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Forbes Releases Digital 100, The Inaugural Ranking Of The Top 100 Public Companies Shaping The Digital Economy

digital 100Forbes’ today released the inaugural  Digital 100 list, a ranking of the top 100 public companies that are shaping the digital economy. The list offers a closer look at the technology, media, digital retail and telecommunication companies that shape the digital world. Not surprisingly, Amazon secures the top spot on the list. Amazon.com is classified as a retail company. And while retail makes up most of the company’s $108.3 billion revenues, its cloud computing division brought in $17.5 billion or 16% of sales last year. Netflix, the leader in internet subscription streaming services, is No. 2. NVIDIA Corporation (No. 3), Salesforce.com (No. 4) and ServiceNow (No. 5), round out the top of the list.

Forbes’ Digital 100 includes companies from all the different corners of the digital economy. IT software & services companies make up 35% of the list. Following close behind are technology hardware and equipment companies with 26 companies and semiconductor companies with 23 companies.

Companies come from 17 different countries with the U.S. and China in the lead. Forty-nine American companies make the list, while China comes in second with 16 companies. Of the top 20 companies on the list, 17 of them are from the U.S. Thirty-four of the companies on the list are from Asia.

The Top 20 Companies on Forbes 2018 Digital 100 list:

Rank Company Name Industry Country
1 Amazon.com Retailing UNITED STATES
2 Netflix Media UNITED STATES
3 NVIDIA Corporation Semiconductors UNITED STATES
4 salesforce.com IT Software & Services UNITED STATES
5 ServiceNow IT Software & Services UNITED STATES
6 Square IT Software & Services UNITED STATES
7 Analog Devices Semiconductors UNITED STATES
8 Palo Alto Networks Technology Hardware & Equipment UNITED STATES
9 Splunk IT Software & Services UNITED STATES
10 Adobe Systems IT Software & Services UNITED STATES
11 Broadcom Inc. Semiconductors UNITED STATES
12 Leidos Holdings Aerospace & Defense UNITED STATES
13 ON Semiconductor Semiconductors UNITED STATES
14 Match Group IT Software & Services UNITED STATES
15 Tech Mahindra IT Software & Services INDIA
16 Workday IT Software & Services UNITED STATES
17 Charter Communications Media UNITED STATES
18 Tencent Holdings IT Software & Services CHINA
19 Micron Technology Semiconductors UNITED STATES
20 SK hynix Semiconductors SOUTH KOREA

For the complete list visit: The 2018 Digital 100

Methodology

To compile the top 100 digital companies, Forbes first looked at the technology, media, digital retail and telecommunication companies that made it onto the 2018 Global 2000, Forbes’ annual ranking of the biggest companies in the world. Then, Forbes added to that group the big digital companies that have gone public since the Global 2000 was published in May. Companies were scored on a variety of factors including sales, profits, assets growth and performance of the stock over the past year. The list was priced on September 7, 2018.

source: www.forbes.com

German politician calls for corporate break-up of U.S. digital tech giants

Social Democrats (SPD) Hold Federal Party CongressGerman Social Democrats (SPD) leader Andrea Nahles has called for the break-up of major U.S. technology companies on Monday to prevent the formation of digital monopolies.

Writing in the newspaper Handelsblatt, Nahles urged policymakers to use antitrust regulation to “reign in internet giants” like Facebook, Google and Amazon as soon as their behavior began to “contradict the principles of the social market economy.”

Amongst others, she proposed a “data-for-all” law which would require companies which had acquired a dominant market position to give away a share of their anonymized data for free.

Furthermore, Nahles warned that digital monopolists which failed to assume their responsibility to society would have to face the prospect of involuntary disintegration at the hands of competition authorities.

“In such cases, we will have to hold discussions in the European Union (EU) over whether a corporate break-up is necessary,” the SPD leader said.

In hindsight, Nahles argued, it had been a mistake to allow the concentration of digital market power in a handful of companies as had occurred during the takeover of WhatsApp by Facebook. However, she noted that it would not be unprecedented for governments to reverse these mergers again. It was hence in the “enlightened self-interest” of the sector to take recent criticism of industry business models to heart to avoid the need for such radical steps.

The SPD leader is not the first senior German politician to demand reforms of the way data-driven Silicon Valley companies operate in the EU. Earlier, chancellor Angela Merkel (CDU) proposed introducing a tax on data in the digital economy.

