Taxing times for the internet icons
Taxing times for the internet icons
Social media giants and major tech enterprises are coming under fire from multiple sides as governments are managing to collect their dues, and business partners and users are decrying the unregulated and oftentimes harmful content.
Last week, Google has been accused of manipulating users to track their activities in the Czech Republic, Greece, the Netherlands, Norway, Poland, Slovenia, and Sweden. AFP reported that seven European consumer groups filed complaints against Google with national regulators, accusing it of covertly tracking users’ movements in violation of EU data protection regulations.
The complaints stated that Google used “deceptive design and misleading information, which results in users accepting to be constantly tracked.”
Council official Gro Mette Moen charged, “Google uses extremely detailed and comprehensive personal data without an appropriate judicial basis, and the data is acquired by means of manipulative techniques.”
Social media contains risks
Over the last years, the emergence of the Internet and social media has brought about quite the information revolution in Vietnam. Social media has become a key channel for young people to browse news. Thanks to the constantly updated functions and tools, social media has encroached into news reporting, which used to be the turf of press agencies.
Social media brought a great deal of issues. Fake news on social media elicited a great deal of public distress. Leading examples include stories about a number of luxury cars with blue license plates which imply political or police affiliation in the Mekong Delta city of Can Tho, a student’s letter to her father assigned to a far-reaching island, or the story of the 11-year-old boy killing himself for not getting a new school uniform. Information streams on social networks are heavily personalised and the selection of articles is controlled by simple algorithms, allowing distorted or straight-out fraudulent information to reach users.
“Fake news has become a global crisis. In the past, people relied on newspapers and television, which selected and verified information very carefully. Today, breaking news on social media can reach billions in a single day. This makes readers suspicious about the veracity of each claim, yet 70-80 per cent of readers fall for fake news,” said deputy general director of Vietnam News Agency Le Quoc Minh.
“People are duped into sharing fake news, contributing to the viral spread of unauthenticated or completely false news. There are even fake websites, fanpages, and accounts for official press agencies, authorities, politicians, and celebrities,” he added.
According to Minh, fake news is like a terrible disease, and social media networks like Facebook are a very accommodating environment for it.
In addition to fake news, information security is also a challenge on social networks. In early-November, private messages from 81,000 Facebook accounts were hacked to be sold. The hackers told BBC that they had details from a total of 120 million accounts, which they were attempting to sell. Facebook said its security had not been compromised and the data had probably been obtained through malicious browser extensions.
However, this is not the first time Facebook has disclosed users’ information. In last April, the corporation was shaken by a crisis as a number of user data issues were exposed. Some 87 million Facebook accounts were compromised, including 427,446 accounts from Vietnam.
Huge wave of boycotts
The Facebook data leak scandal was followed by a boycott. #DeleteFacebook was the most shared hashtag on Twitter and other social media. Even Brian Acton, co-founder of WhatsApp which Facebook acquired for $19 billion, urged his friends to delete Facebook.
Since then, numerous big advertisers and agencies have been boycotting the social network. Industry giants like ISBA, WPP, M&C Saatchi, Commerzbank, Mozilla, and Sonos decided to withdraw or considered discontinuing advertising on Facebook.
In Vietnam last year, leading enterprises like Vinamilk and Vingroup decided to pull their ads from Facebook and YouTube after they were linked to vulgar content. Similarly, Vietjet also threatened Google to cut their communications co-operation.
Also in 2017, brands like Lidl, Mars, Cadbury, Adidas, Deutsche Bank, and Hewlett-Packard flat out stopped advertising on YouTube, following a slew of other brands which suspended advertisements on YouTube after their logos or ads were showed during clips containing slanderous or anti-government content.
Authorised agencies have received official dispatches from Vietnam Airlines, Mead Johnson Nutrition Vietnam, and Vinamilk complaining that their brands appeared in clips with pornographic, slanderous or anti-government content on YouTube.
Ninh Thi Thu Huong, director of the Basic Cultural Department under the Ministry of Culture, Sports and Tourism, said that malicious information on the social networks is poisoning the souls and personality of millions and cause many types of crime. Besides, enterprises’ pulling their ads is not enough to prevent the dissemination of clips with poor content, necessitating the government to issue appropriate penalties in the Penal Code.
Giants being chased
Not only being boycotted by users and businesses, social networks like Facebook and Google have been beset by the authorities of numerous countries for tax arrears and evasion. Dozens of countries are stepping up efforts to levy new taxes on technology giants, hoping to capture revenue from digital services as economic activity increasingly goes online.
In Italy, Facebook has agreed last week to make a payment of more than €100 million ($113.17 million) to end a fiscal fraud dispute, according to thelocal.it. This will “end the disagreement relating to tax enquiries undertaken by the financial police (GdF) at the behest of the Milan prosecutor for the period 2010-2016,” the Italian tax authority said in a statement.
Italy has already drawn similar agreements from Amazon, Apple, and Google, joining EU neighbours seeking a bigger tax take from multinationals previously able to use loopholes allowing the booking of profits in countries with more favourable tax regimes. In last May, Google agreed to pay €306 million ($346.3 million) to end a dispute related primarily to 2009-2013 profits booked in Ireland.
Meanwhile, the government of the UK also announced a drastic change to the way Silicon Valley tech giants would be taxed. Businessinsider.com stated that the UK will issue a 2 per cent tax rate on the revenue tech giants make from UK users, estimating that it could raise up to £400 million ($510 million) a year starting from 2020.
In every country, these cross-border platforms are the real challenge for the sustainability and fairness of the national tax system. The rules have not kept pace with changing business models, and it is clearly not sustainable or fair that digital platform businesses can generate substantial value in the UK without paying tax.
According to the Wall Street Journal, inspired by European Union proposals to collect tax based on the revenue of tech companies rather than their profit, South Korea, India, and at least seven other Asia-Pacific countries are exploring new taxes. Mexico, Chile, and other Latin American countries are also contemplating new taxes aimed at boosting receipts from foreign tech firms.
Such taxes, which are separate from the corporate income tax many companies already pay, are broadly known as digital taxes and could add billions of dollars to companies’ tax bills. They seek to impose levies on digital services sold by global companies in a given country from units based outside that country. In some cases, the proposed taxes target services involving the collection of local residents’ data like targeted online advertising.
In Vietnam, the government is revising the Law on Tax Administration to strengthen solutions and co-operation between ministries and agencies to ask foreign suppliers like Facebook and Google to declare and pay contractor tax after the services supplied for Vietnamese organisations or individuals.
Additionally, the Law on Cybersecurity approved five months ago also stipulates that cross-border platforms have to establish branches or representative offices in Vietnam.
Opening official branches would mean that the two giants’ operations will be under the Vietnamese authorities’ supervision and will have to comply with Vietnamese regulations, such as paying taxes to the Vietnamese government via domestic bank accounts.
Telling VIR about Vietnam’s tightening management of tech giants, lawyer Lai Ngoc Thanh from Basico Law Firm said, “These policies, along with the co-operation with other countries to jointly deal with tax issues, creating one global taxation platform, are expected to be strong enough for Vietnamese authorities to manage and supervise these cross-border giants, developing an equal and transparent business climate as well as reducing acts of fraud, tax evasion, and their negative impacts on socio-economic development.”
