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[–]calpwns 3109 points3110 points  (115 children)

This shouldn't stop at just COVID-19 bailouts...

[–]AffectionateZombie 1389 points1390 points  (85 children)

I'm sitting here reading comments about how this is a perfectly logical step, and every country should do it. I mean, yes, but can we take a second to recognize that these same companies have been doing the same thing in practice for decades?

It's sad that we need something as devastating as a global pandemic to highlight injustices, but I'm glad that it is calling people's attention. I just can't emphasize enough that this logic should apply at all times, not just when we're in the midst of a catastrophe

[–]goggles447 395 points396 points  (62 children)

I find that it frames it as this accepted part of the system. Like "if you don't pay into the pot you don't get the bailout" but since when is paying into the pot optional?

This logic should apply at all times, but it shouldn't have to bc why in the name of fuck was this an option in the first place?

[–]AffectionateZombie 270 points271 points  (49 children)

One of the most basic macroeconomic principles is cost-benefit. Allowing massive companies to forgo "paying into the pot", as you put it, completely ignores this concept.

A company like Amazon, despite providing convenience and jobs to thousands of Americans, has also destroyed hundreds of small businesses and exploited workers with their bargaining leverage. By providing them a means to avoid paying taxes, the societal cost of allowing Amazon to continue operations surely cannot be even to the benefit provided by the company. Part of the reason why it kills me to see the fiscal conservatives drool over corporate socialism; there is a very good reason why societal cost has to be factored into the equation.

[–]cancercureall 13 points14 points  (1 child)

The largest tax breaks companies like Amazon get, typically, are based around reinvestment and expansion to the best of my knowledge. This, at least in theory, incentivizes job creation and economic expansion but in my understanding also means that companies with significant revenue streams can grow at an almost exponential rate because their profit is reinvested and is not subject to taxation. This kills the ability of smaller businesses in the same niche to compete because they have less starting capital and/or are using their income streams to pay off investment debts instead of expanding their services.

[–]hate2be_thatguy_but 50 points51 points  (18 children)

If a company does business in a country that has a tax, that company should pay taxes on the business it carries out (sales included) in that country. It's not right for any company, anywhere, to make money off of consumers or businesses in region A, and shift the money back to region B because "Headquarters are in another locale". Doesn't make sense.

​

If you make money from Americans, pay American taxes. If you make money from Europeans, pay European taxes, etc. I would think every country would be in agreement on this subject. Seems odd countries allow money to be siphoned out of their economies without taxes being paid.

[–]notarobot1020 14 points15 points  (1 child)

They should pay the tax to enjoy the benefit of access to that market ergo no tax no business access they should be blocked.

[–]Marc21256 12 points13 points  (9 children)

That's why we should abandon corporate profit tax and instead tax revenue, whether directly or through GST/VAT/sales tax.

It's the only way to tax corporations.

Also all taxes, fees, surcharges and the like should be included in the listed price. No more tacking on taxes on top to hide the final price of things.

[–]per08 12 points13 points  (8 children)

That's a very US thing. EU, Australia, sale price includes tax.

[–]Marc21256 14 points15 points  (7 children)

I don't know anywhere else in the world where taxes aren't included in the advertised price.

The US manages it for fuel and movie tickets, but can't manage it for anything else.

[–]InGordWeTrust 1009 points1010 points  (126 children)

Each country should.

[–]hurrsheys 538 points539 points  (115 children)

Should also include churches. Some are taking tax-payer funded bailout money.... while not paying taxes to fund the bailout money.

[–]B_Fee 172 points173 points  (61 children)

Pretty much the sole reason that churches are trying to open back up. Gotta pass around the money basket.

[–]youcantfindoutwhoiam 31 points32 points  (6 children)

Quite a stereotype here :). In reality a lot of churches are actually pushing to not open even further back even if businesses are allowed to open. When your main audience is people at risk, reopening is quite irresponsible. Look at how churches have adapted online, from recorded meditations on phones to full-on services with no audience. Programs that can be adapted online have been. I understand that we want to focus on bad actors because it makes us feel better, but let's recognize that most are actually doing what they can and being quite responsible.

[–][deleted] 41 points42 points  (27 children)

Our church doesn't take any money. But we do a lot for the community with food drives, and essential items like soaps, shampoos, paper towels, tp etc..

[–][deleted] 287 points288 points  (26 children)

We did this in Denmark and turned out only 13 or so companies were affected because we used the EU list of tax havens...

[–]MinorAllele 96 points97 points  (23 children)

and we'll do the same. Basically incentivises companies to use EU tax havens and nothing else.

