Digital Tax - Page 1
Forum section: electronics / general

author: Rick Law
author_rank: Super Contributor
timestamp: December 05, 2019, 06:26:34 pm
content: What do you guys think of the Digital Tax? It will affect IoT, Cloud, and presumably the electronic industry and programming industry that supports them.As you may know, France set the precedence and enacted a Digital Tax in July 2019 (and made it retroactive to January 2019). KPMG has a good write up on it:https://home.kpmg/us/en/home/insights/2019/07/tnf-france-digital-services-tax-enacted.htmlThis may grow in both geographically and in scope. France has it now; China, Vietnam, or anyone for that matter else may. The complication can be very interesting.Until now, I can (for example) say have an international company, standardized my administration with a home-grown and in-house hosted administration software, use it in my French branch and all is well. Say I charge that French department a cooperate $x in funny money (book keeping transaction only) for its IT usage. This is often done by corporate when I was handling a department, "paying" for another department to do something so cost is properly attributed to where it belongs. Now this can be view by the French as buying a corporate service, particularly if the office in France is established as a subsidiary...More striking, say I use some parts from France and only have a buyer there and thus have a "tiny presence" there...I personally knew (in the past) some folks (in the USA) has friends doing their sourcing in Asia, and their friend remote into their system to find out what to source, do the numbers (such as account payable/receivable) related to what they sourced. That too could be view as digital service to the middle man (the friend) doing their sourcing. Many of those products sourced were tiny electronic toys. In this case, Asia is of course not France, but this "digital tax" thing likely could spread both geographically and in scope. So this could get complicated really fast...

author: I wanted a rude username
author_rank: Frequent Contributor
timestamp: December 05, 2019, 08:07:48 pm
content: 3% ofrevenueis interesting. I guess that's to thwarttransfer mispricing.But you know, accountants are the most creative people in the world. They'll figure something out.

author: Red Squirrel
author_rank: Super Contributor
timestamp: December 06, 2019, 12:38:39 am
content: We already pay enough taxes, I hate the idea of any extra taxes on top of the ones we already pay. 33% of our income goes to the government right off the bat, then you pay 15% sales tax on anything you buy, then you pay $5000+ property tax per year. Then there's all the other more specific taxes like cryptocurrency tax, or side income etc. It's just too much. No need for extra taxes on top of that.

author: jadew
author_rank: Frequent Contributor
timestamp: December 06, 2019, 12:43:10 am
content: Seems to be targeted at Google. The two categories of services seem to be these:- Intermediary services (I assume when the intermediary is in France), which makes sense.- Google, with all their ads, tracking and analytics services.If your internal transactions are for bookkeeping purposes only, then keep track of expenses in another spreadsheet.

author: thm_w
author_rank: Super Contributor
timestamp: December 06, 2019, 01:10:51 am
content: Quote from: Red Squirrel on December 06, 2019, 12:38:39 am- Sales tax does not apply to most groceries.- If you are paying 5k in property tax your house is worth over two million dollars.- If you are paying 33% income tax you are earning $180,000 per yearConsidering you are this well off and still complaining, sounds like you should move further south and see how you fare there.

author: Rick Law
author_rank: Super Contributor
timestamp: December 06, 2019, 02:11:32 am
content: Quote from: jadew on December 06, 2019, 12:43:10 amEvery process can be replaced by some kluges, but each kluge will add operational difficulties and cost. In some cases, the cost of the work around may exceed the tax.The advantages with international trade today is how much easier it has become. "Easy" leads to lower cost. Now whether with kluges or tax, cost is going to increase. It will be an additional impediment to international trade and trans-national operations. Picking random countries to make a point: something like design in Japan, HQ (admin) in Taiwan, assembly anywhere near by, and final assembly in China. Without internet as the glue, operations will be a ton more difficult. If the glue gets too expensive, such trans-national operation will not be cost competitive.All government need tax to function. If Google shown an AD in Paris and made a buck over it, Google should pay tax to the local authority. I have no argument with that. Personally, I have such dislike of Google I would not blink an eye if Google is taxed out of existence. But, I would not like the unintended side effect of making trans-national operations so costly that it too got taxed out of existence.* * * * *Quote from: thm_w on December 06, 2019, 01:10:51 amSales tax may not apply to some groceries, but a lot of what you paid for that grocery still went into tax. The grocery employees get paid from your purchases, that salary is inflated because he/she has to pay a tax. So part of what you paid for that grocery went into income tax. The grocery has to be transported, the fuel used to transport was taxed, So part of what you paid for that grocery went into fuel tax... so on, so on.In my view, the best way to account for % tax is how much the government spend out of the total GDP. You pay directly to government, or you paid someone (and that someone pays another someone) who in turn paid the government, so using the totals are the right number to use:100 * total_government_expenditure/ total_GDP.I bet for most countries, that percentage is huge.Often during elections, one hears from politicians how good they are for passing so many laws and regulations. That is to measure the Government's productivity by how many laws/regulations it passed. That is the same as measuring government productivity by how much it slows everyone else down. Some slowing down is good, such as no speeding in a school zone. But slowing down the economy unnecessarily destroys living standard of its citizens.

