it makes.

    The only reason government are now going after companies like this is due to the fact Companies for the first time in 20 or so years are making serious profits, prior to this they were just making a profits and not everyone was working. Governments not think it is safe to go after companies' bank accounts.

    This is just another example of you think you have problem now, wait to you see the solution the government comes up with.
    rinosaur
  • Reply 9 of 31
    sphericspheric Posts: 1,764member
    Wouldn’t it be simpler to raise the sales tax?

    The issue isn’t tax evasion it’s we (local governments) want more money…
    If that were the issue, then they would just raise the sales tax and have all of us citizens pay it. 

    The fact that they're looking into corporate taxes is kind of an indicator that this might be about government tackling an issue that the population indeed gives a mighty fuck about, eh. 

    Also, it's starting to hit home that in the digital age, there are a number of corporations turning over more profit than the GDP of most countries, and the countries where that profit is actually generated see no tax from it, despite there not being any tangible benefits for them. In the physical age, giving massive tax breaks to encourage corporations to settle there would generate jobs, reducing employment and increasing spending and income taxes, which in turn would benefit the whole economy. 

    A company like Facebook will make billions in profit and generate maybe a dozen jobs and a mailbox office in each of three offshore tax havens, and still not pay any taxes. That is about to change in the next decade - hopefully.
  • Reply 10 of 31
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?

    Still, a minimum corporate tax rate sounds like just the thing we need here in the US. Especially since our "lack of income" is "demanding" that we cut SSI, Medicare, Medicare, and all of the other programs upon which the elderly, retirees, and the poor depend.

    Good luck getting that past the House, Senate, and WH, however...
    muthuk_vanalingamGeorgeBMac
  • Reply 11 of 31
    lkrupplkrupp Posts: 7,155member
    hmlongco said:
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?

    Still, a minimum corporate tax rate sounds like just the thing we need here in the US. Especially since our "lack of income" is "demanding" that we cut SSI, Medicare, Medicare, and all of the other programs upon which the elderly, retirees, and the poor depend.

    Good luck getting that past the House, Senate, and WH, however...
    The only way globalism works is to have global socialism. There is no place for free enterprise and free markets in a global economy and government.
    rinosaur
  • Reply 12 of 31
    rob53rob53 Posts: 2,047member
    lkrupp said:
    hmlongco said:
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?

    Still, a minimum corporate tax rate sounds like just the thing we need here in the US. Especially since our "lack of income" is "demanding" that we cut SSI, Medicare, Medicare, and all of the other programs upon which the elderly, retirees, and the poor depend.

    Good luck getting that past the House, Senate, and WH, however...
    The only way globalism works is to have global socialism. There is no place for free enterprise and free markets in a global economy and government.
    I don't think the EU is looking at this as global socialism, I think they're looking at it as a global dictatorship. Even with Ireland's existing laws, the EU is forcing a sovereign country to abide by the dictatorship called the EU. Most of the EU is failing economically so there's an obvious attempt at taxing whomever they can to try and shore up their failing economy. The crazy thing is the people are still buying lots of expensive goods so it's not always the people who are failing but the way the governments are operated that's failing.
  • Reply 13 of 31
    jbdragonjbdragon Posts: 2,135member
    hmlongco said:
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?

    Still, a minimum corporate tax rate sounds like just the thing we need here in the US. Especially since our "lack of income" is "demanding" that we cut SSI, Medicare, Medicare, and all of the other programs upon which the elderly, retirees, and the poor depend.

    Good luck getting that past the House, Senate, and WH, however...
    The U.S. had some of the highest corporate tax rates in the world. By the way they don't pay the taxes, YOU DO in higher prices of product. Taxes go up on them, they really are going up on YOU. By the way, how much should the government steal from you? Where does it end. It keeps growing and growing, even though there's more people, and more people are paying taxes. If people realized how money money is stolen from them in all the many taxes, there would be a uprising. It's almost at the point where half the year you're working to pay for your Taxes. 6 months work of Taxes, 6 months work to put money in your pocket. Where does it end?

    The government could take 100% of everyone's money and figure out all kinds of ways to waste all that money and it still wouldn't be enough. As for the EU, their Socialist Economy can't stand up on it's own and so they keep figuring out ways to steal billions of dollars from American company's that really did no wrong. Followed the laws. They make up new crap to stick a big fine on a company.

    See the problem with Socialism is at some point you run out of other people's money!!!
    edited October 2018 rinosaur
  • Reply 14 of 31
    sphericspheric Posts: 1,764member
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?
    What's wrong with it is what's missing from it. 

    Apple paid an effective ZERO POINT SEVEN (0.7) percent taxes on their income here in Europe, where they make about 30% of their profit, IIRC. 