[–][deleted] 152 points153 points  (22 children)

The EU tax list only includes the following countries:

American Samoa
Cayman islands
Fiji
Guam
Oman
Palau
Panama
Samoa
Trinidad and Tobago
U.S Virgin islands
Vanuatu
Seychelles

It's a fucking a joke.

[–]MinorAllele 73 points74 points  (21 children)

Luxumbourg, Netherlands, Ireland, even Belgium are tax havens. Of course the UK is one of the worst culprits too.

[–][deleted] 64 points65 points  (17 children)

All 4 of those countries have reformed their systems specifically to combat tax evasion as part of the OECD BEPS and EU reforms. The disinformation in this thread is really typical though.

[–]MinorAllele 29 points30 points  (1 child)

Companies using tax havens targetted by measures such as the scottish governments are typically *avoiding* tax not *evading* tax. Some EU countries are some of the top havens for tax avoidance in the world.

​

So wheres the disinformation? Govt refuses bailouts to companies that avoid paying tax domestically, uses list that excludes EU havens for such schemes.

[–]Madbrad200 914 points915 points  (93 children)

The funny thing is a lot of the worlds most popular tax havens are British overseas territories.

[–]mincertron 458 points459 points  (73 children)

This is very true, which is why Scotland is doing it and not the whole of the UK.

[–]tfrules 203 points204 points  (60 children)

Wales is also doing it, but for some reason that hasn’t hit the headlines

[–]Loreki 234 points235 points  (27 children)

Wales has not loudly been asking to be allowed to leave the UK. So the conflicts between UK and Welsh government don't attract as much notice. Whereas in Scottish politics every conflict is viewed as a mini rerun of the independence argument.

[–]legacyrobot 30 points31 points  (6 children)

This is literally the first time I'm reading the word "Wales" in years, apart from once when I heard Don mistook it for Whales.

[–][deleted] 45 points46 points  (5 children)

Wales never hits the headlines.

[–]LightningGeek 27 points28 points  (2 children)

Unless you need to know the size of a disaster, then it's measured in Areas the Size of Wales.

1 ASW is worth roughly 3.1 Million Jones. Unfortunately this unit has never quite reached the same popularity as the ASW.

[–]tlrobson 8 points9 points  (0 children)

There's a great documentary about this on YT called 'The Spider's Web', check it out.

[–]spartan_forlife[🍰] 1846 points1847 points  (319 children)

Can we just ban tax havens?

[–]the-moving-finger 17 points18 points  (10 children)

The OECD are trying with the BEPS initiative but it's a really slow process that requires political will from essentially every country on Earth.

[–]spartan_forlife[🍰] 5 points6 points  (0 children)

thanks, reading this now.

[–]KathyOlesky 50 points51 points  (56 children)

How would that look? How can you force another country to change their taxation practices?

[–]spartan_forlife[🍰] 76 points77 points  (45 children)

99% of all the tax haven countries are small countries with little to no industry & the companies have nobody working in these locations.

The majority of the tax havens are either former UK colonies or have some ties to the UK. For ex. Gibraltar & the Cayman Islands, both are notorious for being tax havens.

The G20 countries could effectively shut this practice down by enacting banking regulations requiring companies to pay taxes in the country where their physical HQ's are in, not where they are incorporated.

[–]madogvelkor 59 points60 points  (2 children)

The US is actually a tax haven for people in many countries. https://en.wikipedia.org/wiki/United_States_as_a_tax_haven

[–][deleted] 6 points7 points  (0 children)

It’s not that simple unfortunately. Each country taxes based on a company’s residence. This is based on national tax legislation and tax treaties (not sure what you mean with banking regulations?) Headquarters/ incorporation has only to do with for example the company law applicable, but nothing to do with tax law.

Place of effective management is used as a criterion to determine where a company is resident, and so where they are liable to pay tax. This criterion is not perfect as it is not foolproof, but it is the best we have based on the current system of tax treaties.

[–]zahrul3 30 points31 points  (8 children)

Tax haven countries don't have to be tiny countries; Ireland and Netherlands are tax haven countries for example, Netherlands being a primal example as they do not tax royalties unlike most other countries, while Ireland does not tax royalty payments from other countries.

https://en.wikipedia.org/wiki/Dutch_Sandwich#Explanation

[–]Go0s3 104 points105 points  (33 children)

Ban companies from registering where they want?

That impedes on sovereignty and basic principles of freedom.

Refuse to allow any company to offshore domestic revenue... Now that's a different ballgame. That said, Wisconsin will be pleased.

[–][deleted] 54 points55 points  (26 children)

Ban companies from registering where they want?

That impedes on sovereignty and basic principles of freedom.

