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Hewlett-Packard's Take On Global Taxes
by William New
U.S. companies that have operations in overseas markets are at a disadvantage under current U.S. tax laws that should be repealed, a senior Hewlett-Packard executive told a Senate panel on Tuesday. The panel is reviewing U.S. law on international taxation for changes in response to a World Trade Organization ruling that current law represents an unfair export subsidy.
Daniel Kostenbauder, vice president for transaction taxes at HP, testified to the Senate Finance Committee that his company follows the model of its foreign competitors in centralizing sales activities within regional hubs. U.S. law taxes income earned outside the country where the hub is located, he said, and that places "major constraints" on U.S.-based companies to operate overseas because foreign competitors do not face the same taxes.
Kostenbauder also called for an increase from five to 10 years in the right to claim the foreign tax credit in order to ensure that U.S. companies are protected from double taxation. And he said the company supports a bill to give a tax break to U.S.-based companies that invest in the United States profits that their overseas branches earn.
Kostenbauder also said that doing business internationally is essential to the company's competitiveness. "It would be impossible for HP to succeed in the United States if we could not compete successfully outside of the United States," he said, citing three reasons in prepared remarks. First, many of the company's customers are international. Second, it is necessary to fund critical research and development by spreading the costs over the maximum number of units worldwide. And third, many products need to be manufactured close to their markets.
European Union Prepares Network Policy
With a new directive on electronic communications networks and services to take effect July 25, European Commission officials planned a workshop this week to tell authorities in European Union nations about preparations to increase EU oversight of national regulatory regimes on telecommunications. The new framework gives the commission, the EU regulatory arm, powers to oversee national rules by way of consultation designed to ensure regulatory openness.
"The new consultation proceedings take the best of both competition law and sector-specific legislation," Mario Monti, the EU competition commissioner, and Erkki Liikanen, the information society commissioner, said in a Monday statement. "National regulators will apply the resulting principles in a coherent manner aimed at stimulating growth and development of a wide variety of electronic communications."
The directive was adopted March 7, 2002, with the primary aim of introducing a "lighter but comprehensive and technology-neutral framework based on competition-law principles," the commission said. It streamlines the entire regulatory process, and defines when operators have significant market power and are dominant in their markets. The rule also accounts for the convergence of telecommunications, information technology and media.
Information Society Meeting Begins In Paris
Governments, non-governmental organizations and private-sector groups are meeting this week in Paris to begin work on documents related to the World Summit on the Information Society (WSIS). That global event will occur in Geneva in December, with a second meeting in Tunis, Tunisia, in November 2004.
The Transnational Radical Party (TRP) on Tuesday submitted recommendations for this week's "inter-sessional" meeting, which lasts through Friday. The party said the delegates must develop a common vision and understanding, beginning with finding a way to reduce the large number of submissions from stakeholders in the information society and the size of WSIS procedural texts.
The TRP suggested several key issues to focus on, including the implementation of rules to prevent the "systematic restriction" of new technologies, the removal of barriers to a free and open Internet, and a clear distinction between forms of online political demonstrations and violent actions intended to cause harm.
The group also recommended legal recognition of every citizen's right to access online the events of their public officials and institutions, as well as to obtain online copies of public documents.
An Eye Toward The 'Digital Divide'
U.N. Secretary-General Kofi Annan said on Tuesday that the current global "digital divide" involving access to and knowledge of technology "threatens to exacerbate the already wide gap between rich and poor, within and among countries."
Annan welcomed a Tuesday resolution by the 53-nation African Union calling on world leaders to participate in the December WSIS. He urged officials to use the U.N.-led summit to "forge an action plan that will put technology at the service of human development."
In other news, officials are planning a Jan. 12-14 conference in Cape Town, South Africa, to discuss the idea of a "digital commons" focused on the use of "open source" software, which allows anyone to alter the underlying code. The event is expected to include a "hackathon." Its sponsors include the Free Software and Open Source Foundation for Africa, the African Virtual Open Initiatives and Resources project at the University of the Western Cape, and the U.N. Economic Commission for Africa.
Global Leaders To Gab In Georgia
The United States will host the 30th summit of the Group of Eight wealthiest countries in the world in Sea Island, Ga., on June 8-10, 2004, the White House announced on Tuesday.
Sea Island is located on the southernmost portion of the Georgia coastline, near the city of Savannah. The summit is the annual meeting of the leaders of the United States, Britain, Canada, France, Germany, Italy, Japan and Russia. European Union officials also attend the meeting.
U.S. Businesses Travel To Southeast Asia
A delegation organized by the U.S.-ASEAN Business Council, a group that represents U.S. businesses doing business in Southeast Asia, is in Thailand this week meeting with senior government officials and private-sector representatives.
The objective of the trip is to address issues raised during the Thai prime minister's June visit to the United States, including progress on the framework for economic cooperation between Thailand and the United States, and to explore new business opportunities, the council said.
Business priorities in Thailand include discussing a trade agreement, protecting intellectual property rights, modernizing customs procedures and deregulating the telecommunications market, the group said. Companies that sent officials on the trip include AOL Time Warner, Citibank, FedEx, General Electric and United Parcel Service.
The Price Of Intellectual Property
Malaysia may face a challenge from the United States at the World Trade Organization for setting price ranges for software and movie and music discs, CNET Asia reports. The report, which originated in The Straits Times, a Singapore daily, said the United States is looking into whether the price controls might violate WTO rules.
Malaysia last month announced plans to place software, compact discs, digital videodiscs and video CDs under the same price regulations as food and essential items, such as oil, rice and sugar. The aim is to curb high levels of piracy, for which the government has been criticized.
But technology companies and groups such as Microsoft, the Business Software Alliance and the Recording Industry Association of Malaysia oppose price controls as a way to reduce piracy. The groups will meet with government officials on alternatives.
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