Denmark Blocks Firms Reg. in Tax Havens from Aid - Printable Version
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Denmark Blocks Firms Reg. in Tax Havens from Aid - ChicagoCard - 04-22-2020
Has this been discussed here? Curious what people think...
https://www.nytimes.com/reuters/2020/04/20/world/europe/20reuters-health-coronavirus-denmark.html
RE: Denmark Blocks Firms Reg. in Tax Havens from Aid - OutsiderFan - 04-22-2020
(04-22-2020, 04:40 AM)ChicagoCard Wrote: Has this been discussed here? Curious what people think...
https://www.nytimes.com/reuters/2020/04/20/world/europe/20reuters-health-coronavirus-denmark.html
YES! F U.S. companies who moved their HQ out of the U.S. to avoid paying taxes, with a 10 ft pole! Bravo, Denmark!
RE: Denmark Blocks Firms Reg. in Tax Havens from Aid - Leftcoast - 04-22-2020
I get the sentiment but it’s not that easy.
Most international companies have a HIGHLY evolved structure matching wholly owned corporations with their needs. Doing business with a US registered company probably means there were other companies along the supply chain - Each with finely tuned inter-company pricing.
How does this work? Let’s say a certain nameless company I hypothetically know has a China manufacturing entity, Cayman Islands entity, US Entity (their HQ) and European entity. IP/Patents might be “owned” in Cayman Islands to justify their role. Product is made by the China entity and sold to the Cayman Islands at a small profit (nothing to tax there and China never sees the true sale price!). A much larger profit is taken in the Cayman’s justified by the patents/IP which are arguably the true value. Cayman Islands sells to regional operating companies in US and Europe. Transfer cost is determined by the amount of money needed in-country for operating costs (salaries, etc), other needs, and so on.
You never exposed cost and end sales price to the same tax authorities along the way and all books match. Plus every customer does business with a local entity. Where you are incorporated at geographically barely matters.
This is a simple structure for illustration purposes. Actual tax strategy at most bigger companies I’ve worked for have at least three other shell companies thrown in and all of it carefully thought through to hide actual margins from tax authorities but in a legally defendable manner.
Hypothetically speaking of course.
One flaw in this strategy comes with large and unforeseen business emergencies - like what is happening NOW (or in 1999, or 2008) A company suddenly needs cash locally but money is in the wrong entities. Expect requests for repatriation (tax free transfers from off-shore companies) any day now if they haven’t already been approved.
RE: Denmark Blocks Firms Reg. in Tax Havens from Aid - BostonCard - 04-22-2020
The original coronavirus bill had language that required companies receiving bailouts to be headquartered in the US and have a majority of employees in the US. This pointedly left cruise ship companies ineligible.
You can't see me right now, but I am playing the world's smallest violin.
BC