Multinational tech giants like Apple often 'pay taxes nowhere,' says German minister

Posted:
in General Discussion
The world's biggest multinational tech companies, Apple among them, are escaping much of their fair tax burden, German Finance Minister Olaf Scholz said in an interview this week.

Olaf Scholz


"My biggest concern with the tech companies is that they tend to pay taxes nowhere," Scholz told CNBC. The European Union has been debating a continent-wide digital tax that would mainly target the "GAFA" group -- that is, Google, Apple, Facebook, and Amazon. Sweden, Finland, Ireland, and Denmark blocked a draft proposal last weekend.

Proponents of a GAFA tax have pointed out that a lot of online business, such as advertising, isn't being taxed. That's posing a problem for government budgets as more and more transactions move from physical space to the internet.

Major tech companies have also regularly exploited loopholes to minimize their tax payments. Apple, for instance, is known to have funneled billions of dollars in international revenue through Irish subsidiaries, paying little tax in that country or where sales actually took place. A 2016 European Commission ruling found that the Irish government had for years arranged preferential treatment -- something illegal under E.U. law. Apple has already paid over $15 billion to comply with that ruling, though both it and the Irish government are working to appeal.

France is meanwhile advancing the prospect of a national 3 percent tax on tech firms with global revenues exceeding 750 million euros ($843 million) per year. The U.K. could potentially impose a 2 percent tax on companies generating 500 million pounds ($653 million).

Scholz concurred with E.U. Competition Commissioner Margrethe Vestager, who recently said that a "global solution" to weak digital tax laws was needed.

"I think we should find a global agreement on that question, this would help a lot," Scholz commented.

The minister suggested in fact that a "common approach" is being taken in the U.S. There are some efforts in the country to secure a minimum tax rate on multinationals that operate in low-tax regions.

Apple CEO Tim Cook has famously insisted that "We pay all of the taxes we owe," and moreover that it not only complies with laws but "the spirit of the laws." In February however, Apple agreed to pay the French government about 500 million euros ($571 million) in back taxes following a years-long audit.
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Comments

  • Reply 1 of 45
    uraharaurahara Posts: 733member
    Find a global agreement? On what? What are the options?
    Just another political blabbering to stay in the news and be at least a little bit relevant. 
    designrracerhomie3
  • Reply 2 of 45
    rwx9901rwx9901 Posts: 100member
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    designrjbdragonkarsk
  • Reply 3 of 45
    gatorguygatorguy Posts: 24,212member
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    edited April 2019 SpamSandwichhodar
  • Reply 4 of 45
    gatorguygatorguy Posts: 24,212member
    designr said:

    Apple CEO Tim Cook has famously insisted that "We pay all of the taxes we owe,"...
    Yep. And that's all I pay too. It's all anyone should pay. This political blathering is just whining about companies and people using the laws as they are currently written to their fullest advantage to keep the money they've earned. Nothing wrong with that. Don't like it? Change the laws. Jurisdictional arbitrage happening? Well, I guess that's life unless we want some kind of one world government (at least for taxation) and eliminate independent nations.
    Tim Cook also said "...we obey the SPIRIT of the law" and not just the strict wording of the law.
    muthuk_vanalingam
  • Reply 5 of 45
    rwx9901rwx9901 Posts: 100member
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    Thank you.  The consumer, and only the consumer, pays taxes.  Corporations do not pay taxes.  They collect taxes and nothing more.  An example would be this.  If Apple's tax burden were increased by 5% would Apple decrease their profit margin by 5%?  No.  They would more than likely pass that cost onto the consumer rather than face their shareholders and say we are going to reduce our PM by 5%.  Not gonna happen.
    edited April 2019 designr
  • Reply 6 of 45
    gatorguygatorguy Posts: 24,212member
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    I can give you a personal example since I do have 2 corporations.

    Neither of them price their products to include corporate taxes on the profits from those sales.