“The pricing of data, especially that of consumers, is the central injustice issue of the future,” the Christian Democratic Union (CDU) leader said. She emphasized that such data had become fundamental to the business model of many companies in the digital economy which generated income with targeted advertising.

According to Merkel, ongoing discussions in the EU over how to tax large U.S. companies like Google and Amazon only underscored the urgency of problems in the current regulatory regime governing e-commerce. The situation raised the question of whether traditional corporation tax models were still appropriate, or whether policymakers should instead resort to revenue-taxing to ensure a level playing field between digital and non-digital firms.

Many online businesses pay considerably less tax in Europe than traditional industrial manufacturers or brick-and-mortar retailers. The digital companies hereby benefit from their non-locational character which allows them to channel European profits through low-tax jurisdictions such as Ireland and Luxembourg.

The EU Commission has already announced tentative plans to tax the revenue of large digital companies with at least 750 million euros in annual global revenue and online sales worth 50 million euros in Europe at a three percent rate. The taxes would be levied in the countries where users are physically based.

But the plans also require unanimous consent from EU members, which remains elusive on the issue. While Germany and France are seen as the major driving forces behind the changes, low-tax countries like Ireland, Luxemburg and Malta have warned that the reforms could open a new front in the temporarily-stalled trade war between Brussels and Washington.

Writing on Monday, Nahles insisted nevertheless that closer regulatory scrutiny of the commercial activities of major digital technology firms was required in the bloc. She argued that digitalization would only become a force for good when its potential was harnessed by society as a whole, rather than an elite circle of corporate beneficiaries.

source: www.xinhuanet.com

Tax Department’s Consultation On Digital Taxation May End Up Being An Academic Exercise, Experts Say

taxationTechnology giants like Facebook, Google, Amazon, Alibaba and other such digital companies derive considerable value from a large user base. For instance, some digital companies sell user data for targeted advertising. It’s this value that nations now want to tax.

Europe, for instance, has proposed a tax on turnover. Australia is mulling a tax on digital advertising. Singapore has announced a sales tax on digital services, starting 2020. India isn’t far behind either.

Digital advertising on foreign platforms is already under the tax net, also known as the equalisation levy. But now, India now wants to tax the business profits of digital companies, for which the taxman has reached out to various stakeholders for consultation. Experts told BloombergQuint the move will run into two problems: attribution of profits among countries i.e. who can tax how much, and treaty troubles.

Digital Services: What Gets Taxed?

Two years ago, the government imposed a 6 percent tax on digital advertising, which is attracted when an Indian resident or a non-resident with a fixed place of business in the country advertises online with a service provider with no permanent establishment in India. Permanent establishment is, in tax parlance, a fixed place of business. The levy is applicable if the transaction value exceeds Rs 1 lakh in a financial year. Reportedly, this levy has added close to Rs 3,000 crore to tax collections in the last two years.

Equalisation levy is applicable on advertising revenues and the administration of it has been smooth in the last two years, Sudhir Kapadia, partner and national tax leader at EY India, told BloombergQuint. It’s a tax on business-to-business transactions and the law has ensured there’s no double taxation, he said.

There is no income tax in the hands of a non-resident once the equalisation levy is discharged. So, it is a proxy for any kind of income tax liability that can be levied on the company concerned.Sudhir Kapadia, Partner, EY India

What About B2C Transactions?

Enter, Significant Economic Presence. In budget 2018, the government proposed to get its fair share of tax from business-to-consumer transactions by introducing the concept of significant economic presence. According to the finance minister, the idea is to tax profits of those digital businesses that don’t have a physical presence in India but derive significant economic value from the country.

India’s belief is that we follow strict source-based rules of taxation; our domestic law and treaty definitions of permanent establishment have lost their relevance because of the digital invasion, Mukesh Butani, managing partner at BMR Legal, said.

A lot of foreign luxury goods and garment manufacturers don’t have a physical presence in India. You can use an Amazon platform and order those goods, or you can go to the company’s website and order. But you can’t tax those activities in India, assuming they don’t have presence here. Under this significant economic presence, such activities will come under the tax net.

Mukesh Butani, Managing Partner, BMR Legal

What Does The Tax Department Want To Know?

In one word, thresholds. The department has asked for consultation on:

  • Revenue threshold of transactions with respect to physical goods or services carried out by a non-resident in India.
  • Revenue threshold of transactions pertaining to digital goods or services or property, including the provision of download of data or software.
  • Threshold for number of “users” with whom systematic and continuous soliciting of business activities is done through digital means.

