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In the current discussion about fees and taxes for import and export of goods to and from the US I have a question about internet services (as kind of virtual goods):

Is it possible that the US raises a fee or taxes for using US based internet services for people not living in the US?

Then there's no more free service1 available for all customers, only for people from the US. People from all other countries would have to pay, when accessing services, data and websites that are hosted in the US or are offered by US companies. Now there are companies, that also operate in other parts of the world and have branches in different locations - maybe that does make a difference. Also a lot of internet based services are available only from US companies with no real competition from other regions of the world – like Google or Stack Exchange.

Or could it be the other way around:
People from the US must pay extra fees to access services provided by other countries, in order to make them more expensive and "to protect" local companies?


Is this something that could be possible – politically and legally2, besides all headwind that this will get from the community?3


1 I know that these companies do have models to create revenue through other things, like data collection, advertising etc., which might decrease in short term but not in the long run.

2 Hopefully not.

3 Hopefully.

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    Hello. I'm fairly new to this community (long time reader, first time asker). Hopefully this is a question that is suitable here. – someone.else.2020 Jun 12 '18 at 8:02
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    It's the other way around. The US would have no interest in forbidding the export of a product which is bringing revenue from foreign markets. It's usually the role of other markets to increase or decrease taxes (for it's own consumers) of products from its trading partners. If things proceed as they are now you can probably expect other big economies to make it more difficult for US based digital providers to operate on foreign ground. China has already done it. The EU will probably react if one of its big industries are affected (auto for example). – armatita Jun 12 '18 at 11:18
  • That sounds reasonable and like an actual answer that you could add. Somehow I think the EU wouldn't have a strong standing, as people heavily use US products here, like Google or Twitter etc., where there's no "local" competition. @armatita – someone.else.2020 Jun 12 '18 at 11:53
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    @someone.else.2020 Actually, the people in Europe are using the Irish subsideries of Google and Twitter. If you go to the Twitter imprint page from an European IP, you will get a post address in Dublin. All the tech companies already have Irish subsideries for tax reasons and to comply with EU data protection laws. – Philipp Jun 12 '18 at 11:56
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    @someone.else.2020 I usually like to provide good sources and examples in my answers. Something that requires significant time. Thus I've added it as a comment. And yes, Google is immense in the EU, but never assume that if there was a void, there would be no one there to fill it. Google, by leaving its EU market, would only be prompting the rise of one or more new global players (competition). The consumers are there, the technology is there, how much time do you think it would take for someone to occupy their place? Nokia, Yahoo!, Fiat, MySpace, SEGA: there are no intemporal in free markets. – armatita Jun 12 '18 at 12:44
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I do not understand the references to punitive duties (at least from the USA), as the use of these services seems more related to exports than to imports (I get a service from the USA, an USA company gets money -even if it is because advertising-, the USA company pays taxes in the USA1).

Anyway, the USA can enact a law asking me to pay for using Google. FWIW, it can enact a law asking me to pay a zillion US$ because of my methane production activities.

Of course, I might refuse to pay. Then the USA can try to seize my assets in USA jurisdiction (they can have them all, as I have none). Then they may ask local law enforcement to make me pay (fat chance!). After that fails, it can threaten to sanction my country or companies that work with me as additional presure methods. And I may get in trouble if I ever want to visit the USA (not planning to do at least in the next two years, so I'll take the chance).

A more intelligent and common approach would be taxing USA companies (let's say Google) for each non-USA customer they have. This will probably force Google to pass that cost on me, or to forbid me from using its services.

And then Google's parent company, Alphabet, can setup a new company WorldGoogle that offers non USA (or even USA) citizens the same services. Since the company will be incorporated elsewhere, it no longer is "a USA Company" and does not need to pay taxes to the USA (although Alphabet will have to pay the taxes on the benefits it gets from WorldGoogle).

Or I can end using an alternative solution built by a non-USA company, so the profit that company gets will never get to be taxed by the USA government. And that company will pay its workers outside the USA (so they will not be paying taxes to the USA, either).

UPDATE: A brief recapitulation of the points against it:

  • The activity is more like exports than imports. Governments want to encourage exports, not to limit them.

  • Directly taxing the users is going to be unenforceable for 99.999% of them.

  • Taxing the companies is complicated; international companies have lots of ways to avoid regulations, and tech companies excel at it. Governments have leverage only if they can act over their income ("Google does not comply with local laws -> I cut access to Google service -> no income for Google").

  • It helps foreign companies (see first point) to compete with local ones.


1There is some answer in the site about how international companies -specially tech companies- often benefit from "jurisdiction shopping" to avoid paying corporate taxes at their home and operation countries, but that is besides this answer.

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