⚔️ Clash of Billionaires

by Yash Gohel

Hey,


What can pay for 7,29,010 nurses, 7,70,649 midwives, or 8,79,899 primary school teachers in 20 countries and also provide for 1.7 million nurses across the globe? A sum of $2.8B!


ActionAid is an NGO working for child rights, women’s rights, and emergency response. On 26th October, it released a report in big bold headlines: “$2.8bn ‘tax gap’ reveals the tip of the iceberg of ‘Big Tech’s big tax bill’ in the global south.” By Big Tech, they referred to 3 giants- Alphabet, Facebook, and Microsoft.


⚔️ Clash of Billionaires



$3.4B- The value of the deal struck by Reliance with Future Group in August. But the click? Last year Amazon had indirectly bought a 3.6% stake in Future Retails by acquiring a 49% stake in Future Coupons. And Future’s sale of its retail, wholesale, logistics, and warehousing businesses to Reliance breached its pre-existing contract. The contract included that the sale of the business to rivals (like Reliance) is barred. Amazon sent a legal notice to Future group and India’s antitrust watchdog, the Competition Commission of India (CCI) jumped into action.


$5.0B- Amount Reliance Retail has raised by marquee investors. Reliance is already India’s biggest offline retailer with more than 11k stores and revenues of $18.5B. And it is on its journey to become the digital giant of India and usurp the thrones of Amazon and Walmart-owned-Flipkart which control 70% of the e-commerce market in India. And if the Future deal goes through, Ambani will control 40% of India’s formal grocery market. Why should a foreign company dominate when we have our homegrown giants!


$86B- The estimated size of India’s e-commerce market by 2024. Amazon is pretty bummed for 2 major reasons. First, shutting down its online store in China last year. It is now looking at India as the largest e-commerce market the world has to offer. Two, India’s new law where foreign companies are not allowed to keep their ‘own’ inventory. They can only operate as online ‘marketplaces’ connecting sellers to buyers. This is a new law, introduced after Walmart’s $16B acquisition of Flipkart. And this explains why Amazon bought a stake in Future Group, Shoppers Stop, grocery chain More, and Aditya Birla Group. Moreover, the Vodafone Tax Row of $2B related to an acquisition of a local operator(Hutch) is still unsettled. We do not want history to repeat itself. India needs a strong policy framework for the treatment of foreign investors.


Although the battle is stooped in favor of Amazon, Reliance is not ready to fold-in. The SIAC (Singapore International Arbitration Centre) has issued an emergency order to restrain the deal from going any further. But the SIAC cannot be enforced in India. It is truly a battle of billionaires to dominate India’s e-commerce market.


💲 And now, it’s Crypto


Here is think tank OECD’s (The Organization for Economic Cooperation and Development) attempt to crack down on tax avoidance and regulate billions and billions in crypto-assets globally.


Highly inconsistent treatment of crypto across countries – it is majorly treated as a “financial instrument or asset” followed by a “virtual commodity.” In countries like Belgium, Poland, and Italy, it’s even found a way to become a mode of currency. Japan treats it as a “legal payment method” while in Austria, China, Canada, and Indonesia, it’s a “commodity.” And hence, a standard guardrail is important for clarifying the local treatment and international exchanges of crypto.


Interest from the G20 tax authorities cannot be overlooked, especially following the launch of Facebook’s cryptocurrency ‘Libra’ in 2019… By the way, the G20 is an international forum for the finance ministers and central bank governors from 19 countries plus the European Union. Also, companies like PayPal could face a much higher tax burden, considering in the mind – the additional attempt to create an international rulebook by OECD to tax the digital giants of the world.


OECD is trying to build a solid standardized tax-framework. And the decisions might hit a lot of digital and financial service multinationals out there.


🎃 Trick, Treat, or Tax? – Crazy Tax Story



Question: What happened when the Iowa Department of Revenue officials tried to tax pumpkins?


Yes, the government at all levels seems to get cash-strapped sometimes. But these proposed rules make you wonder if the lawmakers just have too much time on their hands. Take Iowa’s attempt to pass a pumpkin tax in 2007.


The Revenue Department made a discovery! Around 750 million pumpkins were carved into Jack-O-Lanterns every year during Halloween. So, someone from the department drew up a notice. It was circulated to the retailers across the state, instructing the: You cannot simply sell a pumpkin. You must first put on your detective caps and find out the true intent of the purchaser. Will this pumpkin be food? If so, no problem. But if the orange ball will become a decoration…trrrrng! Tax that buyer.


Iowa is not alone! New Jersey and Pennsylvania are part of the same gang. But Tennessee took it to another level! A visit to a Pumpkin patch to search for Jack-o-Lanterns was considered an amusement and was taxed. Turn those pumpkins into pie or bread and taxability gets even more complex. Cooked food made entirely from the farm’s produce or agricultural products is exempt if the charges are separately stated on receipts from taxable charges for amusement. Yet if the cooked or prepared food contains “any non-raised components or ingredients other than water, sugar, salt, pectin, or preservatives,” the charge is subject to state and local sales tax.


The lawmakers of IOWA were ridiculed for their idea. They dropped the efforts and rescinded the tax a few days later.


Answer: They got squashed!


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