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> the "evasion" in question is the US government trying to grab taxes on money paid to a company by foreign nationals in a foreign market It's not just this, I

> the "evasion" in question is the US government trying to grab taxes on money paid to a company by foreign nationals in a foreign market It's not just this, It's also evasion of taxes that could've been paid in these countries. (Could've, because what they're doing is legal, so they have no obligation to.) What they do, is most easily explained with the Starbucks example: Starbucks has one subsidiary, based in the Netherlands, that holds the rights to sell coffee with the name 'Frappuccino'. All Starbucks stores are owned by another subsidiary. Whenever a store sells a 'Frappuccino', they pay a $1 royalty on that name. Because royalties aren't taxed in the Netherlands, this $1 is pure profit. This is from memory, so It's probably not completely right, but in the end they really do evade foreign taxes, not just a double tax in the US.

fixermark 8y ago
Correct. And they do so by working within the cross-national legal frameworks, and the Netherlands lets them get away with this because they want (to torture the analogy) the Starbucks subsidiary to be doing business at all in their country, and they fear if they started taxing name royalties Starbucks would pack up and leave, taking their franchise rights and the jobs they bring with them. ... and that's before we even touch on the ethical framework around which anybody gets to charge any taxes at all on "right to a name;" the companies we're talking about are already paying sales tax, real estate tax for land, payroll taxes, etc., etc., etc. ... it comes back to the ethics and morality of "Can you tax intangible goods" in the first place, and that's where things get really exciting. For what is the value of a piece of software, and how do you measure it? ;)