A $2B tax claim on Vodafone India Group PLc on its $11B offshore deal of acquiring Hutchison Essar Ltd. But the international arbitration tribunal gave its decision in favor of Vodafone. Now, the Indian government is trying to exercise the fact that it has the ‘sovereign right to tax’ and the ruling is ‘unacceptable.’
Or else, the world might be on the brink of a Trade War 🏴 and the global economy could shed almost 1% 📉 of the total output (more than a trillion dollars, at current levels). So what are these rules?
A 2 pillar tax proposal 🏛️ has been set up by the OECD aka Organization for Economic Cooperation and Development. The first one talks about establishing new rules on where the tax should be paid (‘nexus’ rules) – keeping in mind the presence of tax havens and low tax jurisdictions like Ireland. The second one proposes a global minimum tax rate. This can increase global corporate income tax worldwide by 1.9% to 3.2%, or about $50B to $80B per year. That could reach $100B when including an existing U.S. minimum tax on overseas profits.
There’s a pressure to tax ❗ the global digital economy. But there’s a total absence of any international rulebook. Currently, every country is on its separate way, finding ways to impose taxes on giants like Google, Facebook, Apple, Amazon…(the list is pretty long). The only alternative to finding an agreement might be a trade war. This is the last thing you want to add up to the COVID crisis. And the Trump administration of the USA is going to be the epicenter of all of this.
Let’s wait and watch how the talks proceed further….
Don’t Forget the EU vs the USA 🤔 Remember the trade dispute and the Boeing case where the USA began imposing tariffs on $7.5B in EU goods over state aid for Airbus, ✈️ which has sites in Britain, France, Germany, and Spain. The European Union just won the right to impose retaliatory taxes worth $4B on imports of airplanes, wine, spirits, suitcases, tractors, frozen fish, produce from dried onions to cherries, and whatnot. Combined, these cases represent the largest ever trade dispute.
……or will the governments go – 💣KABOOM!!
Foxconn is the largest electronic goods manufacturer in the world. But it leans majorly on iPhones for its business. It has a major factory in China manufacturing Apple products. And recently Apple announced a $900M pump to the Indian manufacturing unit. But what went wrong 🧐 with the plant in Wisconsin, USA?
In 2017, the giant had promised to invest $10B 💰 and get 13k jobs in the manufacturing unit in Wisconsin to get local tax incentives worth $4B. But currently, it emplys a sheer 281 people. Instead of building a Generation 10.5 plant, it has built a Generation 6.0 plant – which means they down-scaled their factory. Moreover, the promise was to produce size display screen. But all they are making now is smaller, thin-film transistor liquid crystal display screens for mobile phones and other devices
The Wisconsin authorities are cancelling out any tax subsidy applications – leveraging that they have already spent a billion dollars to support Foxconn’s endeavour. And of course the list of broken commitments.💔
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Cracking down on emissions, eh? It already taxes a maximum of 20,000 euros on CO2 emissions. And it now plans to take it to the next level i.e. 50,000 euros! This roughly amounts to 59,000 dollars.
Cars emitting more than 225 grams of carbon dioxide per kilometer will be taxed a maximum rate of 40,000 euros next year and 50,000 euros in 2022. The levy is capped at half the cost of a vehicle.
Bad news for supercars, luxury and exclusive vehicles, and a show stopper for foreign imported cars. Governments across the globe want to get rid of the internal-combustion engine. California to ban them by 2035. China announced a $30B plan to boost the eclectic vehicle industry. Europe, has committed to reduce emission levels by 55% by 2030. And the countries are dead set to achieve that target.
Lamborghini’s Urus and Aventador; Ferrari’s Portofino and 812; Porsche’s 718 Spyder and 911; Rolls-Royce’s Ghost and Cullinan; Bentley’s Flying Spur and Mercedes’s AMG and G-Class are few of the cars subject to full tax – some the most desired cars out there!
Yes, taxes did exist in the ancient civilizations of the world. And these codes leveraged enough power. 💪
The Rosetta stone tells us the story of the entire Egyptian civilization through the tax codes written on it. Its purpose was to secure tax-exempt status for temples. What is taxed, and how much is it taxed, tells us what the rulers valued. What was exempt tells us who had the political pull to be excluded.
Let’s go baaaaaack in time. The era of Alexander the Great. After he died, his kingdom was split in two. Egypt went to Ptolemy I. His successor Plotemy V faced major civil wars for imposing insanely huge taxes. What did it lead to? A failed state and prisons so crowded that villages were empty. But Ptolemy had to give in and peace was restored.
What followed? Ptolemy granted the Egyptian temples tax-exempt status. This was a particularly smart move. The temples hadn’t had tax-exempt status since the time of the Pharaohs, a status taken from them when the Assyrians conquered Egypt some five hundred years before the Rosetta Stone was carved. It was a point of pride on the part of priests to get it back and the key to re-establishing peace.
To ensure tax collectors honored the temples’ new tax-exempt status, the priests put up a massive black slab of basalt, a stele that celebrated the king’s wisdom in giving the temples such wonderful tax benefits. What’s left of that stele is what we call the Rosetta Stone. Its impressive presence essentially told prospective tax collectors: “Just so you know, we know the king said we don’t have to pay taxes, so don’t try anything.” An accompanying statue of the king added further authority; it was a setup temples probably repeated throughout the kingdom.
Well, we didn’t leave the stone unturned.