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That assumes countries have to accept that the licensing fees are tax deductible. Putting some tariffs on licensing intellectual property seems like a non-pris
by 8note 6y ago
That assumes countries have to accept that the licensing fees are tax deductible.
Putting some tariffs on licensing intellectual property seems like a non-prisoners dillema solution
- MrPowers 6y agoNot sure I follow. If US Multinational charges license to Italian Subsidiary, then the pricing impacts the profit allocation between the two entities. The IRS will say "the license should be really high" so the profits in the US are higher. The Italian tax authorities will say "the license should be low" so they get more tax revenue. For a complicated technology that's licensed, remember that neither taxing authority has any clue as to what it's actually worth. They don't care. They just want tax revenue. Remember to think about both taxing authorities when analyzing these transactions and imagine the ridiculous situations multinationals are put in.