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Tax based on value extracted from a country. For example, in the UK I would tax corporations based upon UK Sales - UK Costs. For this I would require Amazon to set up a UK subsidiary.

Once they have set up a UK subsidiary then they will need to pay a corporation tax based on their total UK sales - UK costs. Sales are sales to the UK; any sales made to other countries, then no tax needed as those countries might (and probably should) have their own tax schemes. Costs would be employee costs, payments made to other UK companies such as an advertising agency or truck leasing and any other taxes they have to pay like rates or VAT.

It’s not really that simple to measure the ‘value’ extracted from a specific country. If we’re considering digital goods Amazon UK could just transfer the profits to Amazon Luxemburg by signing an IP licensing agreement etc. for the same amount they would be taxes on in the UK. So the UK entity would operate at a loss/zero profit. AFAIK many companies are already doing this.

Amazon Luxemburg is not a UK company, so it wouldn't feature in the UK costs. They would have to pay tax on UK sales - UK costs.

Import more (including IP) and you pay more tax unless you also increase your UK costs.

I believe something like the following would create an uncheatable system, and therefore will obviously never be implemented:

Does a corporation want to sell their products and services in country X? Very well, they must agree to the following regulation. The country X reserves an option to, at any point in time, buy up any subsidiaries or parts of the corporation, for value based on generally accepted accounting principles (GAAP). For example, if the accounting profit of Microsoft Germany is $0 over the past decade, the country has an option to purchase Microsoft Germany for its fair GAAP price - $0. After doing this, the country also has an option to reverse the trades the subsidiary has done. So, if Microsoft Germany sold its IP to Microsoft Ireland for the total value of $100, the country X can buy it back for $100. Repeat with Microsoft US, Microsoft UK, etc. The shareholders will be left with their extremely valuable (according to GAAP) Microsoft Ireland and Microsoft Singapore.

Any sufficiently large country with sufficiently motivated government can pull this off. No revolutionary overhaul of the existing tax system is necessary. The regulation is clear and fair. But again, it's never gonna happen.

Sort out those countries with sanctions and gunboat diplomacy.

The sanctions can also be used against the shareholders and executives of the companies taking advantage of these situations.

And use some protectionist measures to help grow national industry - see Baidu, Yandex, etc.

> Countries would simply not agree to play along, no?

You require them to play along, you sanction them if they don't, and you penalize anybody locally who does any business with the companies who are 'based' there.

The EU maintains a current list of "non-cooperative tax jurisdictions", and applies these kind of rules today: https://en.wikipedia.org/wiki/European_Union_tax_haven_black....

If the global tax changes being discussed come to fruition, I'd expect that list to extend and the penalities involve to tighten up a whole lot further.

Well of course it can be done, we have been to the Moon and all. It's just the squirming politicians and oblivious general populace that won't do anything (except vote for the same people year after year) that allow them to get a free pass.

Basically you could just penalize and persecute companies that funnel their profits to small tax-haven countries with little or no employees but excessive profits and hence, are considered avoiding taxes. The general gist of it is that since there is no penalty they lose nothing currently except small reputational damage. It's definitely a solvable problem but one needs a consensus to enforce it across the borders.

I can recommend "The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay" by economists Emmanuel Saez and Gabriel Zucman for some concrete ideas on how to fix this problem.

Some ideas seemed a bit unlikely, but overall great refreshing read in my opinion.

A country could apply the global minimum tax on the worldwide profits of a company operating within it but recognize taxes already paid to other countries. So a country with a 0% corporate tax is just giving money to other countries.

>The only thing I can think is that this entire thing has to be flipped into some sort of "VAT"/usage situation.

Then it's a consumption tax (aka sales tax), which we already have and is generally regressive.

So there is no solution then. The entire concept of "corporate taxes" can be thrown out the window because they will just set up "shop" wherever is offering 0%.

And whichever country that happens to be at the moment gains nothing other than a shell company with zero employees.