Some additional elements on the issue

I start this post with a couple of questions: when did you use a mechanical writing machine for the last time? When was the last time you saw someone taking notes in shorthand?

Since a couple of years ago, one of the leading companies in the sector manufactured its last typewriter, intending to donate it to the United Kingdom Science Museum, it won’t cost you to imagine that they have changed very little in the first 80 years of the last century, period in which probably the most important innovations were the “typing ball” on IBM Selectric machines and the characters correction mechanisms. In some offices, there is still some machine, usually on an empty desktop, used to fill out paper forms. They still have some application in places where the law has not changed and are required to copy something in carbon paper and, surprisingly perhaps, in some prisons, for the inmates.

The spread of computers and the internet connectivity not only has condemned some products; they have also brought the status of “endangered species” to some trades and professions. One of them, that of the stenographers. Precisely for this reason some people, perhaps the youngest, will answer to the second question of the beginning of this post with another question: What is shorthand?

At the same time, other professions, other skills, other opportunities appear. At the time of the Selectric we could not even dream of topics such as ITIL libraries nor was anyone requested to know the IFRS; social network specialists were not sought or data scientists and “user experience” was not yet a concept, to the point that if someone read the expression he probably thought it referred to a user with experience. Today there are not only new professions, but that, as Kirk Douglas Garcia wrote in a previous post comment of this series, in some sectors not only the user experience has changed dramatically, but the respective value chains have also changed, with new elements, new actors, new business models and new ways to monetize the information.

A bit of patience. Imagine the following business model. One of the actors is a company offering services of streaming (1)located in country A. This company does not have any hardware and has contracts for hosting and storage systems with service providers in a country B, which has data centers in countries C and D. At other end, there are the viewers, by hundreds, or perhaps thousands, simultaneously in countries ranging from A to Z. The third actor, are people of all genders and preferences, who engage in a new activity: to be camera models. These models are alone, in pairs or in groups; they keep “showrooms” to “entertain” “attendees” running activities with cameras installed in their homes, studios and rooms of residence in countries that go from Z to A, performing acts that would blush even to the most assiduous female readers of some novel starting with the number 50, if and only if, the “audience” “donate” altogether the amount of tokens requested by the model. It is something like a theater in which the audience pays, together, the amount claimed by the actors and actresses, in which all agree that if the minimum amount required is not reached, there is no show. Those tokens are a kind of currency, valid within the ecosystem, and can be purchased in packages through transactions that use different means of payment, including credit cards, money orders, and crypto-currencies. In the majority of cases, the company only provides or pretends to only provide the platform service and applications to interact within the ecosystem and acts as an intermediary, while the agreements take place directly between the “attendees” and the “models”.

This is not the result of the twisted mind of your favorite blogger. Apart from the fact that the description use expressions that surely could be considered, between quotes, as “euphemisms”, this is a reasonable illustration of a current and real business. A brief search on the Internet tells us that a camera model can be making an average income ranging from a couple hundred to a few thousand dollars… a week, according to the dedication and “commitment”.

I conclude this post with more questions, with a prior consideration.

First. The company that is in country A, could be incorporated in a jurisdiction with low or null taxation and surely does not have any physical presence in countries from A to Z where are their two types of clients “attendees” and “models”. What are the tax consequences in your jurisdiction for the different agents involved – the company that provides the service of streaming, the company that provides the service of hosting, the resident “attendees”, the non-resident “attendees”, the resident “models”, the non-resident “models” ? How do we apply (or how should apply) here the concepts of source and residence, in the case of direct taxes? And how do we apply the concepts of origin or destination, in the case of indirect taxes such as VAT?

Second. How would the tax administration enforce them?

If your answer is that it doesn’t matter, because it is a small market, perhaps it is worth remembering that a company that provides a service similar to taxi transport is valued at more than 40 billion, and operates in many cities, according to its Web site, including 10 cities in Central and South America. Another company that is dedicated to the service of video streaming of movies and TV series for a monthly flat-rate has millions of subscribers in many countries. And, perhaps even more interesting, according to press reports(2),  30 million users of the service are located in countries where the service is not available, so in turn they use other services to hide their geographical location or simulate being in another location. What do you do?

Good luck.

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