author: james_s
author_rank: Super Contributor
timestamp: December 06, 2019, 05:35:07 am
content: I don't like paying taxes any more than the next guy, but like most people I do like having all the services and infrastructure that taxes support in a civilized society. Also the giant elephant in the room at least in the US is military spending, we spend obscene amounts of money on our military, much of that spend meddling in other countries.The only specific tax I find particularly annoying is property tax. I have no control over the value of my house, I really wish it would drop because I have no plans to sell it and the higher the assessed value goes the higher my property taxes get. Retired people are occasionally forced out of the home they own outright when the taxes rise beyond their means.

author: julianhigginson
author_rank: Frequent Contributor
timestamp: December 06, 2019, 06:29:59 am
content: If it exists to stop transfer mispricing, and it's going to stop that, then I think it's awesome.So many large multinationals get away with paying no tax at all in the countries they operate in and profit from, by playing silly buggers with IP and licensing to wholly owned/controlled subsidiary companies in separate countries.Of course it's a government thing, so who knows what it's actually going to do, and who is going to get messed up by it. I guess we'll find out.

author: m98
author_rank: Frequent Contributor
timestamp: December 06, 2019, 11:09:21 am
content: Why do they feel that "digital services" need a higher tax than any other B2B product? As far as accountant tricks go, they'll be wondering why suddenly no French company will be paying for any "digital service" the quartal after that tax is in effect.

author: Stray Electron
author_rank: Super Contributor
timestamp: December 06, 2019, 06:18:17 pm
content: Quote from: jadew on December 06, 2019, 12:43:10 amDon't kid yourself, like ALL taxes the costs will eventually be passed down to the little guy that can't afford accountants, lawyers and political lobbyists.A tax is still a tax, no matter what rational they use to use to justify it.

author: thm_w
author_rank: Super Contributor
timestamp: December 06, 2019, 10:08:15 pm
content: Quote from: Rick Law on December 06, 2019, 02:11:32 amI don't mind taxes on transport fuel, thats a good thing.There are various tax rebates on farm land, farm fuel, etc. in this province. As well as groceries being incredibly cheap, so I have no issue with the current taxation levels on food.Good points though.

author: Red Squirrel
author_rank: Super Contributor
timestamp: December 06, 2019, 10:34:46 pm
content: Quote from: thm_w on December 06, 2019, 01:10:51 amNope, house worth around 200k (paid less though 10 years ago), and I make around 80k per year... which is well off, but with all these taxes and costs of living going up each year and it eats into most of it. It's even more expensive living down south as houses are like over a million and you get way less for your money. Especially the GTA is nuts. Not my style of living either, too much hustle and bustle.

author: thm_w
author_rank: Super Contributor
timestamp: December 06, 2019, 10:43:33 pm
content: Quote from: Red Squirrel on December 06, 2019, 10:34:46 pmSo your numbers are a bit off then,80k income = 25% tax rate (link)Property tax = ~1.2% = $2,400 (link) (but I'm sure this can reach 5k after utilities, maybe other city taxes, etc.)

author: VK3DRB
author_rank: Super Contributor
timestamp: December 07, 2019, 01:09:53 am
content: I am 100% for a digital tax providing:1. People can't cheat on paying the tax2. The tax is well spent and not wasted3. Our government looks after the taxpayers' interestsIn Australia - a big fail on all counts, so I am 100% against the digital tax.

