If a company doesn't have offices in your country, it's not yours.
>These companies exist globally
Well, maybe the net result is to get out of the EU then, if the costs of 3% of global revenues exceed profits.
If you don't think a company that is mostly non-profit (Twitter) shouldn't exist, I feel that's a pretty pathetic position. So you're either a very greedy, high margin profit company,or the EU says you shouldn't exist?
[1] http://www.dw.com/en/eu-prepares-revenue-based-tax-on-us-tec...
[2] https://www.bloomberg.com/view/articles/2018-03-16/eu-digita...
Let's use lumber as an analogy. Let's say the trees are in nation A. And a company from nation B is cutting them them down to make lumber (and is paying appropriate taxes in A for licenses, employees, land, etc). Lumber which is sold to companies in nations C, D and E. And appropriate taxes are paid on those sales. The company also pays income tax in nation B. The EU tax is like nation A saying, "you're using our trees to make even more money in nations C, D and E -- pay us a share of those sales!" In this analogy, the users are the trees.
To use another analogy, it's like demanding farmers pay taxes on the revenues that McDonalds makes. It's just silly.
Google has offices in almost every EU country.
https://careers.google.com/locations/
Aarhus, Amsterdam, Athens, Berlin, Bratislava, Brussels, Budapest, Copenhagen, Dublin (EU HQ), Eemshaven, Frankfurt, Hamburg, Hamina, Helsinki, Lisbon, London, Lubeck, Madrid, Milan, Moscow, Munich, Oslo, Paris. Prague, Rome, Saint-Ghislain, Stockholm, Vienna, Warsaw, Wroclaw, Zagreb Zurich
Twitter: https://careers.twitter.com/en/locations.html
Berlin, Brussels, Dublin, Hamburg, London, Madrid, Paris
The answer is simple: They'll get court-approval to confiscate funds being transferred to these companies from European customers.
So the real option on the table is to stop taking money from anyone in Europe, and the European market is simply too big for that to be a realistic option.
Did you also support Brexit?
It's not uncommon for monopolies to lose money on some projects as a tradeoff for destroying would-competitors. Thus the fact that a big company is not making a direct immediate profit is NOT a reliable indicator of them being benign.
I'm assuming you mean "not profitable" rather than a "non-profit", since the latter indicates an organization explicitly limited to at least ostensibly-charitable purposes.
If a company sells a product (ad space in this instance) in a geography they are doing business there and should pay taxes there.
You've boxed the parent into three positions. They're kind of orthogonal so it's hard to approach directly, but consider a hypothetical 4th position.
What if the parent hypothetically thinks that twitter is acceptable collateral damage if it means fixing some other abuse, does that make him greedy? What if he gains nothing from it?
I think I've just provided a way out of your boxes, if you disagree please let me know!
Let me provide an alternative hypothetical scenario: Major tech companies withdraw their businesses out of EU jurisdictions. They run sales and support remotely. They close down local offices. They host in clouds that sit on the border of EU territories, enough to provide low latency, but outside taxing authority.
Now what? US Internet services still makes money, EU citizens still have access, but there's no corporate footprint. Do you really think with such huge traffic, if Google and Facebook and Twitter shutdown local offices and entities that businesses still won't advertise with them? Advertisers go where the audience is.
The EU would then face a moment of truth about whether to bifurcate the internet like China did, erecting a Great Firewall of Europe, blocking access to properties that are not in compliance.
Lest people think this is about my employer, read https://people.eecs.berkeley.edu/~daw/papers/privacy-compcon... and search from "Cromwell", and you'll see reference to work I published in 1996. I heavy subscribe to John Perry Barlow's "Declaration of Independence" of Cyberspace. To me, the internet was the first new zone of human freedom in millenia that was completely free of state interference, and the "permissionless innovation" it enabled, where anyone could publish anything that was accessible to the whole world, shook me to my core as a young teen in the late 80s when I first go on the net.
I think many people who came to the internet decades later perhaps don't have that sense of awe I do, that sense of its specialness. And this continual chipping away at that original Utopian dream with nationalistic, provincial concerns, is to me the unacceptable collateral damage.
The collateral damage I'm willing to except is some people getting away with tax evasion, if it means more freedom is preserved and we don't end up with a splintered-net-of-a-thousand rules, where I need to be concerned about what the CCCP and Brussels and Congress thinks before I publish something.
The 3% tax isn't being implemented because it's the best system. It's being done because tech giants have consistently weaseled their way around the normal way of taxing businesses by fiddling with transfer prices and corrupting governments.
