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from the accountants-legally-accounting dept.
The Australian Taxation Office (ATO) has warned that the nation's attempts at imposing a "Google Tax" are already being circumvented, and suggested big accountancy firms have found a way around efforts to stymie multinational tax avoidance.
Australia's Google Tax, formally known as the Multinational Anti-Avoidance Law (MAAL), is modelled on the UK's and imposes penalties on companies that move money offshore for the sole purpose of legally-but-cynically avoiding tax.
[...] Indeed the Office says it's just found a new [technique] it considers "artificial and contrived," as it "involves interposing an entity described as a partnership between the foreign entity originally making supplies to Australian customers, and the Australian customers."
"The partnership has one resident corporate partner with a minority interest in the partnership, therefore purporting to characterise the partnership as an 'Australian entity' for the purposes of the MAAL." But nothing changes in the business' actual operations, and the ATO says: "The arrangements have little, if any, commercial basis."
(Score: 3, Interesting) by bradley13 on Saturday September 17 2016, @11:41AM
I'm not enough of an economic expert to evaluate this, but I have heard interesting arguments for a simple solution: eliminate corporate tax entirely.
- First and foremost: you will never eliminate these stupid financial shell games. Companies legitimately trade with each other, and this is the basis of the shell games. So why not remove the incentive, by doing away with taxes.
- Corporate taxes increase the cost of doing business. Generally speaking, businesses (must!) pass these costs on to consumers.
- Excess profits that corporations earn are (again, generally speaking) paid out to their shareholders. If they don't pay out dividends, then the value of their stock rises, and that stock is owned by their shareholders.
- Shareholders are ultimately (possibly through intermediaries) individual people. Individual people are easier to tax: they have a registered residence, where their income and property can be assessed.
Again, I'm not an economist, but the arguments to seem to make sense...
Everyone is somebody else's weirdo.
(Score: 1, Informative) by Anonymous Coward on Saturday September 17 2016, @12:02PM
Excess profits that corporations earn are (again, generally speaking) paid out to their shareholders. If they don't pay out dividends, then the value of their stock rises, and that stock is owned by their shareholders.
Eh, not so much [cnn.com].
What's more, corporations use public services and facilities such as roadways, police and fire services, enjoy the benefits of a stable economy (where those exist), benefit from (this is a much more complicated issue, so I'm going to simplify) government oversight of markets, manufacturing quality, government enforcement of contracts and a raft of other things that are paid for with tax dollars.
As such, corporate tax avoidance makes everyone except the corporations poorer.
I'm not an economist either, but this is so obvious that it makes me wonder if you're not being deliberately obtuse or just plain disingenuous.
(Score: 3, Interesting) by edIII on Sunday September 18 2016, @12:39AM
Thank you for pointing that out. It's not possible to have fair taxation when large pools of money become exempt from taxation, which is what corporations are. Additionally, the average person is simply incapable of forming corporate shells around them with sufficient resources to pay for their daily affairs. A high level executive can earn untaxed money simply by having a corporate car pick him up every day, eat at a company restaurant, live in a corporate house, etc.
My idea is to no longer tax money at rest. Meaning, a janitor earns $500 in cash and takes it home. Once it is in his "mattress", it is at rest. Even earning interest on that, still doesn't qualify it as being in motion again as somebody paid him to keep that money at rest in that location (bank). As long as the janitor never moves the money again, it isn't taxed.
Money in motion on the other hand, represents transactions being performed. Government should tax all money in motion that it can reasonably access without incurring nonviable recovery costs. Additionally, We the People don't guarantee all transactions can be taxed, nor is the government responsible to tax all transactions. The government is expected to tax enough transactions to cover its own costs, and then stop. Corporations will represent the greatest amounts of motion, and government can simply "dip its hand in the waters" opportunistically. Recovery costs are less because corporations are easier to "put hands on" with regulations and independent accounting. The new reliance on electronic transfers is their downfall. No money at rest is ever touched again, and we can make grocery stores and other such locations off limits to taxation for the purposes of aiding the poor. As many have stated, the grocery store will always attempt to pass off the taxation to the customers, thereby de facto taxing the citizenry at their peril (They'll need some finesse and anti-price fixing regulations for sure). When the grocery store moves the money to the bank that transaction is taxed instantly. Right there, no arguments, no paper trails, no tax code. Just a flat rate fee that the government can adjust as required to supply budgets.
An individual is never taxed again directly with the exception of the super rich when they buy a whole yacht. As a result, individuals do not need to keep financial records. There is no longer a reason to violate our privacy by keeping records of our transactions, and a great deal of Americans quite simply never need to anyways. The grocery store doesn't need to keep customer records either, since the government is only taxing the aggregate deposits at the moment of deposit at the bank, not the store.
Taxation can't be used an excuse to gather information anymore, as government is more or less guaranteed the funds it needs. The loss of a few transactions is a matter of justice, and not national security.
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 3, Insightful) by SunTzuWarmaster on Saturday September 17 2016, @12:26PM
(Score: 1) by toddestan on Saturday September 17 2016, @04:07PM
Not necessarily, those costs could also come out of their profits. Most likely, it would be a mix of the two, unless demand is truly inelastic (say, you sell EpiPens). On the other hand, it's unlikely Apple is going to raise prices to pay off the EU's tax bill - that money will just come out of their profits.
Since those profits mainly go into the bank accounts of the wealthy, lowing corporate taxes really would only serve to make the rich even richer. Or put it another way, if suddenly the corporate tax rate became zero, would you really expect goods and services to become cheaper, or would they leave prices the same and pocket the difference?
I do agree you make some other good points. Financial shell games are a difficult problem, as the tools used to play those games have perfectly legit and valid uses. I don't think eliminating corporate tax is solution.
(Score: 1) by shipofgold on Sunday September 18 2016, @07:03AM
Everybody would become a corporation. It doesn't take much to setup a corporation in most States and you would see a lot of income move into these corporations which would pay mortgages, car loans, etc. from which a shareholder would benefit tax free.
What needs to happen is the countries of the world need to move toward a common tax structure so that the incentive of playing these types of accounting games is removed.