There are two thing which are certain in life: you are going to die and in the meanwhile you will need to pay taxes. This old adage rings true for every person and company on earth yet it is true to varying degrees.
The Panama Papers shook the entire world to its foundation. How is it possible that people and companies could pay a small amount to taxes by just setting up phone companies and structures aided by companies such Mossack Fonseca? The data provided rare insights into how a global industry led by major banks, legal firms and asset management companies operated in the shadows to manage the money of the rich and famous. You might be wondering as a reader how this is important for information strategies in general and started yawning since taxes can be perceived as quite boring. An invitation is extended to you to hold on.
The above mentioned further awakened the politicians and the general public about the practice of big multinational companies not paying their fair share of taxes. The OECD for example started with the projects BEPS, base erosion profit shifting, which aimed at targeting these shady companies and structures. Despite all this efforts internet companies have an effective tax rate of 9.5% in Europe whereas for the other companies this numbers rises to 22%.
The discrepancy in tax rates is due to the fact that the system is adept at taxing companies with a physical location and companies such as Facebook and Google do not have this all the European countries. Yet, they do have a large user base in all the countries. This is why a proposal, by the European Committee, of taxing 3% of these companies’ revenue is on the table at the moment. Another proposal is taxing the user value creation. Users on Facebook for example create value when they like something because that generated data for this company. The challenge with this latter proposal is that companies such as Netflix and Amazon would no be hit by these taxes.
In my opinion it is in our nature to avoid paying taxes or at least more than our fair share. Taxes are partly used as an instrument to create equality. The peculiar thing is that everyone want more equality but at the same time wants to generate more wealth for themselves. From that point of view you will always have the cat and mouse game where the legislator is trying to tax these companies and conversely these companies are trying to come up with ways to avoid these legislation. Consequently, it is imperative that these companies have a clear understanding of their information strategy and digital business models in order to explain it clearly to legislators. Otherwise they may end up in a situation that they are unfairly taxed because the European countries do not understand exactly what it is that these internet companies do. Considering the turmoil in Italy you may get a situation where the Italy might proclaimed that they are going to overspend and get Facebook, Google etc to pay for it!
https://panamapapers.sueddeutsche.de/articles/56febff0a1bb8d3c3495adf4/
http://www.oecd.org/tax/beps/
https://fd.nl/economie-politiek/1273312/tang-verdubbel-de-ambities-voor-de-europese-digitale-taks-voor-facebook-en-google
https://fd.nl/economie-politiek/1275003/moody-s-verlaagt-italiaanse-rating-tot-net-boven-rommelstatus
