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Billion Dollar Companies

After New Jersey, Airbnb and Uber to Face New Tax Rules in Spain

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Airbnb

Airbnb and Uber, along with other digital services websites, will be required to pay a 3% tax as per the Spanish Finance Ministry’s new tax rules.

These digital companies are responsible for opening new doors for businesses and investors alike. However, until now, innovative startups such as Just Eat have reaped benefits due to the lack of regulation for digital platforms.

María Jesús Montero, Finance Minister from the Spanish Socialist Workers’ Party, said:

“There are businesses we all know that are dedicated to services and are generating billions in economic activity, yet do not pay appropriate taxes, because the current tax laws do not recognize this type of activity.”

Currently, the tax applies to digital advertisement and brokerage services, and Sale of Data (SoD) websites, that earn over $3.44 million revenue in Spain and $860 million globally.

According to Spanish Newspaper El País, Airbnb published an official statement claiming that the company pays tax in every country it operates in, including Spain.

Tax Rules for Airbnb in the US

Spain isn’t the first country to create a new tax structure for online platforms. On October 1, New Jersey applied a 5% tax of “hotel occupancy fee” for Airbnb and travel website VRBO. Since the law exempted realtors from this tax, visitors can avoid this situation by getting in touch with real estate agents.

Meanwhile, Huntsville doesn’t plan on following New Jersey anytime soon. The city applies a lodging tax on Airbnb hosts and believes that it’s sufficient for the time being.

Last month in Colorado, various residents requested authorities to change the category of Airbnb rentals from residential to commercial. This would increase the tax figure from 7% to 29%. Since a lot of people rent out their properties and earn their income through the digital platform, this move would result in a loss. Some people even rent a portion of their houses and share it with strangers to make ends meet. According to Molly Weedn, Public Affairs manager of Airbnb US West:

“This proposed change could mean much of this important supplemental income would go to state coffers, rather than helping a host pay their bills.”

Thus, on October 3, it was finally revealed that Colorado had decided against implementing this tax rule.

France and UK Weigh in on the Situation

Last month, French politician, Ian Brossat, submitted a proposal which explained that Airbnb should be banned from Paris. He also raised a question regarding Airbnb’s tax activities, “Why does Airbnb pay as much tax in France as a neighborhood bakery?”

Earlier today, Financial Times reported that Her Majesty’s Revenue and Customs (HMRC) reached out to Airbnb to discuss tax regulations applied on the company. However, Airbnb’s official statement added that these are just “routine checks.” The company was previously criticized for paying only £379,075 in tax from the profits earned in 2017 and £188,000 in 2016.

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Billion Dollar Companies

Procter & Gamble Surpasses Expected Revenue Thanks to Beauty Products

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P&G

Procter & Gamble (P&G) stocks have surged by 5% since Friday morning, as reported by CNBC. P&G announced that its beauty products are responsible for driving sales and helping the company in surpassing the expected revenue in the fiscal fourth quarter of 2018.

Wall Street was expecting earnings per share (EPS) to be $1.09 and revenue to be $16.46 billion. However, P&G’s report shows an increase in both these numbers–$1.12 for the former and $16.69 for the latter.

Compared with beauty products, P&G’s fabric and home-care brands sales jumped by 2%, while grooming, health care, baby, feminine, and family care dropped by 1%, 3%, and 3% respectively.

In this year, P&G’s shares slumped by 11%; the company now has a market cap of $202 billion.

Even though P&G faces competition from other rising startups, the company is positive that the current boom in revenue will “hold up.”

On October 16, Nasdaq published a post anticipating the results from the fiscal fourth quarter. The report stated that net sales would rise by 4% due to P&G’s beauty, fabric, and healthcare products. They predicted that Q4’s sales would come from baby, feminine and family care products. However, these categories are the ones that dropped the most in the latest quarter.

P&G Has Some Fierce Competition

P&G’s biggest competitor in the grooming industry is the Dollar Shave Club, which was acquired by Unilever in 2016. In an interview with Cincinnati Business CourierJon Moeller, the chief financial officer of P&G, said that grooming and baby products were:

“the two sales growth challenges.”

He added that the company was developing and funding ideas to support Gillette. Moeller also said that the stakes were higher since competitors are now expanding their products into Europe.

An online subscription program called Gillette on Demand was also launched by the company. It offers three different packages compared to the two packages offered by the Dollar Shave Club.

Gillette has been around since the 1980s but Dollar Shave Club has managed to attract more attention due to advanced marketing tactics. Currently, P&G expects its organic sales to fall between 2% to 3%, EPS between 6% to 8% and all-in-sales growth by approximately 3% in fiscal 2018.

Meanwhile, David Taylor, P&G’s CEO, recently launched 2019’s CEO Challenge where students solve various business problems. The finals will take place in May 2019 in Dubai.

Last year’s challenge was won by a group of industrial engineering students from Saudi Arabia. These students were also offered jobs in the company. This year, the real-world business problems students will solve are based on its grooming brand Gillette.

Featured image from Shutterstock.

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