15 upvotes, 1 direct replies (showing 1)
View submission: Donald Trump Threatens Tax War Over US Multinationals
Countries implementing DSTs claim they address the inequities of outdated tax systems that allow tech firms to shift profits to low-tax jurisdictions.
It's called Base erosion and profit shifting (BEPS).
Depending on jurisdiction, the counter-argument does not hold any ground...
Comment by powerboy20 at 23/01/2025 at 13:30 UTC*
0 upvotes, 1 direct replies
It isn't that simple. "Fairness" is highly subjective. The crux of the issue is deciding who deserves the profits from digital products like software. If an American designs a video games and sells it through a distributor in france to a French guy, how much of the profit should the distributor earn vs the design/owner? For years, the world agreed that the owner of the ip should get the lions' share. The EU hates that and decided to specially tax the gross revenue of digital companies. Taxing revenue is considered bad form, and they only do it for tech. It gets even muddier when around the issue of digital ads. At the risk of over simplifying the problem, an example would be like if you ran a website in your basement in the US with paid advertisements, and some kids in france visits your site, france demands 3% of gross revenue. You're losing 3% of the money before subtracting your salary, rent, utiliitis, or paying your hosting service. That 3% might be more than you pay yourself. That would piss you all the way off.
Regarding BEPS, you claim that "the counter-argument doesn't hold any ground" is disingenuous at best. First of all, it's only a proposal and has been stuck in the proposal phase for years. Secondly, the reason it is stuck is because nobody agrees on these issues. If the authors of the rules can't agree, how can you claim that there is no counterargument?
Ultimately, i don't blame the EU for being salty, and i get why the US is pissed. I'm actually shocked that the US hasn't fought against these digital service taxes much sooner. France would lose their shit if we put a 3% tax on gross revenue for all their imports.
Edit: Don't be fooled by the "low tax jurisdiction" language. That is the terminology countries use bc it sounds better than saying "any tax jurisdiction that isn't mine." The US isn't fighting so that tech can send extra revenue to the cayman islands. They're fighting bc they think that the DST revenue should be taxed in the US.
Edit #2: You blocked me bc of this response??? That's wild.