7 ms·

The article also states that the irish subsidiary is owned by companies in Bermuda and British virgin islands, which is where the profits go. Is it easy for Mi

by bfwi 14y ago

The article also states that the irish subsidiary is owned by companies in Bermuda and British virgin islands, which is where the profits go. Is it easy for Microsoft to get this money back into the US? And how?

drucken 14y ago
If you mean the cash, why would they need to get these funds back? Earnings are posted from the group. Credit lines and capital market borrowing similarly have limited ties to jurisdiction. Regulatory filings can be arranged to not post detailed transfer pricing information. If they ever want to pay a dividend, the cash they have on hand for on-going concerns should more than cover it. Where it does not, they can have it "loaned" from the foreign subsidiaries and gain even more tax efficiencies... Otherwise, much of the time, they can just leave it in control of Bermudan and Irish accounts; at least, until debt-ridden, revenue-starved, middle-class squeezed Western governments start moaning a little too loudly and the tax accountants and lawyers prepare to roll out the next tax avoidance schemes down the closest tax haven rabbit holes!
- lifeisstillgood 14y ago
  This is one that bothers me - UK government is chairing the G20 and is pushing "fixing international corporate taxation" It's popular amoungst all the member nations, but there seems to be absolutely no clue what to actually do If anyone has a suggestion there are a lot of people waiting to listen ?
  - vellum 14y ago
    >UK government is chairing the G20 and is pushing "fixing international corporate taxation" That's rich, considering London is one of the biggest tax havens around. http://www.guardian.co.uk/money/2007/jul/08/tax.business1 http://www.guardian.co.uk/money/2007/jul/08/tax.business1
    - Silhouette 14y ago
      Did you realise that the article you linked was from 2007? I think it's safe to say that the political and economic landscape has changed a little since then.
      - vellum 14y ago
        I looked around and they still have non-domicile rule. Since 2008, they added an annual £30,000 fee, but that's nothing if you're rich. http://www.theaustralian.com.au/news/world/london-is-a-magnet-for-the-worlds-super-wealthy/story-fnb64oi6- http://www.theaustralian.com.au/news/world/london-is-a-magne... http://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom1226349592779 http://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom1...
    - lifeisstillgood 14y ago
      Every western government has off shore havens they give a nod and wink to - but it's this very prisoners dilemma that the G8 etc want to solve.
  - arethuza 14y ago
    Might be an idea for the UK to close down all of the offshore tax havens we control first before asking others to do the same....
    - eurleif 14y ago
      Seems like it might be kind of a prisoner's dilemma situation: the best outcome is if everyone shuts down their tax havens, but you're individually worse off if you shut down yours and the other players don't, so no one wants to do it.
  - gadders 14y ago
    It's popular amongst the member governments. They're always after more money to waste.
jobu 14y ago
Much of it comes back as invesments in US businesses, real estate, and stock markets by these foreign subsidiaries. I don't think they're actually able to bring it back into the parent companies in the US, but with good accountants and lawyers it wouldn't surprise me.
subsystem 14y ago
According to themselves they "spend it overseas". http://www.winamericacampaign.org/ http://www.winamericacampaign.org/
prostoalex 14y ago
Unless it's immediately distributed as dividend or used for acquisition, the money would be subject to US corporate taxes. Microsoft actually borrows in the US http://www.smartmoney.com/invest/bonds/what-s-behind-microsoft-s-bond-offering/ http://www.smartmoney.com/invest/bonds/what-s-behind-microso... as it's not in shareholders' best interests to initiate a money transfer to a US account.
vellum 14y ago
They could wait around for a tax-repatriation holiday. There was one in 2004 that brought in about $312 billion. Companies paid 5% tax, instead of 35%, on all foreign revenue brought back to the states. The theory was that companies would use that money to create jobs, but instead they bought back a lot of stock. So it's unlikely that there will be another one in the near future, unless the political winds change. http://online.wsj.com/article/SB10001424052702303339904576404183763158882.html http://online.wsj.com/article/SB1000142405270230333990457640...
- jacquesm 14y ago
  What they should do instead of a holiday is simply seize assets statesside with rouhgly the same bookvalue until the money was brought in and taxed in the normal way. That would close this loophole pdq. All this pussyfooting around just underscores that private individuals are on the hook but as a company you can do just about anything. I don't like taxes, I disagree with plenty of them, I disagree with how they are spent. But I still pay my taxes and the fact that I pay more tax on my income (which is a very small fraction of their turn-over) than some well known multi-nationals has me seriously ticked off.
  - gadders 14y ago
    Nah, what should happen is that governments lower their extortionate tax rates so that these avoidance measures aren't neccessary. http://en.wikipedia.org/wiki/Laffer_curve http://en.wikipedia.org/wiki/Laffer_curve
    - wavefunction 14y ago
      The Laffer curve has never been shown to be true, and in fact has always been shown to be false in the real world.
      - davidw 14y ago
        So... if it's "not true", what sort of curve would you get if you plot government revenue as a function of tax rates? The Laffer curve makes a lot of sense. What is difficult about it, and where politicians are likely to try and push their own agenda, is finding where revenues are maximized, which is a far more difficult proposition than proposing that there is a revenue curve with a high point somewhere in the middle, which makes intuitive sense.
wilfra 14y ago
Not without paying taxes on it. Companies like Apple, Facebook and Google have many billions of dollars in foreign banks which they aren't bringing back because they'd have to pay huge tax bills if they did. There has been a lot of pressure on the government for awhile to allow a 'holiday' where this money could be brought back tax-free temporarily, but nothing has happened yet.
OGinparadise 14y ago
Is it easy for Microsoft to get this money back into the US? And how? Well, that's not something you want to do to Denmark, they are a member of EU and can make MS's life miserable. Plus, MS has so many assets, all over the world. They can contest it, appeal but then will pay.
skywalk 14y ago
classic double irish setup: https://en.wikipedia.org/wiki/Double_Irish https://en.wikipedia.org/wiki/Double_Irish