author: Red Squirrel
author_rank: Super Contributor
timestamp: December 07, 2019, 01:57:57 am
content: Quote from: thm_w on December 06, 2019, 10:43:33 pmThose calculators arn't universal. There's lot of things that it depends on. The 25% rate might be only one part of the equation, there is way more that comes out as there is federal and provincial, and then other stuff that comes off like CPP etc.Property taxes also depend a lot on the city. My city has a crazy high tax rate that's been going up every year. Right now I'm at just under $400 per month. As of next year my water bill is also going up to $100/mo, that's separate from taxes. Been starting to consider moving because of these crazy costs but hard to find a job in tech that pays 80k in this area and don't want to go south or too far from family. I can buy like 40 acres less than an hour from here for around 50k range in an unorganized township and the taxes are like $100/YEAR. I don't need permits or any BS to build anything so the taxes don't go up either. Been on the lookout for such property but hoping to get something lake front. Would be a camp for a while until I can set it up to be fully winterized. Way cheaper costs of living, and more land and more room for toys. The only way to really pay less taxes is to make less money and buy less stuff. Though they'll still find a way... They are starting totax solarnow. Not sure what this would mean for a full off grid setup when there is no meter though. Maybe I would be safe for now, but I'm sure a solar and EV tax is eventually going to come.

author: VK3DRB
author_rank: Super Contributor
timestamp: December 07, 2019, 06:12:16 am
content: Efficient, fair and clever government would reduce taxes. We have inept state and federal government, so our taxes are high and our standard of living is falling, especially for the young who have little hope of ever being able to afford a home of their own.

author: SerieZ
author_rank: Regular Contributor
timestamp: December 09, 2019, 12:23:48 pm
content: People who advocate for more state and taxes are either clueless, stupid and/or lazy.A big NO from me.

author: SiliconWizard
author_rank: Super Contributor
timestamp: December 09, 2019, 03:38:41 pm
content: Quote from: SerieZ on December 09, 2019, 12:23:48 pmAlthough I personally agree with this, I think you're going a bit far here. What you're talking about is essentially the "liberal" thought. Some people are not liberal with a sensible rationale, and I don't think they are neither clueless nor stupid. Maybe lazy, but we're all lazy in a way. So, I'm rather liberal myself, but I wouldn't call the non-liberal people stupid by default (of course some are!). It's just a different approach with different outcomes.Getting back to the topic, the "digital economy" is pretty tough to handle. Taxes are probably not the answer, but in a world where taxes are used everywhere (yes, even in the most liberal of countries), it's hard to decide that some activities should not be submitted to taxes (or at least have it too easy to avoid them). Otherwise they'll obviously get advantages over other forms of activities, which would lead to a number of problems (it already does). It's the true political approach with a strategy in mind. Of course, the usual short-term decision for taxing is just to get more tax money. Another obvious solution to address the strategic issue would be to remove taxes for ANY kind of activity. Most states would collapse. You (and maybe even I) may like the idea, but it's just not realistic for the time being.

author: SerieZ
author_rank: Regular Contributor
timestamp: December 09, 2019, 03:53:21 pm
content: The people I am talking about are the Utopists (Naivetes who believe in some form of greater good that, of course, requieres funding from the pocket of their neighbour etc.) and Leeches (Politician etc).Living in a (Stable)-Society requieres some Government, and with Government come Taxes - I understand.The question is how much should such Institution reach into our every day lives and how much of a burden can we put on those who "produce" to fund the unfortunate and needy.As someone who works a lot (and effective) I do not feel a need to depart with any more tax dollars than I already do and quite frankly when I think of most EU countries like Germany I am overcome with shudder.The same feeling I get when I see wasted Tax Money in stuff like for example "Art" that no one asked for.Thankfully most Swiss Citizens believe the same as I do and nor are we in a healthcare crisis or our streets sinking in garbage.Basically we are a very low Tax country and yet far from Societal Collapse.Regarding this Tax in specific -> sounds to me as yet another excuse to squash the Citizen and Entrepeneurs out their hard earned cash.

author: thm_w
author_rank: Super Contributor
timestamp: December 10, 2019, 10:40:44 pm
content: Some averages here:https://en.wikipedia.org/wiki/Taxation_in_Switzerland#/media/File:Tax_revenue_as_a_percentage_of_GDP_(1985-2014).pngLooks like swiss is very low.Quote from: Red Squirrel on December 07, 2019, 01:57:57 amIf you had looked at the link you can see it includes CPP/EI premiums (4.5% of income). Technically you should get the money back but, still a tax so.The calculator is close enough to reality for most people.

author: NiHaoMike
author_rank: Super Contributor
timestamp: December 10, 2019, 11:58:51 pm
content: Quote from: SerieZ on December 09, 2019, 03:53:21 pmPerhaps the solution is to allow voting what the tax dollars are used for as well as show how much is currently going to those uses?