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DenFletcher
Although internet has facilitated international trade and travel, I don't think ...
KB3001
Correct, that's the real problem. If they register in the Channel Islands for ...
France considers Internet tax, says report
Peter Clarke
7/16/2012 7:40 AM EDT
LONDON – The French government is considering ways to tax Internet based companies that contrive to sell products and services in France without paying much to the government there by way of taxes, according to an Agence France-Presse (AFP) report.
Google, Apple, Facebook and Amazon are being targeted the report quotes Yves Le Mouel, head of the French Telecommunications Federation (FFT), as saying. The GAFA quartet has annual sales of around five billion euros (about $6.1 billion) in France, the report said.
It is an old question that first surfaced in the 1990s when the Internet first became popular and facilitated international sales. The idea of an internet tax was put to one side at that time because individual countries found it too difficult to address and were wary of the economic penalty of not developing as knowledge-based and Internet-enabled societies.
The French government has now launched a study due later this year that will again look at levies on Internet-based companies.
"Our fiscal system has trouble integrating new transaction forms generated by the digital economy. The result is a loss of income for public finances and a competitive disadvantage for French companies with respect to international groups which have organized themselves to evade or diminish their taxes," the report quoted French ministries as saying in a statement.
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kinnar
7/16/2012 8:14 AM EDT
Good Point, French Government has rightly targeted the business making use of the global environment and not being responsible to the places where they are doing businesses. In-fact every company should be responsible to the country from where they are generating revenues, instead of transferring entire chunk of the revenue to the parent country.
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KB3001
7/16/2012 10:04 AM EDT
It's not even going to the parent country, kinnar. These companies register themselves in tax havens such as Luxembourg and transfer their profits there, paying next-to-nothing taxes in the process. The EU as a whole has to crack-down on this loophole.
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DenFletcher
2/7/2013 5:01 PM EST
Although internet has facilitated international trade and travel, I don't think that there should be an additional tax for companies that operate in the online environment. I have a travel agency, http://www.frenchmaison.co.uk/ that is based only on internet customers wanting to travel to France. It's a small business and it would be a burden for me to have to pay extra taxes to the French government. All businesses should be treated alike no matter if they are online or not.
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nicolas.mokhoff
7/16/2012 10:11 AM EDT
This is very interdependent issue between freedom of expression and commerce and the need to collect taxes. What if the potential revenue gain could be tied to a national sales tax. Could not work in the states, but could be tried in other countries. Or is that too radical?
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derek_c
7/17/2012 7:19 AM EDT
It's already in place. The EU already demands that extra-EU companies selling services like downloaded software and books charge (and hence pay) VAT on each transaction.
Of course enforcement is spotty, but big firms like Amazon certainly comply.
This isn't about sales taxes but corporation taxes on profits - the profits are generated outside the EU despite the sales being into the EU.
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Duane Benson
7/16/2012 10:43 AM EDT
In the U.S. at least one state, California, has started requiring companies that have any kind of a physical footprint in the state collect sales tax for sales within California. Aside from all of the political issues, it's an incredible pain to implement. Sales tax, as used, does not lend itself to the Internet.
The state of California has a base sales tax and each city can levy additional on top of that, which has to be collected and paid to the sate. In some cases, a city may have more than one tax rate. Zip codes may have more than one tax rate. The local taxes can be changed at intervals set by the individual municipalities.
Expand that to all of the other U.S. states that levy sales taxes and to all of the countries around the world that want to collect Internet taxes, and a huge part of the computing power needed for e-commerce would need to be devoted just to calculating the tax rates.
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any1
7/16/2012 11:22 AM EDT
That's why there's a movement afoot to "simplify" sales tax regulations in the US if internet companies would be forced to collect them. It appears that at least Amazon is ready to capitulate to collecting sales taxes in the near future.
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AlPothoof
7/16/2012 4:15 PM EDT
Duane, I think pretty much every state has laws on their books whereby, if I have a store in that state and I sell you something, either at that store or to a delivery address in that state, I am supposed to collect sales taxes (based on my address). Doesn't matter whether its a phone order, mail order, internet or whatever.
Further, I think most states have laws on their books whereby, if you are doing an out-of-state purchase (again, phone order, mail order, internet) you are supposed to pay your home state's sales tax on the good's purchase price.
One way or another, that sales tax is supposed to be paid.
Not sure how New Mexico handles it as I understand they have a "gross receipts tax", rather than a sales tax, the difference being that, theoretically, the seller pays the gross receipts tax rather than the purchaser.
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chanj
7/16/2012 11:25 AM EDT
Tax is the major revenue to any country. It is very important for countries to be able to collect them.
On the other hands, to break down the revenue into different country is a pain, imposing extra administrative cost to the company. In addition, government will have very difficult time to detect fault.
In the process of good exchange, there are 3 parties involved - buyers, sellers and credit card companies. It seems to me that getting the information from credit card companies is the most direct way to acquire the information, isn't it?
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KB3001
7/17/2012 6:56 AM EDT
Correct, and that happens to a certain extent. The problem is that these businesses will legally set themselves in tax havens e.g. Luxembourg or the Channel Islands, within the same jurisdiction e.g. the EU or the UK. It is possible to crack down on these practices, but there are vested interests...
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derek_c
7/17/2012 7:22 AM EDT
The problem there is that credit card payments could be for anything, all the card companies know is the amount, vendor and purchaser.
So how do they differentiate between card payments for things on which all taxes have been charged and those that aren't?
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Bert22306
7/16/2012 4:51 PM EDT
Why single out France? The US Senate is doing exactly the same thing.
http://www.dailyherald.com/article/20120113/news/701139709/
In practice, though, if people travel to another state and buy something there in a brick and mortar store, they pay the sales tax of THAT state, not their home state. So as far as I'm concerned, the same could be made to apply here. Where Internet purchases are taxed according to where the e-commerce business is headquartered.
Anyway, this is fair enough, as far as I'm concerned.
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Bert22306
7/16/2012 5:05 PM EDT
Oh, and as far as international trade go, if you go through customs carrying more than a certain value of stuff you bought overseas, US customs will demand their share. So I suppose that too could be applied, to be fair, also to international Internet sales, no?
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peter.clarke
7/16/2012 5:15 PM EDT
I think the problems come with trying to levy taxes on things like iTunes, eBay and Amazon sales.
People pay to download tunes and other intangibles.....and little or no tax is paid in the country of consumption...Meanwhile the physical CDs on which sales tax of about 20 percent was due go unsold.
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derek_c
7/17/2012 7:26 AM EDT
Again, that simply isn't so. I'm in the UK and pay VAT on every Amazon download I buy.
Mind you there are some other US firms who clearly don't know their obligations and don't charge VAT, but i'm not naming them :-)
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KB3001
7/17/2012 6:53 AM EDT
In the US, taxes are not wildely different from one state to the other, at least compared to Europe. That is the real problem.
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derek_c
7/17/2012 7:24 AM EDT
This applies in the EU. A US company selling say downloaded software is supposed to register for VAT, but they can choose any member state to register in.
They then charge the VAT rate of that member state rather than that of the purchaser's.
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KB3001
7/17/2012 7:30 AM EDT
Correct, that's the real problem. If they register in the Channel Islands for instance, they pay no VAT. I think Luxembourg has next-to-nothing corporate tax etc.
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