How do we make the tech giants pay their fair share of tax?

By Verónica Grondona for www.IrishBroadLeft.com

Examples of massive corporate tax avoidance by multinational technology giants active in the digital economy have been widely covered in the media, prompting outrage among people across the world.

So how do they get away with it? Google, Facebook, Amazon and Uber are all large enough companies for tax authorities to notice them. They are digital, but their activities in the countries we live in are not invisible. We can see their advertising, or we even buy goods or services through them, and we clearly see that they are using our data.

However, for tax authorities, it is not that easy to legally “see” them because most legislation and tax treaties involving EU states say that tax authorities can only tax a “taxable presence”, a tax resident, or a permanent establishment (PE) with physical presence in a country – and we all know that one thing these companies need not have in order to operate in our countries is a physical presence.

This has resulted in different court cases around the world with different, even contradictory results.

To name just a couple of them: In July 2017, France’s “Google Tax” was ruled illegal by a Paris court. The tax authority was not allowed to assume a PE of Google Ireland in France. On the other hand, in June 2018, the United States Supreme Court decided the case of South Dakota vs Wayfair, Inc., ruling that “a business does not need a physical presence in a State to meet the requirements of due process which call for some definite link, some minimum connection, between a state and the person, property or transactions it seeks to tax.”

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