4 ms·

I mean... let's say I buy chinese toothbrushes for $1, and sell them for $10 in usa... I get taxed on the $9 I earned, and I pay a lot of tax. Instead, my frien

I mean... let's say I buy chinese toothbrushes for $1, and sell them for $10 in usa... I get taxed on the $9 I earned, and I pay a lot of tax. Instead, my friend opens a company in TaxHeaven islands, and he buys the toothbrushes for $1 from the chinese manufacturer, and sells them to me for $9.90,... i get taxed on the $0.1 at a high rate, and he gets taxed on the $8.90 at a very low island rate. In many cases this is perfectly legal, and many companies do just that (not directly with toothbrushes, but pay licence fees to offshore companies where taxes are low). For another example, in slovenia, i can start a company, earn 100k (profit), and that profit gets taxed at 19% at the end of the year, and to take it out (pay it to me, the owner) aditional 25%. If I open the same company in bosnia, I can still to the same jobs with the bosnian company, but I only pay 10% on the money I take out (so, 100k->81k in slovenia, and to pay out, i get 60.75k... or i get 90k with a bosnian firm). This is completely legal in slovenia in bosnia. Our "IRS" can't do anything about that. So, first the laws have to change to make it fair, so facebook would pay taxes at the same rate a small local plumber would, and only than can IRS start their job.

dmurko 5y ago
That's not... how it works. You still get charged the 25% when you pay it to yourself, you only save the corporate tax. And that only works if you can say that the BiH company is managed there, not in SI. Otherwise you're getting taxed by SI standards and that means no savings. Also, your toothbrush example is actually illegal and considered a tax evasion by EU and probably most Western countries. Taxes are way more complicated than you're trying to show. Also, don't underestimate the IRS.