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FB is playing the game that corporations play all over the world - global tax arbitrage. They shift operations, losses and profits to different countries based
by inthewoods 11y ago
FB is playing the game that corporations play all over the world - global tax arbitrage. They shift operations, losses and profits to different countries based on tax policy.
The similar thing happens here in the US at the State level. It isn't uncommon for large companies to pack up and move their operations to lower tax States, or to actually bargain with individual States over who will give them the best deal. Here in Massachusetts, Fidelity packed up and left for North Carolina and Texas - they found it was cheaper to move employees than pay the taxes.
This will likely continue as long as different countries (and States) have different tax schemes - and that isn't going away anytime soon.
Soon we'll probably have a renewed call for a lower tax rate here in the US for companies to repatriate those revenues.
- ptaipale 11y agoTax policy, but not just tax policy. Companies also place their operations based on cost (total operating cost, including logistics costs and whatever). For instance, it is not a surprise that so many computers and smartphones are made in China.
- inthewoods 11y agoCompletely agree - but if you look at these global companies, many just locate their headquarters in tax-free zones while not having a substantial amount of employees, or engage in tax avoidance strategies like the Double Irish. But you're right - it's not typically only for tax reasons.
- ptaipale 11y agoAnother reason is that tax havens (such as Cayman Islands, or within EU also Luxembourg or London) often have substantial amounts of financial services - lawyers and other experts are available. So, for the logistics of running headquarter functions, it's not necessarily that taxes are low, it's also that there's available expertise for operation.