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<br>
Dear Carlos<br>
<br>
I agree that any position that IGC takes should follow an informed
discussion. I will try to contribute to it.<br>
<br>
A few points. (below)<br>
<br>
<div class="moz-cite-prefix">On Thursday 13 December 2012 05:24 PM,
Carlos A. Afonso wrote:<br>
</div>
<blockquote cite="mid:50C9C20D.4070405@cafonso.ca" type="cite">Dear
Parm, unfortunately (again) I am unable to follow up closely on
the thread. But one point intrigues me: taxes are determined by
governments within their geopolitical boundaries. Why don't
governments charge appropriate taxes (if any) on services such as
Google's?
<br>
</blockquote>
<br>
Governments have general tax laws and structures and obviously not
specific to a company. The problem is that google builds a complex
web of operations and entities to make their tax liabilities move to
some tax havens (in this case, Bermuda). While non networked-digital
businesses also do such things, it is so much easier for
networked-digital businesses like google because the transactions
themselves take place in the cyberspace. <br>
<br>
Such a situation requires (1) national laws to be reformed to deal
with the new situation, (2) international taxation treaties, and
norms (model tax codes like OECD has) which can harmonise tax laws
enough to enable countries to collect their tax dues and disable, or
reduce, illegitimate tax haven systems. Point (2) becomes even more
important, and perhaps central, in a globally distributed businesses
like that of google which are conducted in cyberspace. <br>
<br>
I quoted an EU document in an email to Adam which makes the problem
as well as the needed solution quite clear....<br>
<br>
<blockquote>“E-commerce is, by its nature, a truly global process
and no tax jurisdiction, acting in isolation, can resolve all the
issues it raises. ... The successful administration and
application of taxes will to a great extent depend on, inter alia,
achieving an international consensus...” <br>
</blockquote>
In fact EU and OECD have been working on inter-country agreements,
and model tax codes, to make sure thatthe right tax goes to the
right place.... Since the digital space is almost seamlessly global,
and developing countries lose the greatest proportion of tax, it is
only appropriate that such agreements, norms development etc is done
at a global level, involving them. (This issue also figured at
WCIT.)<br>
<br>
It is therefore a core IG issue that needs global resolution. Loss
of tax is loss to the more marginalised people whom the state serves
on priority. We cannot ignore this issue.<br>
<br>
In UK recently, when Starbuck was found to systematically avoid
taxes, <a href="http://www.bbc.co.uk/news/uk-20650945">civil
society groups</a> boycotted Starbuck outlets and also picketed
them. (This has made Starbuck made new tax commitments.) The
situation is so much worse with Google, not only on the scale of tax
avoidance, but only the greater globalness of the issues, because of
the very globalness of the cyberspace... <br>
<br>
Why should, correspondingly, the global IG CS <i>not</i> take
action, as groups in UK did, now when cases of very huge tax
avoidance by google have surfaced in so many countries... <br>
<br>
We need to also demonstrate that we are ready to take action when
economic and social rights and entitlements of people are involved,
and not only in case of a narrow range of civil and political
rights. That is my principle contention.<br>
<br>
<br>
<blockquote cite="mid:50C9C20D.4070405@cafonso.ca" type="cite">
<br>
The point is: I do not think a corporation of that size just
evades taxes and keeps an eye for what may happen. The certainly
know about tax legislation in the countries they have operations.
