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So Amazon is loosing money is the US? Starbucks is loosing money in UK and Disneyland is loosing money in France? Please shifting profit is not normal there is

by Ceezy 6y ago

So Amazon is loosing money is the US? Starbucks is loosing money in UK and Disneyland is loosing money in France? Please shifting profit is not normal there is no reason a company can do it and average people can't.

gsnedders 6y ago
In many industries it's hard to quantify the value of imports from the parent company. What is the value of the software engineering services Amazon US provide to Amazon UK, maintaining amazon.co.uk? Because, rationally, that's an expense of the UK company. How much in the Starbucks brand worth? How do you distinguish a franchise from a subsidiary? If Starbucks split in two, with Starbucks Corporation maintaining only the trademarks and associated IP, and sold all the actual stores it owns to a second company Coffee Shop Corporation which started off as a franchise (and there exist franchised Starbucks stores today), which then paid licensing fees to the franchisor, would that be any different? Like, there's definitely questions to be had about international accounting, but some of the complexity is because national subsidiaries rarely operate in isolation, and valuing much of what they get from their parent organisation is exceptionally hard.
- goatinaboat 6y ago
  Like, there's definitely questions to be had about international accounting, but some of the complexity is because national subsidiaries rarely operate in isolation, and valuing much of what they get from their parent organisation is exceptionally hard. The very, very easy solution is for every corporate entity to be taxed on revenue in each jurisdiction. E.g. if I am in the UK and I spend £4 on a coffee in Starbucks then their legal entity in the UK now owes the taxman £0.40 (for example). How they pay their operating costs and internally transfer the remainder of £3.60 to their parent company is up to them.
  - scrollaway 6y ago
    You just reinvented VAT.
    - goatinaboat 6y ago
      You just reinvented VAT. VAT is passed “through” a company, I mean for this to be charged to the company on what is normally considered income. Essentially, since corporations are supposedly people, they can pay income tax like people.
      - gsnedders 6y ago
        So you're just replacing a profit tax with a revenue tax? For low-margin industries that'll have a significant impact, and grocery stores for example will be heavily hit by it (Tesco, for example, made £1.3B pre-tax profit on £64.8B revenue, which is roughly expected for the industry), with consequential rises in the prices of food. A revenue tax disproportionately hits low-margin industries, which typically account for a disproportionate amount of expenditure of low-income households, which is likely a bad thing.

by Ceezy 6y ago

gsnedders 6y ago

In many industries it's hard to quantify the value of imports from the parent company. What is the value of the software engineering services Amazon US provide to Amazon UK, maintaining amazon.co.uk? Because, rationally, that's an expense of the UK company. How much in the Starbucks brand worth? How do you distinguish a franchise from a subsidiary? If Starbucks split in two, with Starbucks Corporation maintaining only the trademarks and associated IP, and sold all the actual stores it owns to a second company Coffee Shop Corporation which started off as a franchise (and there exist franchised Starbucks stores today), which then paid licensing fees to the franchisor, would that be any different? Like, there's definitely questions to be had about international accounting, but some of the complexity is because national subsidiaries rarely operate in isolation, and valuing much of what they get from their parent organisation is exceptionally hard.

goatinaboat 6y ago
Like, there's definitely questions to be had about international accounting, but some of the complexity is because national subsidiaries rarely operate in isolation, and valuing much of what they get from their parent organisation is exceptionally hard. The very, very easy solution is for every corporate entity to be taxed on revenue in each jurisdiction. E.g. if I am in the UK and I spend £4 on a coffee in Starbucks then their legal entity in the UK now owes the taxman £0.40 (for example). How they pay their operating costs and internally transfer the remainder of £3.60 to their parent company is up to them.
- scrollaway 6y ago
  You just reinvented VAT.
  - goatinaboat 6y ago
    You just reinvented VAT. VAT is passed “through” a company, I mean for this to be charged to the company on what is normally considered income. Essentially, since corporations are supposedly people, they can pay income tax like people.
    - gsnedders 6y ago
      So you're just replacing a profit tax with a revenue tax? For low-margin industries that'll have a significant impact, and grocery stores for example will be heavily hit by it (Tesco, for example, made £1.3B pre-tax profit on £64.8B revenue, which is roughly expected for the industry), with consequential rises in the prices of food. A revenue tax disproportionately hits low-margin industries, which typically account for a disproportionate amount of expenditure of low-income households, which is likely a bad thing.