South Korea wants to tax global companies like Apple and Google It's getting harder for global companies like Amazon, Apple and Google to avoid paying tax around the world as more countries move to change their permissive corporate tax laws. Now, the South Korean government is looking at ways to collect taxes from foreign companies in the wake of domestic complaints about the practice. (Engadget)
Seems like there are two counter trends in world trades and taxation: 1. The race to the bottom. All countries are reducing corporate tax on their home companies in order to keep them there instead of them escaping to set up shop in the Caribbeans where they pay no corporate taxes, or to countries like Ireland... If this continues, then corporate taxes will all go to zero one of these days. 2. Trying to figure how to tax companies headquarter elsewhere. Here it gets tricky due to things like transfer pricing by companies. I think the mentality also has something to do with protection of domestic companies. If I tax the global profits of a foreign company, perhaps the tax can be set so onerous the foreign companies will find it not profitable to sell there, thus satisfies the protective effect against foreign competitions. This is a very interesting economics and political discussion. The end effect could be: Whose Ox is gored (taxed)? Someone else's? Perhaps some of you economists and finance types can help explain the fallacy of this type of thinking?