14 ms·
Activision Blizzard has moved billions of dollars of profit into tax havens
- Trias11 7y agoAs long as it is legal - tax avoidance strategies makes perfect sense. Why waste money on buying extra taxes? Tax evasion does not count of course.
- adonnjohn 7y agoI just wish they would go back to making satisfying games.
- jakear 7y agoTax management as a strategy/puzzle game would honestly be a great time.
- arkitaip 7y ago^ How you know you've become middle-aged.
- pdpi 7y agoLucas Pope has made very successful games out of being a passport control officer and an insurance agent, so I'm sure he can manage a tax optimisation game too.
- Scoundreller 7y agoI could see it now. Starbucks develops a "new brew". They fly the best coffee connoisseurs to a Liberian-flagged, Korean-built ship sailing from Saipan to Nauru, and develop a new formula there with equal parts Arabic beans and Robusta beans. They sell this new product worldwide, with marketing from a PR team domiciled in Malta, but operating in the Netherlands. Where was the value created?
- Fnoord 7y agoThey're not operating in The Netherlands. They're "operating" in The Netherlands. The "operating" refers to having a PO box. That's all they need to have a physical presence here. See RamBam episodes (in Dutch, but contain some English too): > S04E11 Nederland Belastingparadijs broadcasted 29 Apr 2015 > S05E05 Russische bedrijven in Nederland broadcasted 17 Feb 2016 [1] https://nl.wikipedia.org/wiki/Rambam_(televisieprogramma) https://nl.wikipedia.org/wiki/Rambam_(televisieprogramma)
- FireBeyond 7y agoBlizzard's programmers develop a game in the US. It's hosted on US servers. It has an in-game currency system/DLC system, also hosted in the US, and processes card transactions in the US. However, at the same time, they claim that the entity that runs the DLC purchase system is in Malta, where Blizzard has no employees, but uses an outside legal and accounting firm. They claim all the value is in Malta. I tend to disagree.
- Scoundreller 7y agoI don’t think any reasonable person disagrees. We should send tax cases to juries for decisions.
- Phanyxx 7y agoBingo! This cuts right to the heart of the issue.
- jnwatson 7y agoI knew a retired guy just like this. He had lots of investments and shares in subchapter S corps (and some influence in the distribution rate). His idea of fun was gaming out the different options he had for filing.
- Trias11 7y agoBecome non-resident for tax purposes and move to tax free jurisdiction. Game over.
- jrockway 7y agoBlizzard makes the games, Activision avoids the taxes. Synergy!
- rasz 7y agoThey are about to release one of their better games .. for the third time in a row, COD4MW.
- Operyl 7y agoI, unfortunately, can't really blame the company for doing something that's legal. They're literally just doing what's best for the company's shareholders, and they'd be yelled at for doing anything otherwise. If we want this fixed, our lawmakers need to change the laws.
- shaftoe 7y agoCurse them for not wanting to pay extra money for no gain. How dare they act out of a rational self interest.
- scarejunba 7y agoRational self-interest isn’t an unalloyed good (or even necessarily a good of any sort) so I don’t understand why you’re saying what you’re saying. Yes, sometimes for some people “fuck them for acting out of rational self-interest”. Rational self-interest for Intuit is lobbying to keep the tax code complex, but fuck them for it.
- shaftoe 7y agoIt's reasonable to assume all entities act out of rational self-interest. To be angry with someone when they simply defend their own interests is to either hate the person/entity or to be angry with nature itself. That was my only point.
- scarejunba 7y agoIt is because that assumption is reasonable that it doesn’t work as a defence. My objective is also to act in rational self-interest. And so it is no surprise that I will use mechanisms other than law to bring pressure to bear. For instance, someone is legally permitted to call me an asshole. They may choose to do so completely in self-interest. I am then permitted to ask my friends to shun him and they may. I may use this implicit threat to ensure no one calls me names. I am not required to change the law to prevent being called an asshole in order to reconfigure the incentives. In the same way, I may determine it to be in my self-interest to have a large company pay my government extra taxes, even in an ex post facto manner (though the constitution bans laws, it does not ban agreements that clearly are mechanisms to bypass that prohibition). I may then bring other weapons to bear to get things to happen. The most common such technique is by directing public opinion in a certain manner. If someone were to tell me that the company dumping, entirely legally, in the waterway is just acting in self-interest, that’s irrelevant. I still don’t want the waterway dumped in so I’ll tell everyone anyway and we’ll kick up a fuss and make life hard for them, even though they are acting legally and rationally in their interest.
- FDSGSG 7y agoIt's downright ridiculous to complain about companies taking perfectly legal steps to reduce their tax burden. As the oft-quoted US judge Learned Hand said: > Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands
- i_am_proteus 7y agoLearned Hand never sat on the Supreme Court; he was a district and appellate judge for the Second Circuit.
- FDSGSG 7y agoThank you so much, I can't believe I got that wrong. I've been mistaken on this for far too long.