<br>
</blockquote>
<br>
Yes, they keep a very keen eye on tax legislation and find
international loopholes around them... (1) making use of their
international operations (and cyberspaces based jurisdictionally
fuzzy transactions) and (2) (this being the important point) <i><b>absence
of international agreements or norms in this area</b></i>, which
is new and thus challenges are new. <br>
<br>
Campaigns against any kind of global regulation, agreements, norms
creation with regard to the Internet (not only at WCIT but also
elsewhere) directly serves the interests and agenda of google in
this regard.... It for this reason that while civil society may
rightly side with google to resist the wrong kind of things that are
proposed at the WCIT,<i><b> the world watches keenly what would the
CS do when similar issues and processes of global Internet
governance are implicated, where by far Google is on the wrong,
and money that should be spent to welfare regimes in developing
countries is being, well, to use advocacy language, 'stolen' by
it. </b></i><br>
<br>
And there is a clear connection between the two kinds of issues -
Google spends money on one, and earns/saves (lots lots more) on the
other..... And the overall issue about whether Internet needs any
kind of democratic global governance and regulation at all or not
connects the two sets of issues.... Civil society therefore needs to
nuance its position, to be on the right 'public interest' side on
both the sets of issues. It is for this reason important that we
address this letter to Google. It will greatly raise our
credibility. <br>
<br>
parminder <br>
<br>
<br>
<blockquote cite="mid:50C9C20D.4070405@cafonso.ca" type="cite">
<br>
What is the proper way to define a policy on this for us?
<br>
<br>
frt rgds
<br>
<br>
--c.a.
<br>
<br>
On 12/13/2012 02:33 AM, parminder wrote:
<br>
<blockquote type="cite">
<br>
Rather shameful that google paid 3 percent tax on its overseas
profit!!
<br>
It surely leaves it with a lot of money to spend in lobbying and
<br>
advocacy efforts to keep global markets free for its unlettered
<br>
operations... Like organising campaigns against ITU, German
legislature,
<br>
and so on.
<br>
<br>
Would IGC write an open letter to Google that its tax evasion
policy is
<br>
anti people, and it should pays its taxes where it makes its
profit. (Or
<br>
is it that the IG civil society does not go into such
re-distributional
<br>
questions ) It is not rhetorical but a real question to the
list, and
<br>
its coordinator.
<br>
<br>
parminder
<br>
<br>
<br>
On Wednesday 12 December 2012 09:37 PM, Salanieta T.
Tamanikaiwaimaro wrote:
<br>
<blockquote type="cite">More on Bloomberg:
<br>
<a class="moz-txt-link-freetext" href="http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html">http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html</a>
<br>
<br>
On Thu, Dec 13, 2012 at 4:48 AM, Salanieta T. Tamanikaiwaimaro
<br>
<<a class="moz-txt-link-abbreviated" href="mailto:salanieta.tamanikaiwaimaro@gmail.com">salanieta.tamanikaiwaimaro@gmail.com</a>
<br>
<a class="moz-txt-link-rfc2396E" href="mailto:salanieta.tamanikaiwaimaro@gmail.com"><mailto:salanieta.tamanikaiwaimaro@gmail.com></a>> wrote:
<br>
<br>
<br>
Somehow it feels that there is a targeted media campaign
out
<br>
against the likes of Google and other mncs - the timing of
the
<br>
release is almost impeccable with the WCIT.
<br>
<br>
Source:
<br>
<a class="moz-txt-link-freetext" href="http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10">http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10</a><br>
<br>
<br>
Google “can make money without doing evil” (as it evades
$2bn in
<br>
taxes)
<br>
<br>
Posted By TelecomTV One
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.telecomtv.com/go/?ct=9&id=e9381817-0593-417a-8639-c4c53e2a2a10"><http://www.telecomtv.com/go/?ct=9&id=e9381817-0593-417a-8639-c4c53e2a2a10></a>
,
<br>
12 December 2012 | 1 Comments
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10#comments"><http://www.telecomtv.com/comspace_newsDetail.aspx?n=49763&id=e9381817-0593-417a-8639-c4c53e2a2a10#comments></a>
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<br>
Tags: /Google
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.telecomtv.com/results.aspx?tag=122&tagname=Google"><http://www.telecomtv.com/results.aspx?tag=122&tagname=Google></a>/<br>
/corporate
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.telecomtv.com/results.aspx?tag=6972&tagname=corporate"><http://www.telecomtv.com/results.aspx?tag=6972&tagname=corporate></a>/
/tax
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.telecomtv.com/results.aspx?tag=434&tagname=tax"><http://www.telecomtv.com/results.aspx?tag=434&tagname=tax></a>/
<br>
/Finance
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.telecomtv.com/results.aspx?tag=365&tagname=Finance"><http://www.telecomtv.com/results.aspx?tag=365&tagname=Finance></a>/<br>
<br>
As the net closes around the multinationals that avoid
paying
<br>
corporation taxes, Google is accused of saving $2bn by
routing
<br>
income through a “Double Irish Dutch Sandwich”, paying tax
of just
<br>
3.2 per cent on its overseas profits. Guy Daniels reports.
