Facebook and some companies face billions of dollars in new taxes

Facebook and some companies face billions of dollars in new taxes

Facebook and some companies face billions of dollars in new taxes

Facebook and some companies face billions of dollars in new taxes Tens of countries are stepping up efforts to impose new taxes on technology giants such as Google and Facebook, hoping to get new revenue from digital services, especially in light of growing economic activity on the Internet, explores South Korea and India and at least seven other Asian countries In the Pacific the possibility of new taxes inspired by EU proposals to impose a new tax based on the returns of technology companies rather than their profits called the European Digital Tax.

Mexico, Chile and other Latin American countries are also considering new taxes aimed at boosting their revenues from foreign technology companies. These are widely known as digital taxes, which are separate from corporate income taxes already paid by many technology companies and can add billions of Dollars to corporate tax invoices.
Facebook and some companies face billions of dollars in new taxes

They seek to charge for digital services sold by international companies in a particular country through their overseas headquarters. In some cases, proposed taxes are targeted at services that include data collection on local populations such as online targeted advertising.

Countries all over the world now understand that they have to impose a digital tax, said Bruno Le Maire, the French finance minister who lobbied across Europe for taxes before a meeting of EU finance ministers in November. Fairness and justice “.

The digital tax in Europe faced opposition, prompting some countries to signal that they could act unilaterally. Philip Hammond, the UK Treasury secretary, said earlier this month that his country was ready to go ahead with the digital service tax.

Efforts in Asia, the United Kingdom, and Latin America help make it more likely because there are many different taxes to be raised, even if the European proposal faces a political battle. Europe is the most significant external market for many technology companies. About 5 billion euros ($ 5.7 billion) a year.

If we put this aside, I think the nation will lose revenue, said Amiruddin Hamzah, deputy finance minister at a recent event. Malaysia is considering adding digital taxes to its budget for 2019. one time repatriation tax us repatriation tax
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Digital tax opponents, including lobbies for multinational corporations and large export countries, say a new set of rules that will vary across countries will hurt smaller firms and say initiatives can double corporate profits taxes that stifle international trade and discourage Investment.

The technology industry opposes the proposals. The ITIC, a lobby group in Washington, DC, representing technology companies including Google and Facebook, warned that digital taxation posed a real and significant threat to companies in all sectors, citing the possibility of double taxation.

An income tax is recognized where value arises, following international tax principles. This is not always clear to technology companies. Services, including advertisements and taxi bookings, are often digitized around the world by companies that Local limited income taxes are paid.
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US technology companies often report little profit, and therefore pay small income tax in foreign countries where they sell their digital services because customers in those countries buy from the company’s headquarters elsewhere, usually a low-tax state. Headquarters within the country is assigned to marketing and support, while the external offices responsible for actual sales pays the costs and expenses of the local offices, leaving little taxable profits.
Facebook and some companies face billions of dollars in new taxes

Some technology companies, including Google, Facebook, and Amazon, have recently begun to announce more revenue in the countries where they operate, under increasing political pressure, but are also announcing domestic spending, which could offset much of that extra revenue.

The European Union’s proposal to increase tax revenues aims to impose a tax on the digital incomes of huge companies within the region’s borders, in addition to the traditional tax on its profits after costs, and the tax under the current proposal remains valid until agreement is reached World on how to deal with the digital economy.

EU action needs collective approval from member states to pass, and many countries still oppose it, including Ireland, where many large technology companies based in the EU, partly because of the favorable tax rate in the country. The proposals put pressure on major powers, including the United States, which last year imposed a new minimum tax on US multinational profits abroad to reach an agreement on how to tax the digital economy.

 

The Organization for Economic Co-operation and Development (OECD), a forum for rich countries, is leading international talks aimed at reaching consensus by 2020. Pascal Saint-Amans, head of the tax and policy center at the group, said The proposals create an incentive to move more quickly, We understand there is some frustration, and there is a pressing political need that we can not ignore.

Stephen Mnuchin, the US Treasury Secretary, expressed concern over unilateral and unfair tax proposals directed against US technology companies and urged his counterparts abroad to work within the Organization for Economic Co-operation and Development (OECD) on a global plan. us repatriation tax

Lawmakers in South Korea will hold committee meetings next week to decide whether they will impose a new digital tax. Legislators estimate that foreign technology giant companies made up to $ 4.4 billion in sales in the country last year but paid less than $ 88,000 Of tax, less than a quarter of what they would have paid if they were local companies.

The EU has become a reference point for many Asian countries, and we can follow their approach, said Pang Hyo-chang, an information technology professor who wrote a report on digital taxes used by the South Korean legislator

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