4 ms·

This seems entirely reasonable. Suppose you're a company and you lost $100m over the last few years, so naturally you have a sizable tax deduction from future e

by bko 2mo ago

This seems entirely reasonable. Suppose you're a company and you lost $100m over the last few years, so naturally you have a sizable tax deduction from future earnings. Even if you're profitable now, over the life of your business you've lost money so it makes sense you don't pay taxes until you make back that $100m you lost. If you begin selling in a different tax jurisdiction, that would be unfair that you have to start paying corporate taxes despite being unprofitable. It's not a brand new company and you're using the resources you built in the other country so royalty and licensing fee make sense. In other words, Starbucks brand name and operational efficiencies are assets that were developed in the US, so the US subsidiary should receive revenue from the service to the UK branch

Nursie 2mo ago
In a convenient amount that somehow just always exceeds the profits it makes, in perpetuity? Pull the other one mate, it's got bells on.
- bko 2mo ago
  How is it convenient that they lost a lot of money in the past and it pays it's employees in stock? Yes, any company can pay 0 taxes by taking all the money that they made and setting it on fire, in perpetuity.
  - Nursie 2mo ago
    They could, but that's not what they're doing, they're moving the profit to a lower tax situation to avoid paying. Pure and simple.
sevenzero 2mo ago
>so it makes sense you don't pay taxes until you make back that $100m you lost LOL. You losing money with your business is no excuse to not pay taxes on profits you make after losing money. Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Simple as that. Everybody benefits off of tax money.
- greyw 2mo ago
  I dont know a single country that doesnt allow losses to be offset from future profits. Not a single one! It discourages investments in your country.
  - sevenzero 2mo ago
    So I'll expect not having to pay VAT next time I buy from a franchised business operating in my country given that all of them usually make little to no profits officially.
    - greyw 2mo ago
      The equivalent would be not having to pay taxes if you dont earn money (or lie about it which the franchise business might be doing legally or illegally). Fortunately its quite rare to have a job that results in negative income. Unfortunately, VAT is a consumption tax that has little to do with the company. Your gov thinks you need to pay it because you consume. Are you paying a consumption tax on investments? No that would be really dumb
    - bluecalm 2mo ago
      VAT and income tax are completely different taxes. One is a tax on income. The other is a consumption tax - like a sale tax but with additional accounting steps.
- Leif24 2mo ago
  > Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Over what timescale? For instance, if the first month I operate my business I have a loss of $50,000 (have to buy initial supplies and equipment, hire employees, etc.), but in the second month sales start taking off and I net $20,000 do I (a) have a total loss of $30,000 and pay no tax or (b) owe taxes on the $20,000 in month two? This can be extended, e.g. profit and loss can be calculated on a weekly, daily, or even hourly basis. In the extreme case, this is no longer a tax on profit but on revenue (which essentially runs any business that has a smaller margin than the tax rate out of business since every dollar of revenue coming in results in more tax liability than the business actually nets). Before you say "obviously profit and loss should be calculated in a yearly cadence" I would note that the choice of a year is fairly arbitrary and this taxation scheme would greatly disincentive any sort of capital allocations that would take more than a year to payoff (as a small example, would incentive leasing equipment annually vs. buying outright).

by bko 2mo ago

Nursie 2mo ago

In a convenient amount that somehow just always exceeds the profits it makes, in perpetuity? Pull the other one mate, it's got bells on.

bko 2mo ago
How is it convenient that they lost a lot of money in the past and it pays it's employees in stock? Yes, any company can pay 0 taxes by taking all the money that they made and setting it on fire, in perpetuity.
- Nursie 2mo ago
  They could, but that's not what they're doing, they're moving the profit to a lower tax situation to avoid paying. Pure and simple.

sevenzero 2mo ago

>so it makes sense you don't pay taxes until you make back that $100m you lost LOL. You losing money with your business is no excuse to not pay taxes on profits you make after losing money. Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Simple as that. Everybody benefits off of tax money.

greyw 2mo ago
I dont know a single country that doesnt allow losses to be offset from future profits. Not a single one! It discourages investments in your country.
- sevenzero 2mo ago
  So I'll expect not having to pay VAT next time I buy from a franchised business operating in my country given that all of them usually make little to no profits officially.
  - greyw 2mo ago
    The equivalent would be not having to pay taxes if you dont earn money (or lie about it which the franchise business might be doing legally or illegally). Fortunately its quite rare to have a job that results in negative income. Unfortunately, VAT is a consumption tax that has little to do with the company. Your gov thinks you need to pay it because you consume. Are you paying a consumption tax on investments? No that would be really dumb
  - bluecalm 2mo ago
    VAT and income tax are completely different taxes. One is a tax on income. The other is a consumption tax - like a sale tax but with additional accounting steps.
Leif24 2mo ago
> Just because you lost money doesn't mean you dont make profits until you earned back that money. Taxes should be paid every time you make money in the country your business operates in. Over what timescale? For instance, if the first month I operate my business I have a loss of $50,000 (have to buy initial supplies and equipment, hire employees, etc.), but in the second month sales start taking off and I net $20,000 do I (a) have a total loss of $30,000 and pay no tax or (b) owe taxes on the $20,000 in month two? This can be extended, e.g. profit and loss can be calculated on a weekly, daily, or even hourly basis. In the extreme case, this is no longer a tax on profit but on revenue (which essentially runs any business that has a smaller margin than the tax rate out of business since every dollar of revenue coming in results in more tax liability than the business actually nets). Before you say "obviously profit and loss should be calculated in a yearly cadence" I would note that the choice of a year is fairly arbitrary and this taxation scheme would greatly disincentive any sort of capital allocations that would take more than a year to payoff (as a small example, would incentive leasing equipment annually vs. buying outright).