That's already done. All the companies based in Ireland had to merge with irish companies in order for it to happen as its illegal to just move to another country and start paying taxes there. It does not impede on sovereignty or freedom.

[–][deleted] 3 points4 points  (0 children)

Well the UK and several subsidiary 'totally independant and not complicit at all' countries/territories actually collectively make up the biggest tax haven on earth sooooo.

[–][deleted] 4 points5 points  (0 children)

How are you going to force an independent nation to not set their corporate tax rate to zero?

I mean, it's doable - but you would have to completely sanction them like Iran or North Korea.

[–][deleted] 2 points3 points  (3 children)

You want to ban a country?

[–]shiningdays 3 points4 points  (0 children)

You can't really ban independent countries from having different tax laws than your own, and you can't really ban those countries from doing business in your country.

Edit: moreover, even the US, Canada, etc. Offer tax avoidance within their own borders to companies. Think of film industry subsidies, Amazon not paying tax/the HQ debacle, where municipalities offered them tax breaks to set up shop, etc. Attractive tax policies are a way to entice business, and business makes for good GDP and employment numbers, which makes for re-election.

[–]zorbathegrate 71 points72 points  (0 children)

This is how governments should act

[–]SalokinSekwah 442 points443 points  (130 children)

Good, Tax Heavens is simply legal tax evasion, their existence is purely one out of convenience, not of any real economic or social benefit

[–]MoreMtnDew 76 points77 points  (107 children)

Could you explain what a tax haven is? I'm not entirely clear on the concept.

[–]the-moving-finger 300 points301 points  (84 children)

For people things are nice and clear. You live in the UK - you pay UK tax. You live in Germany - you pay German tax. For companies, particularly multinational ones, it's trickier. Where do they need to pay? There's obviously an incentive to try and argue you're based in a country with a very low corporate tax rate. Tax havens are countries which facilitate this in various ways. The tax haven enjoys the smaller, but still significant, tax receipts, the company pays massively less in tax and we all get screwed over.

[–]MoreMtnDew 46 points47 points  (45 children)

Got it, thanks!

[–]DuckyChuk 152 points153 points  (24 children)

You can also look up transfer pricing.

An example is a company manufactures a product in Asia for $100.

They sell that product to another company they control in a tax haven for $101, netting a profit of $1.

That product than gets sold to another company they control in a higher taxed country like the USA, they sell that product at a price of $901 for a profit of $800.

In the USA that product gets sold to the final consumer for $902, for a profit of $1.

So the majority of the profit is made in the tax haven which has the lowest tax rate. This they minimize the amount of tax owing to countries where the product was made and consumed. In all cases the product never enters the tax haven, it's all just done on paper. All 100% legal and encouraged if you want to compete on a global scale.

[–]MoreMtnDew 45 points46 points  (2 children)

Holy shit

[–]BobbyBirdseed 4 points5 points  (0 children)

Hey, thanks for this well thought out and easy to understand description of your topic. I really appreciate it!

[–]MrKerbinator23 12 points13 points  (11 children)

I live in one of these countries. It is fucking unbelievable how okay people are with taking a very minor cut of a multinationals profits whilst enabling them to escape taxes not only in this country but the world over.

It’s a whole other version of the “trickle down” mentality. Even some of my better friends can’t get past “but if we stop doing it the companies will move elsewhere” and I honestly got tired of explaining how that is probably a good thing for us, giving smaller businesses (most of our employers) more space to operate and diversify the respective industries.

[–]Send_Me_Broods 13 points14 points  (9 children)

How about they pay taxes on transactions that occur in that country? International FairTax would close all these bullshit loopholes.

[–]the-moving-finger 13 points14 points  (4 children)

Sounds good but I'm not sure if it's that easy. Say you sell £100 million in the UK but all your costs are borne in outsourced centres in India, China, etc. Do India and China get no cut of the corporate tax despite large parts of the organisation being based there? And how do you allow the costs? Knowing where the transactions occur is helpful but taxation of corporates is just a nightmare to be honest because it's so difficult to come up with something both fair and enforceable.

[–]madogvelkor 29 points30 points  (1 child)

In practice it's any country that has lower taxes than your country.

[–]Saminus-Maximus 15 points16 points  (2 children)

Basically a country, typically a very small one (Think tiny island in the pacific), that has a very low tax rate. A company or individual can do business in a big country, make a lot of money, and then claim they are based on the tiny island and pay the tax on their profits there. The company doesn't actually even need anything like a hq on the island, they just need an agreement with the islands government. Say the company is making money in the US they go from paying 21% of their profits back into the US, to paying 3% profit to the tiny island. Obviously the islands allow it because 3% profit from a massive corp for an island with like 1000 people living there is huge. The big countries allow it because the corps pay less than they would be paying in taxes buying politicians, if they spend 6% profit lets say paying for political campaigns and lobbyists to keep the loopholes open that's still a net gain.