    There's some years they've owed no taxes whatsoever, many more that they have. Pricing in the tax expected at the end of a year based on what profits those corporations factually realize and then adding to each of the products doesn't happen. If we could price our products higher and still maintain our sales goals we would just as EVERY corporation would. We all love profit. We can't compute "what the market will bear" and then add another fee on top for corporate taxes. That would end up counterproductive If we have already priced properly then adding the tax on top would logically result in fewer sales and in all likelihood LESS profit. 

    People that make up these stories that corporations don't pay taxes, consumers do, don't run corporations. 
    edited April 2019 hodarchasmgilly33muthuk_vanalingam
  • Reply 7 of 45
    jbdragonjbdragon Posts: 2,311member
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    Corporations pay taxes sure, but it's not coming out of their pocket. It's YOU the customers buying the products. You are paying the taxes in the form of higher prices. It's really a round about way for politicians to tax YOU more money while making themselves look good. Look, we're going after that Evil whatever. The people go thanks, make sure I vote for you once again. If they just raised taxes even more, people don't like that. It's never enough. Government wants more and more. An extra unfair 3% tax on this company's is just a 3-4% price increase on YOU. That's what he means when he says Corporations don't pay taxes. It's the same as hey, lets get those EVIL Oil Company's. Now you have even higher Gas Prices.
    designrrwx9901
  • Reply 8 of 45
    avon b7avon b7 Posts: 7,666member
    designr said:

    Apple CEO Tim Cook has famously insisted that "We pay all of the taxes we owe,"...
    Yep. And that's all I pay too. It's all anyone should pay. This political blathering is just whining about companies and people using the laws as they are currently written to their fullest advantage to keep the money they've earned. Nothing wrong with that. Don't like it? Change the laws. Jurisdictional arbitrage happening? Well, I guess that's life unless we want some kind of one world government (at least for taxation) and eliminate independent nations.
    Unless my memory fails me, the summary of the EU investigation claimed that Apple was actually deciding how much to make payable for taxation.

    So, one possible reading for Tim Cook's claim is that yes, they pay everything they owe, but as they can actually decide what to make available for taxation in the first place, the whole claim is worthless.
    muthuk_vanalingam
  • Reply 9 of 45
    22july201322july2013 Posts: 3,571member
    Maybe DED could write a detailed article explaining how corporations give tax money to the governments. And related details like what happens when a company transfers money between different jurisdictions.
    gilly33
  • Reply 10 of 45
    gatorguygatorguy Posts: 24,212member
    jbdragon said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    Corporations pay taxes sure, but it's not coming out of their pocket. It's YOU the customers buying the products. You are paying the taxes in the form of higher prices.
    No you're not for for very obvious reasons. If Apple has properly priced their iPhones for example, charging as much as the market will bear which they should, how do they then tack more on top without negatively affecting sales and thus profits? Companies do not price for taxes and no matter how much their corporate tax bill is Apple will not raise prices above what the market will bear. Their price is their price regardless of the corporate taxes or lack thereof. 
    karsktokyojimuhodargilly33muthuk_vanalingam
  • Reply 11 of 45
    avon b7avon b7 Posts: 7,666member
    designr said:
    avon b7 said:
    designr said:

    Apple CEO Tim Cook has famously insisted that "We pay all of the taxes we owe,"...
    Yep. And that's all I pay too. It's all anyone should pay. This political blathering is just whining about companies and people using the laws as they are currently written to their fullest advantage to keep the money they've earned. Nothing wrong with that. Don't like it? Change the laws. Jurisdictional arbitrage happening? Well, I guess that's life unless we want some kind of one world government (at least for taxation) and eliminate independent nations.
    Unless my memory fails me, the summary of the EU investigation claimed that Apple was actually deciding how much to make payable for taxation.

