A win-win for everyone — just don’t tell that to Big Tech’s motherlands who miss out on what they deem revenues that should’ve been theirs.
Technology companies have thrived because of innovation and creativity. Unfortunately, those two nouns can also be used to describe how they could, apparently, dodge their tax obligations. One of the most basic rules of business is that expenses must be kept at a minimum, taxes being a big part of those calculations. Remember: Tax evasion is different from tax avoidance, the latter using legal means or being — here goes those words again — innovative and creative to steer clear of having to pay dues under tax codes. It’s not entirely Big Tech’s fault they’ve decided to flee elsewhere to conduct a major part of their business. After all, countries considered as tax havens use this same dynamic to become an attractive investment hub: Come set up shop here, enjoy our sights and we’ll keep you happy with our low tax rates. A win-win for everyone — just don’t tell that to Big Tech’s motherlands who miss out on what they deem revenues that should’ve been theirs, a hard catch despite some of the most stringent tax laws in a number of these advanced economies.
The G7’s landmark move to rein in these practices will cast a wider net, considering the proposed 15 per cent minimum corporate tax rate that will be uniform at a global level. The biggest global levy shakeup in years has ramifications for all involved: Ireland, the go-to haven for big companies with a budget-friendly corporate tax rate of 12.5 per cent, has already estimated that its coffers would lose €2 billion a year if G7 plans come into fruition. Amazon and Google have already welcomed the move, while Facebook is apparently resigned to paying more tax. Apple, the richest, has yet to respond. For the mightiest and the wealthiest, a 15 per cent rate is still chump change.
But this is where things get murky: Who will be taxed and what criteria will be used for determining such? The G7 hadn’t laid out any details on this — only the ‘largest and most profitable companies’, they said — which leaves more questions than answers. Even critics have pointed out that the rate sets the ‘bar so low that companies can just step over it’. True. There are so many other countries imposing much higher, sometimes sky-high, corporate taxes. Global alliances have already wasted many years trying to come up with a suitable Big Tech tax regime; they should’ve at least come up with a solid stand, some rules and, maybe, a higher tax rate proposal. In a rather lacking proposal, all they may have done is give Big Tech more time to do what they do best — be even more innovative and creative to prepare for a new ‘taxing’ world.