- devwastaken 7y agoLegal /=/ moral
- throwaway07Ju19 7y agoBut making them equal is the goal. When they are unequal we create moral hazards. Moral hazard like this has to be least appealing part of having shareholders.
- kup0 7y agoDo you mean in all areas of life or specifically companies / shareholders? A person cheating on their spouse would pretty commonly be considered to be doing something "immoral" Yet it would be ridiculous to make something like that illegal I think the attempt to make moral and legal always align creates plenty of hazards itself Especially if the moral code the law is based on something external and nowhere near universal (like religious sources, which disagree with each other, etc)
- sunshinerag 7y agoSounds good. As long as the approach is available to everyone too.
- lunchladydoris 7y agoWe are surrounded by more and more genies that have escaped their bottles. The current tax systems we have are the result, and I'm afraid I don't see any way that's going to change.
- ravitation 7y agoThere seems to be some confusion about the point of the article... The point is to, using the example of Activision Blizzard, point out how tax is avoided. For example, with the use of royalty payments. The title of the original article actually includes a prepended "How", which illustrates that it is primarily about the specific mechanisms of tax avoidance.
- rolltiide 7y agoif anyone wants a slightly deeper discussion can someone tell me honestly, how is Activision Blizzard they fucking this up? They settled with the US government to the tune of $300 million over this setup, and European area governments are seeking $1.1 billion. Setting up transfer pricing arrangement to tax havens literally involves paying kickbacks to the IRS via an advance pricing agreement before you start doing the IP revenue games. Something went wrong. My guess is that there also was some incompetence outside of the APA arrangement. I would see new employees interpreting something in a more and more warped way getting this messed up, along with incompetence in the island countries used changing rules under their feet.
- mettamage 7y agoAh, ever since I'm doing consulting prep (for a couple of weeks now), I have a new perspective on this. It's just a new perspective, that I happen to trade in in for my soul, not as a price, but as a side effect really, but whatever. I guess that had to happen if you want to know what game the executive suite is playing :D The question is: why wouldn't they? Big corporations exist for one reason which is brought about by a myriad of incentives from stakeholders (e.g. consumers, shareholders, employees and the state). That reason is: to generate as much profit as possible. Some say it's about growth or revenue, IMO those are all indirect ways to potentially generate more profit. That's it, that's why big corporations exist. They're quite mindless in that sense because this mostly comes about by the interaction of all the stakeholders. So from Activision Blizzard its perspective, I applaud them. This is what they should be doing. There's less financial pressure on employees (aka layoff season is probably even further away now), shareholders see more signs of their favorite currency in their eyes, the regulator/state is simply picking a victim that isn't as savvy and the consumers can play new amazing Warcraft games for years to come! Oh, and the victim has trouble to organize itself, so that helps. In short, they are doing well. For the state and economics researchers I'd say: if you care about wealth distribution to the people, then figure out how to get their money. I wonder, if the state wants tax money so badly and the state is represented by the public, then why doesn't the state compete or invest in companies? You can't tax Activision Blizzard, but you definitely can tax a state owned company (right? Or is there something I'm missing).
- simplify 7y agoI hate it when people rationalize-justify this behavior of corporations. Look up the history around the Freedman doctorine. It wasn't always like this, and it doesn't have to be.
- mettamage 7y agoThanks! I'll look into it, I'm curious about the Freedman doctrine. I also hate it when people do rationalize this, but at the same time not really. It depends on the perspective I have at the time. I switch in it. The rest of my comment shows how. As a member of the public, consumer and human being I'm pretty mad about this and I don't like this type of analysis because it looks like a justification. As an employee and in some cases as a consumer, I'm not mad about this and it's not a justification, it's just as I simply see how the world works. Companies are tigers, they kill other organisms. It sucks, but alright that's the state of the world. Humanity is driving other species extinct. Alright, that sucks, but it is the state of the world. In all this confusion of perspectives, I do know one thing. If one doesn't dare to look at how they see the world is, that's when things go even more dark than they already are. Which is why I'm simply stating how I view what I believe to be the self-interest of a global giant corporation: which is making profit. It sucks, but it is how it works. I don't want it to work this way, but I don't have enough of an incentive to change it. Do you? At least you pointed me to a new source of knowledge to look at, so I suppose that's something. If I had knowledge that would wield the power of change for a better world, I would've used it.
- Proven 7y agoThat's an excellent move, considering the growing uncertainty and the horde of power-tripping socialist politicians threatening to increase taxes and regulation.
- tjpnz 7y agoWhy is your average citizen seemingly unconcerned about this? Is it a lack of reporting (awareness) or the misplaced belief amongst the masses that maybe one day they too could be the next Bobby Kotick?
- bashwizard 7y agoBobby wants a new yacht.
- daemin 7y agoTo me taxing revenue rather than profits seems like a better idea more and more now. Instead of taxing profits which makes it easy to do accounting tricks and export IP to other countries, a revenue tax would be applied wherever a company takes money in a given country. It doesn't have to be high, maybe 1% or even less. It will drastically increase government revenue from company taxation and it would be much easier to administer.