<br>
<br>
Three questions. One; where do you stand on the subject of
tax
<br>
avoidance? We at TelecomTV believe that individuals and
<br>
corporations have a duty to pay their fair share of tax.
By fair,
<br>
we mean whatever respective governments rule to be the
legal
<br>
requirement (after all, in most countries, we voted the
<br>
politicians in to office). By all means try and mitigate
the
<br>
amount of tax you have to pay, using whatever accepted
mechanisms
<br>
are available. But avoidance? That just means somebody
else (with
<br>
far less access to expensive and clever advisors) has to
<br>
contribute to your share as well.
<br>
<br>
Second question: how do you define evil? The Oxford
English
<br>
Dictionary defines evil as “profoundly immoral and wicked”
or
<br>
“something which is harmful or undesirable”. In my book,
that
<br>
means tax avoidance is evil, simple as that.
<br>
<br>
Third and final question: Is Google evil? If you believe
that
<br>
avoiding tax is wrong (especially through aggressive and
<br>
mind-boggling complicated avoidance schemes) and if you
believe
<br>
that depriving society of tax revenues is wrong (and so
reducing
<br>
the level of available State support for the most needy)
and could
<br>
be described as an evil act, then surely you must conclude
that
<br>
Google is acting in an evil manner.
<br>
<br>
An investigative report by Bloomberg
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html"><http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html></a>
has
<br>
discovered that Google avoided about $2 billion in
worldwide
<br>
income taxes in 2011 by shifting $9.8 billion in revenues
into a
<br>
Bermuda shell company – almost double its total from three
years
<br>
ago. The information was disclosed in a November filing by
a
<br>
Google subsidiary in the Netherlands, which was discovered
by
<br>
reporters from Bloomberg.
<br>
<br>
It appears that Google legally routed profits from
overseas
<br>
subsidiaries into Bermuda, which doesn’t have a corporate
income
<br>
tax, thereby enabling it to cut its overall tax rate
almost in
<br>
half. Bloomberg says the amount moved to Bermuda is
equivalent to
<br>
about 80 per cent of Google’s total pretax profit in 2011.
<br>
<br>
Tax evasion and avoidance costs the European Union a
staggering €1
<br>
trillion a year. That’s worth dwelling on for a moment
longer…. €1
<br>
trillion. No wonder politicians are now acting to try and
prevent
<br>
this financial loss and branding such acts as scandalous
and immoral.
<br>
<br>
Bloomberg has a good quote from a UK-based tax accountant,
which
<br>
pretty much sums up the feeling in Europe at the moment.
According
<br>
to Richard Murphy of Tax Research:
<br>
<br>
“The tax strategy of Google and other multinationals is a
deep
<br>
embarrassment to governments around Europe. The political
<br>
awareness now being created in the UK, and to a lesser
degree
<br>
elsewhere in Europe, is: It’s us or them. People
understand that
<br>
if Google doesn’t pay, somebody else has to pay or
services get cut.”
<br>
<br>
Just look what happened to Starbucks. When the public
discovered
<br>
the US coffee giant paid zero taxes in the UK (yes,
absolutely
<br>
nothing at all), it started to boycott the chain.
<br>
<br>
Advertisement
<br>
As a result, Starbucks was forced to “volunteer” to pay
taxes…
<br>
<br>
The UK is Google’s second-biggest market, responsible for
about 11
<br>
per cent of its sales. Of the $4 billion it turned over
last year,
<br>
it paid UK corporation tax of less than $10 million.