>Now what? US Internet services still makes money, EU citizens still have access, but there's no corporate footprint. Do you really think with such huge traffic, if Google and Facebook and Twitter shutdown local offices and entities that businesses still won't advertise with them? Advertisers go where the audience is.
In this hypothetical scenario Google/Facebook/Twitter lose all their actual European clients, the advertisers. It's easy for the European states to just block the few relevant financial flows, there's no need for a Great Firewall for the users.
>I think many people who came to the internet decades later perhaps don't have that sense of awe I do, that sense of its specialness. And this continual chipping away at that original Utopian dream with nationalistic, provincial concerns, is to me the unacceptable collateral damage.
Are you also arguing for either an internet government to do internet wide taxation, or a ban on commercial use of the internet? Because otherwise what you're arguing is that tech giants should be able to use the independence of cyberspace that we both cherish to do a run around of the absolutely normal practice of taxing businesses that operate in specific geographies. If we let them keep doing that then states will end up having to put up more and more draconion barriers to the internet well beyond your worst case scenario of a Great Firewall of Europe.
No, they admit it's not the best system, that's why they claim it is short-term only. The best system would be an international treaty to harmonize corporate taxes.
>Are you also arguing for either an internet government to do internet wide taxation, or a ban on commercial use of the internet?
I'm arguing you should be taxed for the actual business you do. If I make a dollar because I sold an ad to a local company in the EU because they wanted to reach a customer in the EU, fine. That's a rational tax law. It's not rational to tax for business done elsewhere, sold to people elsewhere, for customers elsewhere, to be counted. Spotify is an EU company, do you think the US should tax them based on global European subscriber revenue?
Is internet wide taxation a bad idea? Not necessarily, but it's impractical because whose going to vote on how to distribute the revenues? Who's going to collect, ICANN/ISOC? At best you could come with a cross-regional harmonization of tax regions and agreed upon treaty on how those rates are calculated, but it is up to localities to impose and collect them.
> In this hypothetical scenario Google/Facebook/Twitter lose all their actual European clients, the advertisers. It's easy for the European states to just block the few relevant financial flows, there's no need for a Great Firewall for the users.
Really? How would they do that. It's easy to block purchasing physical goods online and have customs block it. How do you block virtual goods? Block payment processing systems? Foreign bank transfers? Bitcoin? Does the EU prosecute a local business for buying ads on Google or Facebook using a foreign bank account?
I mean, the barrier to buying stuff online, especially purely digital goods, is very low.
If companies with hundreds of billions on the line can figure out how to restructure themselves to avoid taxes, you don't think they can figure out how to restructure themselves to avoid this tax? Google and FB might just decide to pay it, but firms with less EU profits might decide it's not worth it and look for mechanisms around it.
"No" to what? You're just agreeing with what I said. An international treaty would be a much better solution but we're dealing with companies that have already corrupted several European governments, let's not pretend getting something as grandiose as that passed wouldn't be extremely hard.
>I'm arguing you should be taxed for the actual business you do. If I make a dollar because I sold an ad to a local company in the EU because they wanted to reach a customer in the EU, fine. That's a rational tax law. It's not rational to tax for business done elsewhere, sold to people elsewhere, for customers elsewhere, to be counted. Spotify is an EU company, do you think the US should tax them based on global European subscriber revenue?
Other people have already explained that this is not what is on the table. The proposal is to tax at 3% the percentage of the revenues that pertain to EU users, not users elsewhere.
>Really? How would they do that. It's easy to block purchasing physical goods online and have customs block it. How do you block virtual goods? Block payment processing systems? Foreign bank transfers? Bitcoin? Does the EU prosecute a local business for buying ads on Google or Facebook using a foreign bank account?
Yes to all your questions. And the fact that this is escalating is exactly why you should be in favor of proposals to quickly end this exploitation of tax laws by tech giants. Otherwise the internet as we know it is in danger.
That is exactly what this plan does. It is a tax on revenue generated in the EU from digital advertising, subscription fees and selling of user data. It is not a tax on global revenue. You are arguing against a tax plan that does not exist.
Similarly, the reason they pretend sales are conducted in a different country from the client, account manager and geotargeting of the ad is nothing to do with the right to publish things accessible to the whole world and everything to do with paying less tax. Content gatekeepers selling targeted European eyeballs to advertisers is at best orthogonal to the utopian view of the internet as a means to share knowledge irrespective of where and by whom it's consumed.
I've heard some pretty tortuous rationalizations for tax avoidance in the past, but inventing an imaginary Great Firewall of Europe so you can be furious at the EU asking your employer to pay a sales tax on ads is a whole new level. :-)