Tax and tech are not usually comfortable partners.
Large web companies dislike conversations about corporation tax and about how they declare income in different territories. In fact they don’t much like speaking about their tax affairs at all.
Back in September Apple CEO Tim Cook responded with fury when the EU imposed a $13bn back taxes bill over its tax set up with the Republic of Ireland, branding the move ‘political crap.’
According to a report ratings agency Moody’s calculates five giant tech companies have parked $600bn overseas amid complex tax arrangements. However with the EU and other countries now seeking a bigger piece of the tax they say is due this could push the tech giants to move that money back to their home market and deal with the US IRS.
Meanwhile back on stateside Silicon Valley and IBM are courting president elect Donald Trump.
IBM CEO Ginni Rometty declared support for Trump’s planned tax reform saying the US suffered from a punitive tax regime which stopped US companies bringing billions of dollars home and declaring them for tax. In a wide ranging open letter to the President elect the IBM CEO offered suggestions on waste, investment and jobs.
IBM CEO Ginni Rometty
Yves Gassot, CEO of Idate, speaking at the Digiworld conference in France this week, said: “GAFA, and US multinationals in general, with their hundreds of billions of dollars in profits generated internationally, have been waiting for a tax amnesty for years, to come back to the US. Trump has said he would lighten these companies’ tax burden if they were to return, like Bush Junior did back in the day. The idea would be to pour a portion of these sums into public-private investment schemes for the 1,000 billion USD infrastructure project (roads, hospitals, schools, etc.) promised during the campaign. It remains to be seen what percentage will go to telecoms, and what type of public-private scheme they might be offered.”
Among Trump’s plans are a corporation tax of 15%, down 20% from today’s 35% and a 10% tax on money that is earned internationally by US corporations and repatriated to the US.
Taking advantage of these more favourable tax policies could cause difficulties especially for consumer tech brands but also for B2B silicon valley companies which view themselves as liberally progressive.
But one thing we do know is that one doesn’t get to decide how one’s taxes are spent.
Tim Cook calls for unity after election result.
