India ditches its 'Google Tax' after US waved a big stick India will eliminate its equalization levy – a charge imposed on digital services provided by non-resident companies, known as the "Google Tax." The change was announced in Tuesday’s budget, which saw finance minister Nirmala Sitharaman propose [PDF] the levy "shall no longer be applicable on or after 1st August, 2024." "Some …
Does Google even pay as much as 15% of the revenue they generate within the US as tax to the IRS.
Seemed odd that the link to this OECD initiative is to a PWC site - a bit like having the wolves in charge of the sheep I would have thought given how much of the work of PWC and their ilk involves tax avoidance minimization (often transnational.)
And if 15% of your total revenue is more than your profit margin? Not saying that's Google's case, but often profit margins can be wafer thin. This was never going to work.
The solution is pretty simple. Profit on anything sold in a country is taxable in that country. No cost-shifting, no "licensing" fees that magically eat all the local profit.
Can't or won't follow those rules? Can't do business in that country. You web presence is blocked. IP addresses are blocked. Anything imported from that business is blocked at the border. Local businesses are forbidden from selling to that business.
Revenue is before profit.
You would pay the fee on the revenue you make,
Then when that and all other expenses are paid you are left with a sum that you can draw your profit from.
So profit does not factor in at all, this is pre profit. You literally don't get to worry about profit when dealing with this payment.
"Does Google even pay as much as 15% of the revenue they generate within the US as tax to the IRS."
That's still difficult to sort out with a multi-national company. The Ireland corporation sells the Indian corporation an item (service, whatever) that gets sold to the consumer at cost, no profit in India. The corporate entity in Ireland where there's less tax due is the one making all of the profit. By forcing a small tax regardless of net profit reportable by the company, The State is getting some return. Otherwise, funds are leaving the local economy to elsewhere in the world.
I assume that the article was quite poorly worded on this. When they say "to have multinational companies pay at least 15 percent of their revenue as tax in each nation where they do business", I read it as saying that if they do business in 10 nations, they owe a total of 150% of their revenue. The author probably meant to say 15 percent of the revenue that came from a particular nation, but it's not clear at all.
>> say 15 percent of the revenue that came from a particular nation
That's kind of what I assumed but I think it is more a case of:
1, if you make (say) 100K of profit on selling some stuff, and it cost (say) 80k to produce, sell and distribute it, then there would be 20k of profit to be taxed somewhere floating around
2, rather than 100% of this tax being paid in an offshore tax haven and selling it at cost to make it appear that zero profit was made (and thus avoid any tax in the selling country)
3. 15% of that profit figure (3k) would be taxed in the selling country, with the rest in the tax haven or wherever
I can also understand why it is taking time to get going if this is the case as it sounds very complicated
Of course sales tax is a tax on revenue. The word revenue implies the FULL PRICE of said service or product, and sales tax is computed on the sales price.
Its good thing you know everything and yet you cant actually provide your insights and knowledge why our friend that you posted in reply is wrong.
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