Tag Archives: Google

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

Difficult and contentious: taxing the digital economy (Australia)

Accountants have been urged to keep a lookout for significant changes to the tax environment as the government considers options for taxing the digital economy.

In Treasurer Scott Morrison’s budget address, he noted how the government’s crackdown on multinationals had brought $7 billion a year in sales revenue and would now be looking towards the digital economy as part of its initiatives to strengthen its tax base.

“The next big challenge is to ensure big multinational digital and tech companies pay their fair share of tax,” said Mr Morrison.

“Over the past year I have been working with counterparts at the G20 to bring the digital economy into the global tax net.

“In a few weeks’ time I will release a discussion paper that will explore options for taxing digital business in Australia.”

Thomson Reuters tax consultant Terry Hayes believes taxing digital business in Australia will continue to be a difficult and contentious issue and suggested that Mr Morrison was looking to Europe for ideas.

“Europe has been taking a lead in measures to tax the digital economy,” said Mr Hayes.

“In March this year, the European Commission proposed to introduce a digital services tax aimed at addressing the tax challenges of the digital economy in the European Union. Companies such as Google and Facebook would clearly be impacted.”

Mr Hayes believes the upcoming discussion paper announced by Mr Morrison might shadow two distinct legislative proposals put forward by the European Commission in March this year.

The proposed long-term solution would allow EU member states to tax profits that are generated in their territory, even if a company does not have a physical presence there. Profits would be registered and taxed where businesses have significant interaction with users through digital channels.

The second option, would be for an interim digital tax, roughly 3 per cent, to cover the main digital activities that currently escape tax altogether. This interim tax would apply to revenues created from activities where users play a major role in value creation.

“However, it is understood there may be some wavering on the proposals as concerns rise among European countries of possible US retaliation over the measures,” said Mr Hayes.

source: www.accountantsdaily.com.au

India:Google tax may be broadened to cover non-digital MNCs

India FlagMUMBAI: A budgetary proposal to tax multinationals with a substantial user base in India such as Google and Facebook is now being widened to include non-digital companies.
This could mean that any company that merely sells goods or services in India could see domestic taxes of up to 42% on their profits, said two people with direct knowledge of the matter.

The government is planning to introduce rules to effect the change proposed in the budget in the coming weeks, said one of the persons quoted above.
Many tax experts fear this could impact several multinational companies that only export goods or services to India.

“The question is whether there is a tax to do business with India. If non-digital companies that merely trade with India could see their business connection/permanent establishment set in India slapped with domestic taxes, this could lead to unsettling of settled tax positions,” said , partner, Ashok Maheshwary & Associates LLP.

According to another person with direct knowledge of the matter, the impact on non-digital companies is unintentional.

Source:https://economictimes.indiatimes.com