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Comment by glutamate | Hacker News Reader

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glutamate·

As I understood the article, this is a tax on sales, not profits.

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To ddebernardy's point then, why not charge VAT?

VAT is generally not paid from b2b transactions which are the vast majority of ad sales.

To be precise you do pay VAT in some cases but then it is refunded. So no money to government.

VAT would be only partially refunded. Unless you’re selling your product/service for less than it costs you, not a good business model.

It works its way down the supply chain until it reaches the consumer.

I assume this is on top of VAT (the article does not say).

Companies dont pay VAT. And google's reveneus are mostly ads for companies.

Companies do pay VAT when buying ads (but it’s Google Ireland doing the sale, I think).

Everyone pays VAT but if you’re a company you get reimbursed (by having your accountant compute all paid VAT and asking the state for a refund IIUC). VAT is only supposed to apply to the last transaction with the consumer, hence the “value added” in the tax ;)

Selling fake goods between companies and applying for the VAT refund for all the fake transactions is known as a VAT carrousel.

Yes. In the end the end customer pays the whole tax. But everyone along the chain has to collect its share for the taxman. In this way there is no need to check if the sale is or not subject to the tax. Everyone pays, always. It would be a simple system if it wasn’t for all the exceptions, special situations and opportunities for fraud.

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