    So, one possible reading for Tim Cook's claim is that yes, they pay everything they owe, but as they can actually decide what to make available for taxation in the first place, the whole claim is worthless.
    That sounds like a problem with the specification of the law. If the law actually allows that, then I guess they (taxing jurisdiction) kinda get what they deserve. Ya think?

    But, can you clarify what you mean by "they can actually decide what to make available for taxation"? Are you saying they can just decide how much income is taxable or not? How so? That sounds odd.
    Short on time to dig up relevant links but:

    "Therefore, only a small percentage of Apple Sales International's profits were taxed in Ireland, and the rest was taxed nowhere"

    http://europa.eu/rapid/press-release_IP-16-2923_en.htm


  • Reply 12 of 45
    jimh2jimh2 Posts: 614member
    Contrary to what some believe corporations pay tax by taking the money we pay for their product and handing it over to the government. For the two businesses I own, every last cost is factored into the pricing of the services and products. I don't set prices and then hope that it all works out in the end. Same goes for personal income tax. I am required to make estimated tax payments due to being self-employed and my estimates have to be close to spot on. In fact the only way to avoid a penalty is to pay at least what you owed the prior year and even that may not be enough if profits increase substantially during the year.

    As for taxes I pay the legal bare minimum, no less and no more. I am not a scofflaw nor am I offering up charity for the government. Those who complain about this need to speak to their government officials about changing the tax laws. I'll add that the definition of loop-hole has become skewed implying that what is done to capitalize on a poorly written tax law is somehow cheating or paying less than you owe, which it is not.
    rwx99019secondkox2StrangeDaysdesignrrandominternetperson
  • Reply 13 of 45
    9secondkox29secondkox2 Posts: 2,707member
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    Incorrect. 

    The He corporation is an entity. Though not s human, a corporation receives funds and pays funds just like an individual. Sure Apple takes in money. But it doesn’t get to keep it all. It must cut checks to various governments and pay billions in taxes. 

    The “tax” you say customers are paying is simply not so, regardless of expected tax being built into product price. 

    An individual works, receives income, and pays tax out of that income. 

    Same with a corporation. 

    Youre trying to argue semantics without any logical thought or understanding of the real world. 
  • Reply 14 of 45
    rwx9901rwx9901 Posts: 100member
    gatorguy said:
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    I can give you a personal example since I do have 2 corporations.

    Neither of them price their products to include corporate taxes on the profits from those sales.

    There's some years they've owed no taxes whatsoever, many more that they have. Pricing in the tax expected at the end of a year based on what profits those corporations factually realize and then adding to each of the products doesn't happen. If we could price our products higher and still maintain our sales goals we would just as EVERY corporation would. We all love profit. We can't compute "what the market will bear" and then add another fee on top for corporate taxes. That would end up counterproductive If we have already priced properly then adding the tax on top would logically result in fewer sales and in all likelihood LESS profit. 

    People that make up these stories that corporations don't pay taxes, consumers do, don't run corporations. 
    Sorry, but that's just not true.  I am a partner in a corporation.  I know how this works.  Is it your contention that you are unaware that the current corporate tax rate stands at 21%?  A corporation always knows what their tax component is and makes the necessary accommodations to their bottom line.  Always.  If it doesn't then that's just irresponsible.  Having said that my example above stands.  If the tax burden on your corporation increases from 21% to 35% would you take less in profit or would you pass it onto the consumer?  
    randominternetperson
  • Reply 15 of 45
    9secondkox29secondkox2 Posts: 2,707member
    rwx9901 said:
    gatorguy said:
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    I can give you a personal example since I do have 2 corporations.

    Neither of them price their products to include corporate taxes on the profits from those sales.

    There's some years they've owed no taxes whatsoever, many more that they have. Pricing in the tax expected at the end of a year based on what profits those corporations factually realize and then adding to each of the products doesn't happen. If we could price our products higher and still maintain our sales goals we would just as EVERY corporation would. We all love profit. We can't compute "what the market will bear" and then add another fee on top for corporate taxes. That would end up counterproductive If we have already priced properly then adding the tax on top would logically result in fewer sales and in all likelihood LESS profit. 

