Italy Approves 'Google Tax' On Internet Companies 236
recoiledsnake sends this news from Bloomberg:
"Italy's Parliament today passed a new measure on web advertising, the so-called 'Google tax,' which will require Italian companies to purchase their Internet ads from locally registered companies, instead of from units based in havens such as Ireland, Luxembourg and Bermuda. Google, for example, says that it sells nearly all its advertising in Europe from an Irish unit, leaving little taxable profits in the countries where its customers are based. That unit in turn pays royalties to a second Irish subsidiary, which says its headquarters are in Bermuda. Google last year moved nearly $12 billion to the Bermuda unit, the majority of its worldwide income, cutting more than $2 billion off its global income tax bill. Google's Italian unit last year reported total income taxes of just 1.8 million euros, corporate filings show."
Similar to Amazon dodging sales tax (Score:4, Informative)
Really this is a global problem, where an entity can set up an extraterritorial operation and avoid taxation.
Amazon does it to avoid sales taxes and so forth in the United States. Google and Apple do it to avoid taxes in particular countries.
Simply these shenanigans will cause states and countries to extend their cooperation across these boundaries. Eventually there will be a national sales tax system, and an international sales tax.
Re:states dont want to compete. (Score:5, Informative)
Except that the corporations haven't chosen to go where taxes are LOW; they've chosen the places where taxes are ZERO.
The text of the law (Score:5, Informative)
This is a non authoritative translation of a part of the law that I believe TFA missed, legal-Italian to plain-Italian to plain-English (as good as I can get it). Italics are mine.
Think about the implications of the part in italics. Your US company buys an ad in English from Google aimed to the US market. Unfortunately I end up seeing it from my computer located in Italy. Ops, somebody is in trouble now, either you, Google, me or a combination of those three parties. There is nothing in the law about what happens in case of violations and to whom it happens.
Furthermore TFA missed that the law binds companies like Google to register a VAT account in Italy, not to pay taxes there. They'll end up paying just VAT there, which by the way comes from Italians, not from Google. The law aims at quantifying the turnover of those companies in Italy, which can only be estimated now. Unfortunately the way it's worded makes it difficult to enforce.
Luckily a motion [giampaologalli.it] (in Italian, Google translation to English here [google.com]) has already been filed to suspend it. For another take on it you can read this Google translated post from wired.it [google.com].
PS: odd thing to do for me on Christmas morning :-)
Re:Surprised this didn't happen sooner (Score:4, Informative)
In some countries (like Ireland), yes it was the banks.
In countries like Italy, it was largely the governments. In countries like Greece, it was 100% the government.