    While there effective worldwide tax rate was at 26%. 

    What's wrong with this picture?
    edited October 2018 muthuk_vanalingamGeorgeBMac
  • Reply 15 of 31
    hmlongco said:
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?

    Still, a minimum corporate tax rate sounds like just the thing we need here in the US. Especially since our "lack of income" is "demanding" that we cut SSI, Medicare, Medicare, and all of the other programs upon which the elderly, retirees, and the poor depend.

    Good luck getting that past the House, Senate, and WH, however...
    Please list the companies that pay no corporate income tax.
  • Reply 16 of 31
    croprcropr Posts: 944member
    rob53 said:

    I don't think the EU is looking at this as global socialism, I think they're looking at it as a global dictatorship. Even with Ireland's existing laws, the EU is forcing a sovereign country to abide by the dictatorship called the EU. Most of the EU is failing economically so there's an obvious attempt at taxing whomever they can to try and shore up their failing economy. The crazy thing is the people are still buying lots of expensive goods so it's not always the people who are failing but the way the governments are operated that's failing.
    That is a lot of bullshit for a single paragraph. 
    All institutions in the EU are either democratically elected or approved by a democratic elected parliament.   Where did you get the concept that the EU is a dictatorship? A democracy ithat takes actions that you disapprove, remains a democracy
    Ireland has chosen to join the EU and was well aware of the anti-competition rules. 
    The economy in the EU is not failing, it has been growing. the last couple of years  The bad pupil in the EU is currently the UK because of the Brexit
    muthuk_vanalingamGeorgeBMacspheric
  • Reply 17 of 31
    boltsfan17boltsfan17 Posts: 2,161member
    cropr said:
    rob53 said:

    I don't think the EU is looking at this as global socialism, I think they're looking at it as a global dictatorship. Even with Ireland's existing laws, the EU is forcing a sovereign country to abide by the dictatorship called the EU. Most of the EU is failing economically so there's an obvious attempt at taxing whomever they can to try and shore up their failing economy. The crazy thing is the people are still buying lots of expensive goods so it's not always the people who are failing but the way the governments are operated that's failing.
    That is a lot of bullshit for a single paragraph. 
    All institutions in the EU are either democratically elected or approved by a democratic elected parliament.   Where did you get the concept that the EU is a dictatorship? A democracy ithat takes actions that you disapprove, remains a democracy
    Ireland has chosen to join the EU and was well aware of the anti-competition rules. 
    The economy in the EU is not failing, it has been growing. the last couple of years  The bad pupil in the EU is currently the UK because of the Brexit
    The economy in the EU has not been growing the last couple of years. Growth has been falling since 2017. There wasn't any growth in 2016. With current projections, the economy in the EU will continue to fall into 2019. The UK is hardly the only "bad pupil" in the EU. Look at Spain, Greece, Italy, etc. It's bad all around. 
    rinosaurrossb2
  • Reply 18 of 31
    GeorgeBMacGeorgeBMac Posts: 4,684member
    hmlongco said:
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?

    Still, a minimum corporate tax rate sounds like just the thing we need here in the US. Especially since our "lack of income" is "demanding" that we cut SSI, Medicare, Medicare, and all of the other programs upon which the elderly, retirees, and the poor depend.

    Good luck getting that past the House, Senate, and WH, however...
    Please list the companies that pay no corporate income tax.
    Trump
    spheric
  • Reply 19 of 31
    spheric said:
    A company like Facebook will make billions in profit and generate maybe a dozen jobs and a mailbox office in each of three offshore tax havens, and still not pay any taxes. That is about to change in the next decade - hopefully.
    Why should a "company like Facebook" with a dozen employees in a country--and therefore imposing negligible costs and reaping no benefits--be paying lots of taxes to that country?  Presumably the consumers of that company are already paying income taxes and possibly also sales tax on the product (although not in Facebook's case).  So why should these countries get a piece of the action?

  • Reply 20 of 31
    spheric said:
    So.... here in the US we decided that we had to reduce the corporate tax rate (further reducing the effective tax rate) such that many major corporations pay little to no corporate income tax...

    ...while at the same time the EU is considering a minimum corporate tax rate.

    What's wrong with this picture?
    What's wrong with it is what's missing from it. 

    Apple paid an effective ZERO POINT SEVEN (0.7) percent taxes on their income here in Europe, where they make about 30% of their profit, IIRC. 

    While there effective worldwide tax rate was at 26%. 

    What's wrong with this picture?
    What does Apple make in Europe?  How many employees do they have there?  Every Apple employee in Europe pays income taxes there.  Every device Apple sells there is hit with a VAT.  Every European investor who makes money from investing in AAPL pays taxes on those investments to European governments.

    What's wrong with this picture?  Nothing, that I can see.
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