    People that make up these stories that corporations don't pay taxes, consumers do, don't run corporations. 
    Sorry, but that's just not true.  I am a partner in a corporation.  I know how this works.  Is it your contention that you are unaware that the current corporate tax rate stands at 21%?  A corporation always knows what their tax component is and makes the necessary accommodations to their bottom line.  Always.  If it doesn't then that's just irresponsible.  Having said that my example above stands.  If the tax burden on your corporation increases from 21% to 35% would you take less in profit or would you pass it onto the consumer?  
    So you just proved corporations pay taxes. Thank you. 

    anything you pay a government set percentage of from income received is... GASP... TAX... 

    just because you adjust pricing to make sure your peofit margins are still healthy after tax in no way means you aren’t paying by tax. 

    Its simply a lie. 
    edited April 2019
  • Reply 16 of 45
    DAalsethDAalseth Posts: 2,783member
    I agree with him. Corporations don’t pay their fair share. But they are not violating the law. If you want them to pay more, change the law. It’s that simple. Too often it becomes an argument about ‘evil corporations ripping off us little taxpayers’. It’s not. They are obeying the law as it is written. Want to have them pay more, change the law. 
  • Reply 17 of 45
    carnegiecarnegie Posts: 1,078member
    rwx9901 said:
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    Thank you.  The consumer, and only the consumer, pays taxes.  Corporations do not pay taxes.  They collect taxes and nothing more.  An example would be this.  If Apple's tax burden were increased by 5% would Apple decrease their profit margin by 5%?  No.  They would more than likely pass that cost onto the consumer rather than face their shareholders and say we are going to reduce our PM by 5%.  Not gonna happen.
    Some taxes on corporations are, effectively, passed through to consumers. Other taxes on corporations are, effectively, passed through to owners (or, rather, taken from what owners might otherwise ultimately receive). It depends on how the tax functions. Corporate income taxes generally fall into the latter category. I've discussed why this is the case elsewhere, so I won't get lost in the methodological realities here. But, in simple terms, it's because X% of B is greater than X% of A if B is greater than A, regardless of what X is (unless it is 0).

    If one can increase pre-tax profit when the applicable income tax rate would be 30%, without unacceptable consequences (e.g. doing long term damage to a brand or negatively affecting install base), then they can increase pre-tax profit when the applicable tax rate would be 20%. So if they would in the former case, why wouldn't they in the latter case? That is unless the goal is to produce a set amount of after-tax profit and they don't want to produce any more than that even if they know how to (and, of course, there aren't other unacceptable consequences to doing so.) That is not the goal of most corporations. They don't, e.g, desire to make exactly $1 billion in after-tax profit and intentionally choose not to do things which might increase that amount.

    Regardless of the applicable tax rate, the way to increase after-tax profit is to increase pre-tax profit.
    edited April 2019 muthuk_vanalingamrandominternetperson
  • Reply 18 of 45
    mjtomlinmjtomlin Posts: 2,673member
    They made the laws. Now they think those laws are unlawful. So, who's to blame? Certainly not the people that made the laws. (/s) Apple is not illegally evading taxes as they would like you to believe. Apple is just using loopholes in those laws to maximize profits, as every publicly traded corporation should.

    As someone else said, change the tax laws and close those loopholes.
    And as others have said, if taxes go up in the EU, so will the price of goods.
  • Reply 19 of 45
    carnegiecarnegie Posts: 1,078member

    rwx9901 said:
    gatorguy said:
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    I can give you a personal example since I do have 2 corporations.

    Neither of them price their products to include corporate taxes on the profits from those sales.