Bloomberg
<br>
says Google avoids tax by using an Irish subsidiary to
collects
<br>
revenues from ads sold in the UK, which then pays
royalties to
<br>
another Irish subsidiary whose legal residence is in
Bermuda.
<br>
Payments are then sent to yet another subsidiary in the
<br>
Netherlands (with no employees, note) before finally
reaching the
<br>
tax haven of Bermuda.
<br>
<br>
Sounds pretty ‘evil’ to me. And if so, then that’s against
the
<br>
internet company’s guiding principles. Stated clearly on
the “Ten
<br>
Things We Know to be True” page on Google
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.google.com/about/company/philosophy/"><http://www.google.com/about/company/philosophy/></a>’s
website is the
<br>
following:
<br>
<br>
“You can make money without doing evil.”
<br>
<br>
I’m sorry, Google, but I don’t see how avoiding tax is
anything
<br>
but evil. Of course you – and all companies – have a duty
to
<br>
shareholders to maximise profits. But there are rules.
Some of
<br>
these are merely ethical, whilst some are legal. There is
no
<br>
indication or suggestion that Google has acted illegally,
but
<br>
there is every suggestion that it has acted unethically.
<br>
<br>
And who said you can’t have ‘ethical companies’? Of course
you
<br>
can. I don’t buy the ‘extreme capitalist’ viewpoint that
<br>
corporations will only act in self-interest and never “do
the
<br>
right thing” or pay their fair share. If their customers
start to
<br>
boycott their services, then they’ll change. It happened
with the
<br>
sudden emergence of all the so-called ‘corporate
responsibility’
<br>
positions that all featured heavily in annual reports. I
don’t see
<br>
why it can’t happen with fair tax positions.
<br>
<br>
Other ICT companies reported in the media to be using this
<br>
complicated tax evasion (sorry lawyers, of course I mean
<br>
‘mitigation’…) structure include Apple, Facebook,
Microsoft and
<br>
Oracle. Unfortunately, Google – and all the others, who no
doubt
<br>
will soon be named and shamed – will continue their sharp
<br>
practices until they are forced to make a change. If
governments
<br>
can’t do that through the legal process, then it’s up to
customers
<br>
to vote with their feet and walk away from Google
services. As
<br>
Richard Murphy said, consumers are beginning to get the
message
<br>
that it’s “us or them”, and we’re already being squeezed
by the
<br>
many austerity measures that are in effect to drag us out
of
<br>
recession.
<br>
<br>
Come on Google, time to step up to the plate and show some
<br>
leadership. Pay your fair share. And then the rest of the
ICT
<br>
industry can do likewise. Or else remove that fatuous and
<br>
out-dated “don’t do evil” slogan from your website once
and for all.
<br>
<br>
_Further reading: _The Pearse Trust
<br>
<a class="moz-txt-link-rfc2396E" href="http://www.pearse-trust.ie/blog/bid/86105/US-Companies-Their-Use-Of-The-Double-Irish-Dutch-Sandwich"><http://www.pearse-trust.ie/blog/bid/86105/US-Companies-Their-Use-Of-The-Double-Irish-Dutch-Sandwich></a>
blog
<br>
has a detailed explanation of the so-called “Double Irish
Dutch
<br>
Sandwich” tax scheme. Please don’t try and implement it.
<br>
<br>
<br>
<br>
<br>
--
<br>
Salanieta Tamanikaiwaimaro aka Sala
<br>
P.O. Box 17862
<br>
Suva
<br>
Fiji
<br>
<br>
Twitter: @SalanietaT
<br>
Skype:Salanieta.Tamanikaiwaimaro
<br>
Tel: +679 3544828
<br>
Fiji Cell: +679 998 2851
<br>
<br>
<br>
<br>
</blockquote>
<br>
</blockquote>
<br>
</blockquote>
<br>
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