The South Korean government is planning on taxing Google, Apple, Amazon, and other major international technology companies for the sales they generate inside the country.
The government will move quickly to impose taxes on Google, Apple, Amazon and other global IT companies. This follows policymakers and lawmakers paying greater attention to growing criticism that the firms earn billions of dollars in sales here annually but pay no taxes. Naver, Kakao and other domestic companies have been complaining for years about “an uneven playing field,” arguing their foreign rivals should pay corporate income tax on the revenue they generate in Korea.
Corporate taxation has basically been a well-orchestrated sham of loopholes over loopholes put in place through corruption (under the euphemism of “lobbying”) that has gone on so long that most – if not all – multinationals pay little to effectively zero taxes, while smaller, local companies and individuals pay their full taxes. This clearly has to end – if my own small translation company has to pay – say – 20% in taxes over the revenue it generates, so should Apple, Google, and whomever else over the revenue they generate here.
This house of cards has to come tumbling down.
I assume then that South Korean government officials are more interested in growing their own economy than accepting short term brown envelopes full of ‘keep quiet’ cash?
What a novel idea.
Edited 2018-08-02 23:19 UTC
Thom Holwerda,
Why does it have to though? Corruption and favoritism are quite sustainable as long as leaders are able to keep up a facade of serving the people. Or in other words, lying and propaganda for the masses works, even if it’s obvious to you and me.
It would be wrong of me to say that 100% of politicians are corrupt, but the unfortunate truth is that those who aren’t corrupt don’t tend to get very far without the support of the very corrupt forces they oppose
Edited 2018-08-03 00:16 UTC
The reason for this is simple and it’s not to do with corruption.
Globalisation:
There are global companies, but there are no global controls (no global government)
This effectively means ‘the people’ don’t exist in the ‘higher’ global playing field.
Because of this capitalism simply out maneuvers the lower level controls.
Exactly, in the world of Globalisation the level of playing field from bottom to top is *another* order of magnitude higher then it was on a national level.
I think the simplest rule for tax should be.
All revenue made inside the country / nation should be taxed. The more revenue you made the higher tax.
And do exemption on Basic needs, Like Food, Clothes, Transport, and First home ( Any home bought as investment are taxed )
Wouldn’t that be simple and beautiful?
jmorgannz,
You are right to point out the tax avoidance problems at the global level, which is certainly real and they are all very guilt of. However you are overlooking the tax advantages these companies are receiving within a country’s borders because local governments simply decide not to charge them taxes because they’re such big companies.
https://www.desmoinesregister.com/story/money/business/2017/08/24/io…
https://www.techrepublic.com/article/google-microsoft-facebook-apple…
https://www.omaha.com/money/as-google-plans-b-expansion-in-council-b…
It’s billed as a way to help big companies move into one’s state/city in the hopes it will bring a few jobs, but essentially it boils down to using public taxpayer funds to subsidize/pay for a private company’s investment. This adds debt to public coffers with zero interest, no repayment of the principal, and no share’s of the company’s ongoing profits from the investment.
This is extremely unfair to the smaller tax payers who not only don’t get similar benefits, but are paying to subsidize the operating costs of huge companies. It’s wrong on every level.
All these schemes should to be outlawed in the interests of justice… that said, corrupt elements of government only seem interested in serving these mega corps. In all likelihood many of these unfair deals will be “grandfathered in” such that even if they could be blocked going forward, the unfair benefits to mega-corps could last for decades.
Like I said in the earlier post, I would favor a federal law allowing states to keep these deals, but only if they were offered to all companies in a truly non-discriminatory way. Otherwise they ought to be null and void. These huge companies need to stop freeloading on the rest of us.
I disagree. While globalization has affects on some things, taxes, just like sales, are based in countries. The US allows Google to hide money from sales in the US in other countries. We could crack down on them. They would easily pay their dues rather than lose their access to this market. But we have to have a government willing to work for the people.
TechGeek,
I used to think the politicians were owned by greedy corporations, but then I realize that it’s greedy politicians who own the corporations. There are a lot of shareholders and former C*O’s running around D.C.
Edited 2018-08-07 07:17 UTC
here in the UK we have news stories every few months about how the big tech companies aren’t paying sufficient tax
politicians come out and shout and rage against these tech companies
but the thing is – these companies are entirely within the law
and if politicians were serious about fixing the problem, they’d fix the laws that allow amazon/google/facebook/etc to not pay a fair amount of tax
strangely they never do
Trade wars and tariffs are the 19th century mode for competition for big business. The late 20th century model was tax breaks and incentives (a reverse tariff – effectively the same thing, just on the other side of the ledger). It was still a trade war though. So what’s happening – are politicians waking up to the problems with huge tax breaks for wealthy companies (reduced public revenue, and concentration of wealth for rich companies) – or are they just fighting Trump’s stupid ass trade war on his 19th century competition model?
Tax breaks and incentives are reverse tarrifs. It’s annoying to me that more people don’t talk about it like that. Donald Trump is a legendary idiot, but when he imposes tarrifs, it’s seriously no different than offering tax breaks and other tax based incentives – it’s just on the extra tax side, rather than the tax break side – still the same ledger.
The problem with tax breaks to try to lure large corporations to your country or state of course, is that it creates a revenue hole in your budget, which snowballs into larger and larger problems.
One of the positive innovations of the United States was the prohibition on tariffs between states, an innovation that was attempted on a more global scale with neoliberal ideology and the various regional trade agreements – the part of that ideology I don’t mind (the part where they let the rich guys make all the decisions in the economy is nakedly asinine). But that innovation needs for both sides of the ledger to be respected, not just one side.
The only question is whether they are waking up to the problems I highlighted above (I doubt it!) or are they just responding to Trump’s stupid ass trade war (this is my bet).
Edited 2018-08-06 18:36 UTC