    There's some years they've owed no taxes whatsoever, many more that they have. Pricing in the tax expected at the end of a year based on what profits those corporations factually realize and then adding to each of the products doesn't happen. If we could price our products higher and still maintain our sales goals we would just as EVERY corporation would. We all love profit. We can't compute "what the market will bear" and then add another fee on top for corporate taxes. That would end up counterproductive If we have already priced properly then adding the tax on top would logically result in fewer sales and in all likelihood LESS profit. 

    People that make up these stories that corporations don't pay taxes, consumers do, don't run corporations. 
    Sorry, but that's just not true.  I am a partner in a corporation.  I know how this works.  Is it your contention that you are unaware that the current corporate tax rate stands at 21%?  A corporation always knows what their tax component is and makes the necessary accommodations to their bottom line.  Always.  If it doesn't then that's just irresponsible.  Having said that my example above stands.  If the tax burden on your corporation increases from 21% to 35% would you take less in profit or would you pass it onto the consumer?  
    Let's say the applicable income tax rate is 21%. With that applicable rate a given corporation makes $1 billion in pre-tax profit, so it has $790 million in after-tax profit.

    Let's say the applicable income tax rate is instead 35%. To achieve an after-tax profit of $790 million it would need $1.215 billion in pre-tax profit.

    If it could change its practices - e.g., by increasing consumer prices - such that it would have $1.215 billion in pre-tax profit, then why wouldn't it do that in the first case just as it would in the second? Then, in the first case, it would have $960 million in after-tax profit rather than $790 million. To paraphrase, if it wouldn't that would just be irresponsible.

    The ways in which income taxes function are different from the ways in which, e.g., excise taxes function. They come at different points in various (e.g. pricing) considerations. They affect, e.g., margins and market competition in different ways. Because of that the consequences of them - and the decisions made based on them - are different.
    gatorguymuthuk_vanalingam
  • Reply 20 of 45
    gatorguygatorguy Posts: 24,212member
    rwx9901 said:
    gatorguy said:
    designr said:
    gatorguy said:
    rwx9901 said:
    Corporations do not pay taxes. Period. They collect taxes. Nothing more.
    Please tell that to the IRS.  Please. The corporation I control would love that to be true. The Irish and Apple already thought that as well so tell the EU too. :)
    I think you're missing what he means. Who does the corporation you control get revenue from? Those are the ones paying the taxes. It's just basically an accounting trick that makes it seem the the corporation itself is paying them.
    I can give you a personal example since I do have 2 corporations.

    Neither of them price their products to include corporate taxes on the profits from those sales.

    There's some years they've owed no taxes whatsoever, many more that they have. Pricing in the tax expected at the end of a year based on what profits those corporations factually realize and then adding to each of the products doesn't happen. If we could price our products higher and still maintain our sales goals we would just as EVERY corporation would. We all love profit. We can't compute "what the market will bear" and then add another fee on top for corporate taxes. That would end up counterproductive If we have already priced properly then adding the tax on top would logically result in fewer sales and in all likelihood LESS profit. 

    People that make up these stories that corporations don't pay taxes, consumers do, don't run corporations. 
    Sorry, but that's just not true.  I am a partner in a corporation.  I know how this works.  Is it your contention that you are unaware that the current corporate tax rate stands at 21%?  A corporation always knows what their tax component is and makes the necessary accommodations to their bottom line.  Always.  If it doesn't then that's just irresponsible.  Having said that my example above stands.  If the tax burden on your corporation increases from 21% to 35% would you take less in profit or would you pass it onto the consumer?  
    I should already have been passing along to the consumer all the profits that my product will bear without negatively affecting sales and the profits realized. The taxes have zero impact on that on a standalone company basis. If that were true then you'd be reducing prices in those you owed little to nothing, while other years the prices would rise, sometimes a little and sometimes a lot. It would be a constant up and down year by year. I'm pretty confident that's not what you're doing.

    If you're selling yourself short by not already optimizing prices sans taxes on profits you're not doing your job very well. 
    edited April 2019 muthuk_vanalingamCarnage
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