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Comment by oliv__ | Hacker News Reader

"The US has not taken steps to adopt the rules so far, despite Ms Yellen's championship of the plan."

Lol, obviously. Cheering them on as they shoot themselves in the foot

Doesn't America already have a corporate tax rate well above 15%? What would we have to do to "adopt" these rules?

Tax companies that are currently hiding profits in tax havens. The idea is basically that companies headquartering in tax havens will get taxed anyway, until they pay 15% total global tax on those profits. No single country can do this, but when almost all countries agree to do it then companies can no longer hide.

> Tax companies that are currently hiding profits in tax havens.

> No single country can do this

I don't understand. If America already has a >15% tax rate, then it already abides by these rules. America is not a tax haven.

USA needs to tax companies that are headquartered in tax havens, to ensure that those companies can't enjoy less than 15% global taxes. I don't think that USA is doing that right now.

If those companies are controller by a US person then they do tax them in US. See https://en.wikipedia.org/wiki/Controlled_foreign_corporation

They already do. If you are selling from a tax haven (especially services), there is a 15-30% withholding. Of course, you might be able to recover some of that. But it's a defacto tax.

Nobody here seems to understand that this is not about taxes but rather about re-shoring trade power back to the Western world (which is why it concerns the EU the most). EU/US and other developed countries offloaded a part of their industries 20-30 years ago to under-developing countries to save up on some costs.

These countries (evil 0% tax countries) reduced taxes, wages and regulation to attract these offshores companies. Not because these countries like to play games, but because that's their only attraction point. And here we are, 30 years later or something like that, and the EU/US have lost a significant portion of their industrial base.

Now, they want it back. Either because they have a high unemployment rate (ie: France, Italy) and they have actually people who can do these jobs; or because they think the balance has swift too much in favor of these "international" companies and zero-tax countries. Some of them have become too powerful and one of them even downright dangerous to the world order.

Of course, I'm not holding my breath for the "developing" world. It still lacks lots of the infrastructure and many key industries that the EU/US can pressure with. The place to look at will be South East Asia. Europe seems to have lost here to US/Japan and China. I think Europe is going to come to a dark realization real soon. The US might emerge, again ugh, as the winner. China is hated by pretty much all its neighbors.

As one of the states in the USA, Delaware is probably the largest tax haven in the world.

Why do you think Delaware is a tax haven? Many business incorporate there because they have the legal infrastructure so that you are not in court in some boondocks with poorly established corporate case law if there is a lawsuit. But you don't pay less taxes by incorporating in Delaware, you reduce legal uncertainty.

If you want an example of tax haven, Montana's a better bet.

If you do your business outside the United States, Delaware has practically no tax for you. The legal infrastructure argument is also true, but probably more important for some companies than for others.

Companies in Delaware still have to pay the 21% federal corporate tax rate. Well above the EU rate this article is lauding.

Delaware is popular to incorporate in for legal reasons. It is not a tax shelter.

Please educate us how companies are hiding profits in tax havens. Asking for a friend.

One mechanism is via a Double Irish with a Dutch Sandwich https://www.investopedia.com/terms/d/double-irish-with-a-dut...

Another example is leveraging the secrecy provided by states such as South Dakota, Nevada, Delaware, etc. via anonymous shell companies: https://en.wikipedia.org/wiki/United_States_as_a_tax_haven

The double Irish has been phased out.

U.S.-controlled foreign corporations have to pay "global intangible low-taxed income" (GILTI)

https://en.wikipedia.org/wiki/Ireland_as_a_tax_haven

US LLCs are pass trough entities and the solution of choice for digital nomads to completely avoid paying any taxes. US is still the best tax avoidance haven for most people. EU does not care about good laws they care about good headlines for the news not matter how shitty the things they do are.

> EU does not care about good laws they care about good headlines for the news not matter how shitty the things they do are

What political system could not be accused of this? Heck my small town is like that.

also, the EU has done some quite proper laws and directives.

Schengen and the entire construct of the internal market being one of the main advantages.

One does not simply avoid paying taxes with an LLC unless your gross income is minute, tax deductible expenses are huge, or your losses are huge. IT IS NOT SOME MAGICAL LOOPHOLE. It is hard enough to stay afloat as a business without misinformation like this being spread.

If you have a US LLC without US income, you are disregarded by the IRS. The tricky thing is getting a bank account without an EIN, however. But if you can do that, you are pretty much set.

I'm struggling to understand why avoiding an EIN ever helps avoid taxation. It doesn't seem to be a relevant matter.

1. As a non resident alien, you are subject to US tax on business income if you are “engaged in a trade or business in the United States“, short “ETBUS”.

2. You are ETBUS only if two things are true: (i) You have at least one “dependent agent” in the US. Dependent agents are employees or companies that work almost exclusively for you. And (ii) that dependent agent does something substantial to further your business in the US. Purely administrative jobs are not included under this rule.

3. Finally, if you can benefit from an applicable tax treaty, then you’re only subject to US tax if (in addition to being ETBUS) you operate in the US through a “permanent establishment” (e.g. an office or other fixed place of business). If you don’t meet those conditions, you are not (automatically) subject to US tax on your business.

Even if the LLC generates income in the US, by offering services or selling products into the US, that income is not taxed in the US.

Source: https://globalisationguide.org/us-llc-non-resident/

No because the law allow the EU country to tax the benefit made inside of their boundary if the company is not subject to the minimal 15% tax rate. So if the US don’t want to tax at 15%, EU country will tax on their side.

I wish the BBC would elaborate on what they mean by this. The US passed a 15% corporate minimum tax in August.

This isn't about getting all countries to put a 15% corporate tax, that will never happen. This is about increasing taxes on corporations even when they aren't headquartered there until their effective global tax becomes 15%, making it worthless for them to try to hide in tax havens.

Hopefully the US will lower it in a few years.

America and the EU as usual

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