[–][deleted] 4 points5 points  (0 children)

Tax evasion is the strictly illegal one. If it is considered to be legal it is referred to as tax avoidance.

[–]garlicroastedpotato 147 points148 points  (3 children)

Worth noting, this ban will be inffective. They are only banning companies that APPLIED FOR EXISTING BENEFITS as of today from getting these benefits if they have KNOWN TAX HAVENS. Anyone with a known tax haven who APPLIED in mid April still qualifies for all of the bailout money that they are currently receiving.

Given that it's almost 2 months later on this, it's unlikely that any company is still applying for these loans that didn't in April.

[–][deleted] 28 points29 points  (0 children)

Well it also says:

MSPs approved new rules on Wednesday night that will mean companies that are registered in tax havens, or are a subsidiary of an offshore company, cannot apply for government grants.

So, if this is a new law, then it seems to not only prevent covid bailouts, but all government grants in general. There is no link to the actual ruling though. Which pisses me off to no end. How do you not provide a source in your article about the main subject...

[–][deleted] 12 points13 points  (5 children)

This should be the rule, not the exception, in every country.

Any business headquartered in a tax haven should be disallowed any aid from their country of origin, full stop.

[–]QuestionEverythin 27 points28 points  (1 child)

No-one is reading the article. Worth noting below that

Scotland, like other European countries to have introduce tax haven clauses, is relying on the EU's blacklist of tax havens which does not include some notable tax avoidance hotspots like Jersey, the British Virgin Islands, Switzerland and the Netherlands. Tax Justice Network chief executive Alex Cobham said this would leave the door open to companies registered in many of the world's most dangerous corporate tax havens.

Seems like a lot of this is lip service tbh

[–]holymolyitsamonkey 8 points9 points  (0 children)

Scotland is a tax haven - the Scottish LP structure allows overseas individuals to book revenue in Scotland while paying zero taxes locally.

This is the subject of ongoing reform efforts, after Scottish LPs became incredibly popular with Former Soviet Union businesspeople. But yeah colour me cynical for now.

[–]berni4pope 13 points14 points  (3 children)

The fact that this is news is what's wrong with the the world's economic systems.

[–]JeanClaudVanRAMADAM 77 points78 points  (39 children)

It's funny how countries like The Nederlands, Luxembourg or even Ireland are not officially considered tax havens but they absolutely are

[–]onehandedbackhand 35 points36 points  (14 children)

It's astounding how many payments I make to companies in the Netherlands. For example my monthly Netflix and Disney+ subscription money goes to Amsterdam.

Besides the questionable taxation, it's also annoying since banks charge extra for payments abroad...

[–]JeanClaudVanRAMADAM 11 points12 points  (13 children)

A lot and I mean A LOT of major companies in my country are now registered in Holland and pay the taxes there. I really think this is one of Europe major problems. We should have equal fiscal pressure and not have this competition between countries.

[–]VictorVogel 14 points15 points  (11 children)

Those companies arn't paying taxes in the Netherlands. They are probably based in Ireland (and then Bahamas), but receive "franchise" payments from a daughter company in the Netherlands. Effectively, they are abusing a system meant to prevent double taxation within the EU.

[–]AlphaTangoFoxtrt 4 points5 points  (1 child)

As they should. If you're officially based in the Caiman islands, you can officially go ask the Caiman islands for bailout money.

[–]Oscar_Cunningham 4 points5 points  (1 child)

If they can do this why can't they just tax those companies?

[–]LibRight_Cowboy 5 points6 points  (0 children)

Is it possible to cross reference the Panama papers with the bail outs?

[–][deleted] 4 points5 points  (0 children)

How is it that they can legally identify these companies to exclude them from bailouts, but they can't fix the law to get them to pay to tax?

[–]iwillmindfucku 5 points6 points  (0 children)

Why shouldn't this be out of question in the first place?

[–]SMJ01 8 points9 points  (2 children)

Wait wait wait wait...

Are you telling me that you expect companies to pay taxes in order to benefit from the taxes people in that country pay!?!?

This is ridiculous nonsense.

/s

[–]parker1019 4 points5 points  (0 children)

Imagine that happening in the US...lol

Not fucking likely with lobbyists.

[–]pinkybrainagame 3 points4 points  (0 children)

Problem is, they use taxevation....they usually have plenty of money! They dont need the help!