To begin with, the phrase used in our law is significant economic presence and not just digital presence as is the case in Europe, Kapadia said. The first element on which consultation is sought is about transactions involving physical goods and so, our approach is far more overarching, he added.

The budget memorandum only talked about digital economy, but this would include all transactions of import of goods, which currently attract only customs duty. For example, EPC contracts, manufacturing, supplies from vendors etc who do not have a presence in India.

Sudhir Kapadia, Partner, EY India

If India is determined to bring this, revenue threshold for digital goods and services and user threshold can be akin to what the E.U. has proposed, he said.

Europe has proposed a three percent tax on businesses with E.U. digital revenues of over 50 million euros and total global revenues of over 750 million euros. Revenues derived from online advertising, sale of user data and online marketplaces will attract this levy.

So, What’s The Problem?

The first is profit attribution. Or, how should governments determine the revenue attributable to digital activities in their country.

It’s going to be very difficult for India or any other country to ascertain this since the conventional principles of permanent establishment won’t apply to digital businesses, Kapadia said. He explained that data about users in other countries, revenues collected in other countries arising from that user data isn’t easy to get despite the exchange of information arrangements.

 Currently, India has two provisions for attribution. Rule 10 of the Income Tax Rules which essentially says that revenues from India divided by global revenues multiplied by global profits should be the taxable base in India. This, in a brick-and-mortar space, poses enough challenges. It would be impossible to apply this principle in a digital business. Second is the arm’s length principle under transfer pricing. That can’t be the answer either since the entire functions, contractual and legal risks are outside of India in the digital business context.

Sudhir Kapadia, Partner, EY India

The second issue would be tax treaties. If the treaty problem isn’t addressed, this consultation will just be an academic exercise, Butani said.

When the law was passed in Budget 2018, it clearly said India is proposing this law in order to be prepared for the changes that occur in double-tax treaties, Butani said. This subordinate legislation that the department is proposing won’t be useful in situations where the non-resident tax payer is from a country that has a tax treaty with India, he added.

The definition of permanent establishment under the tax treaties don’t contemplate digital transactions. The only way is to amend the treaties using the multilateral instrument tool proposed by the Organisation for Economic Co-operation and Development. But if the treaty partner hasn’t signed up to MLI, the provision under the domestic law won’t help.

Mukesh Butani, Managing Partner, BMR Legal

You’re looking at a scenario where some treaties will trigger a digital permanent establishment and some treaties won’t, he said. So, how will a change in the domestic law affect the taxable position under these treaties, he added.

What’s Next 2018 – Conference – Kuala Lumpur (Malaysia) – 30 August

malayDigital News Asia and EY are excited to invite us to What’s Next 2018: The Business Impact of Digital Disruption.

It is clear that Digital is the Mega Trend of our times with both life and work increasingly shifting to Digital services. And if you needed more proof of this – Jeff Bezos of Amazon has just become the wealthiest human in history with a net worth exceeding US$150 billion. That is RM600 billion. And who is to say that Alibaba’s Jack Ma won’t catch up with him one day?

Both their successes have come from capturing market share from Brick & Mortar companies that are slow to adapt to this new reality. And that is the focus of What’s Next. First launched in 2015, What’s Next has established itself as the leading Digital conference in Malaysia, which focuses on what Brick & Mortar companies are doing to prepare themselves for Digital Disruption.

What’s unique about What’s Next is that we focus on bringing you the experiences and sharings of large Brick & Mortar companies about what is working for them and what is not. From having guest speakers the likes of Tan Sri Tony Fernandes of AirAsia and Tan Sri Vincent Tan of Berjaya Corp to leading banker Raja Teh Maimunah, past conferences have been rich and real with sharings from CEOs.

This year, we have Henry Tan, CEO of Astro Holdings Bhd, as one of the speakers who will share what their companies have been doing to prepare and not just defend their markets, but also seize the opportunities that Digital Disruption is creating as well.

Besides Tan, we also have the CEO of Asia Pacific University, Dato’ Dr Parmjit Singh, who will talk about how a High Touch Business deals with Digital Disruption. Speakers aside, there will also be some excellent breakout sessions, including an opportunity to experience the power of Virtual Reality set in a retail scene. This will give you a real feel for how retailers will soon be using technology to enhance the shopping experience.

Schedule include Panel Session: 3 Things Malaysia Needs To Do To Accelerate Its Digital Economy