I'm pretty sure Google does not have a problem figuring out that the source of it's profits are not occuring in Ireland.

There is no science to what the 'correct' level of tax is, and assigning which part of a multinational corporation is responsible for what dollar of profit is genuinely complicated.

As long as they are playing by the rules, no company has an obligation to try and guess what level of tax is fair for them to pay. Since they are taxed according to their interpretation of the situation (as represented in their account books) there isn't anything wrong with choosing an interpretation that is tax effective.

Oh, I am not implying the "rules" are correct by any means either. Yes, I am saying that just because the rules/laws permit a thing, doesn't mean it isn't broken. The whole point of courts is to decide what broken laws mean, governments to fix holes in the laws, and people to decide who the government is.

It's not that simple?

How do you tax a German company paying an Irish company to show ads in France?

much like the trolley problem and driverless cars, you can easily get lost in the weeds in a legitimate, complex theoretical question, when for a concrete problem a simple answer can easily be obtained. In fact, the theoretical question obscures or acts as cover for the concrete case. For driverless cars, you just apply the brakes. For google, do you outlaw "The double Irish with a Dutch sandwich"

It's not that a simple answer can't be obtained, it's that many different simple answers can be obtained...

sure, if you are trying to solve the fully parametric abstract equation over all possible inputs, which is precisely what I was saying to try to avoid.

In absence of a grand unified theory, tackle obvious concrete instances when they crop up.

If the different "simple" answers (which I am not sure exactly what that means) solve the problem, then I really do not care if there is some equivalence principle there; just pick one as long as it produces the concrete outcome that you want.

The problem can be roughly stated as: For a company registered in country I, selling product/service in country F, with inputs licensed from and/or created in countries N, U, B, G, A, and C, and costs incurred in a potentially different set of countries, what's the amount of tax due to each country represented in the graph?

There are many simple answers to that question; who gets to decide which simple answer is the one enacted? Countries F, I, and U are likely to disagree on which simple answer is "best", which is why we rely on laws and courts to frame and adjudicate the issue.

Outlaw what exactly? Subsidiaries? Licence Agreements? Profit/Loss calculations? The European Union? "The double Irish with a Dutch sandwich" is an emergent property of a bunch of laws "working as intended".

So what you really ask is to get rid of the rule of law so you can target the bad guy du jour directly. Just remember that you may be "the bad guy" tomorrow.

I'm merely stating why "make avoiding taxes illegal" is not a clear cut thing. Apple got to pay over 11 billion of back taxes to Ireland and another 500 million to France for example, so if there is clear fraud it's easy.

The difficulty is to have a legal framework and not just some judge saying "I'll know it's porn when I see it".

This being said I am not a lawyer.

>Sovereign countries are free to set their tax rate to 0 in order to attract companies there.

Then those companies should only sell products and services in those countries. Otherwise, something should be done about it. I'm not saying it's easy, but it can be improved.

So exporting should be illegal?

Doing business with tax havens should be illegal. A tax Haven creates an agreement between companies and a country to steal another country tax reveneu.

Tax havens produce close to nothing, so they have very small exports. It's just a legal arrangement that has nothing to do with production.

You are assuming that somehow that tax revenue is theirs in the first place.

What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland?

Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because here in Spain the legal framework is unclear. All escape rooms in this country are in a legal greyish area.

> You are assuming that somehow that tax revenue is theirs in the first place. The big corporations that evade taxes are using the economic power, infrastructure and legal systems of countries without contributing to any of them. That is money that the corporations owe to the citizens of those countries.

> What if that tax rate makes a business non-profitable in France but a money-making machine in Ireland? I see your point, they are centred about maximizing profit. But, there are other goals as well. The goal of improving the taxation system is related to broad social issues like wealth redistribution. It has nothing to do with the only goal is to maximize short term profits for companies.

> Also, too much focus is centered around taxes when spurious regulations are generally more damning for a lot of companies. For example some friends of mine have attempted to start escape rooms, they have all abandoned their pursuits because here in Spain the legal framework is unclear. All escape rooms in this country are in a legal greyish area.

This is one of the many reasons regulations take a long time to be in place for new kinds of business: https://www.news.com.au/world/europe/five-girls-locked-in-ho...

I hope that your friends find a good way to start escape rooms in the end. If it is their passion they will succeed. Regulations may be slow, but regulations get set and then people can do business safely for everyone involved.

Or more likely: fewer people do business. It would certainly explain Spain's economy.

Escape rooms and haunted houses are a nightmare in local fire code in the states as well. Ends up putting a lot of smaller productions out of business.

If it were that, I’d understand. The main issue my friends had was with declaring their “official activity”. In spain you need to declare what activity your bussiness is into, and the categories available are so restrictive and ill defined that a lot of people end up just making up something and going with it.

I’ve seen contractors with numbers in their paperwork that was obviously made up by putting a completely random number (they even admitted to that privately).

It’s important? No, is a risk that could destroy your bussiness? Certainly.

Wow that's pretty lame then. We have something similar but it's not really something you're held to, mostly just for them to have an idea what your deductions should be (or something like that, not a tax expert). Wondering, could they classify themselves as theater or similar? That's what's commonly used at least in the circles Im part of.

Tax havens are often highly desirable tourist destinations. Making it illegal to do business with them would anger a lot of tourists and is, frankly, a violation of freedom of movement.

But shouldn't they like pay taxes for where the customer is from?

Suppose a guy from US purchases the service, shouldn't tax be paid there. Isn't that how its supposed to work? Taking only in terms of Giants.

Note that there already is a tax that people are paying 'where the customers are'. It's the VAT, which is one of the biggest sources of income for a state.

To complicate the situation, a French citizen, living in Spain, the sole owner of a company incorporated in Ireland, buys software from an American company to run for a customer in Brazil.

Which country/countries should be able to tax the revenue?

The company would pay corporation tax in Ireland. The French citizen, if resident in Spain, would probably pay taxes in Spain (generally countries tax residents).

The customer may need to pay sales tax on the purchase to Brazil, if Brazil has such a thing.

But I agree with your point - it does get quite complicated and bureaucratic.

> The company would pay corporation tax in Ireland.

You'd assume that, but you could also very well be wrong. Depending on tax treaties and the "effective place of management" principle, he could be liable for corporation tax in Spain or in both Spain and Ireland.

One reason why tax laws get very complicated very fast is because every country wants to tax everything it can which inevitably means that two different countries end up taxing the same thing. To avoid this, you get double taxation treaties and loopholes.

In the example above the American company presumably has most of its employees in the US and ought to pay significant tax there somehow.

It will: the process of paying employees is heavily taxed. Who writes the check and what the nominal salary is doesn't matter too much... between the cost to the company, and the employee getting to spend the money, the government gets what 30-40%? That's a lot. And it's hard to avoid, you can't move a hundred engineers to the Bahamas at the stroke of a pen.

It gets really hairy in cases like Google and Facebook, where the guy paying the service might be a US agency paying to show ads to YouTube/FB users in Europe.