Re:G7: Rich nations back deal to tax multinationals
by tomp on Monday June 07, 2021 @06:57AM
(#27421114)
Bingo. The reason that non-US governments (like the UK) want to get a share of the tax on profits is because they lack domestic innovative high-profit companies. They want to take a share of the added value created / subsidised by another government (US in this case). It's bad incentives all around.
Re:G7: Rich nations back deal to tax multinationals
by dragonwriter on Saturday June 05, 2021 @01:54PM
(#27407164)
> The UK already has an 18% GST rate, which is equivalent to an 18% tax on revenues.
No, GST is a VAT (in fact, the UK’s is called a VAT, not a GST), which is not the same as a revenue tax.
Re:G7: Rich nations back deal to tax multinationals
by saddlerustle on Saturday June 05, 2021 @04:12PM
(#27408116)
The majority of Apple's sales is to consumers, so it's equivalent for the sake of argument.
Re:G7: Rich nations back deal to tax multinationals
by dragonwriter on Saturday June 05, 2021 @08:04PM
(#27409471)
Its not equivalent to a revenue tax, because a VAT excludes purchase price and revenue doesn’t.
Re:G7: Rich nations back deal to tax multinationals
by tomp on Monday June 07, 2021 @06:56AM
(#27421105)
VAT excludes the VAT paid when the company purchased the raw materials, i.e. it's paid net.
The end result is, the consumer pays VAT which is 20% of the price (i.e. 20% of the revenue), and the tax is spread out evenly across the whole production supply chain, weighted by the amount of added value by each company in the chain.
Re:G7: Rich nations back deal to tax multinationals
by saddlerustle on Saturday June 05, 2021 @08:19PM
(#27409552)
I'm not sure what you mean. If you assume all sales were to consumers it's true that the government receives ~~18% of Apple's revenue compared to if Apple sold nothing. Or are you just referring to the small difference between counting "revenue" as inclusive of VAT or exclusive of VAT?
Apple revenues in the UK was about $2B. Which means Apple is already paying $360mil in GST tax to the UK gov. Apple also paid some amount of wage, income, real-estate and other taxes.
Let's imagine companies had to pay income tax on a pro-rated, point-of-sales basis. Thus, apple's pre-tax income for the UK would be 2/274 * 67 = $500M. At a 20% income tax rate, this would net the UK gov an additional $100M.
This is why they want this sort of thing. It has nothing to do with fairness. The US gov is generally opposed to pro-rating profits based on location of sales. Because the US tax code allows companies to effectively deduct foreign taxes from net income, income taxes paid overseas has the effect of reducing income tax paid to the US gov.