by bfwi 14y ago

drucken 14y ago

If you mean the cash, why would they need to get these funds back? Earnings are posted from the group. Credit lines and capital market borrowing similarly have limited ties to jurisdiction. Regulatory filings can be arranged to not post detailed transfer pricing information. If they ever want to pay a dividend, the cash they have on hand for on-going concerns should more than cover it. Where it does not, they can have it "loaned" from the foreign subsidiaries and gain even more tax efficiencies... Otherwise, much of the time, they can just leave it in control of Bermudan and Irish accounts; at least, until debt-ridden, revenue-starved, middle-class squeezed Western governments start moaning a little too loudly and the tax accountants and lawyers prepare to roll out the next tax avoidance schemes down the closest tax haven rabbit holes!

lifeisstillgood 14y ago
This is one that bothers me - UK government is chairing the G20 and is pushing "fixing international corporate taxation" It's popular amoungst all the member nations, but there seems to be absolutely no clue what to actually do If anyone has a suggestion there are a lot of people waiting to listen ?
- vellum 14y ago
  >UK government is chairing the G20 and is pushing "fixing international corporate taxation" That's rich, considering London is one of the biggest tax havens around. http://www.guardian.co.uk/money/2007/jul/08/tax.business1 http://www.guardian.co.uk/money/2007/jul/08/tax.business1
  - Silhouette 14y ago
    Did you realise that the article you linked was from 2007? I think it's safe to say that the political and economic landscape has changed a little since then.
    - vellum 14y ago
      I looked around and they still have non-domicile rule. Since 2008, they added an annual £30,000 fee, but that's nothing if you're rich. http://www.theaustralian.com.au/news/world/london-is-a-magnet-for-the-worlds-super-wealthy/story-fnb64oi6- http://www.theaustralian.com.au/news/world/london-is-a-magne... http://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom1226349592779 http://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom1...
  - lifeisstillgood 14y ago
    Every western government has off shore havens they give a nod and wink to - but it's this very prisoners dilemma that the G8 etc want to solve.
- arethuza 14y ago
  Might be an idea for the UK to close down all of the offshore tax havens we control first before asking others to do the same....
  - eurleif 14y ago
    Seems like it might be kind of a prisoner's dilemma situation: the best outcome is if everyone shuts down their tax havens, but you're individually worse off if you shut down yours and the other players don't, so no one wants to do it.
- gadders 14y ago
  It's popular amongst the member governments. They're always after more money to waste.

jobu 14y ago

Much of it comes back as invesments in US businesses, real estate, and stock markets by these foreign subsidiaries. I don't think they're actually able to bring it back into the parent companies in the US, but with good accountants and lawyers it wouldn't surprise me.

subsystem 14y ago

According to themselves they "spend it overseas". http://www.winamericacampaign.org/ http://www.winamericacampaign.org/

prostoalex 14y ago

Unless it's immediately distributed as dividend or used for acquisition, the money would be subject to US corporate taxes. Microsoft actually borrows in the US http://www.smartmoney.com/invest/bonds/what-s-behind-microsoft-s-bond-offering/ http://www.smartmoney.com/invest/bonds/what-s-behind-microso... as it's not in shareholders' best interests to initiate a money transfer to a US account.

vellum 14y ago

They could wait around for a tax-repatriation holiday. There was one in 2004 that brought in about $312 billion. Companies paid 5% tax, instead of 35%, on all foreign revenue brought back to the states. The theory was that companies would use that money to create jobs, but instead they bought back a lot of stock. So it's unlikely that there will be another one in the near future, unless the political winds change. http://online.wsj.com/article/SB10001424052702303339904576404183763158882.html http://online.wsj.com/article/SB1000142405270230333990457640...

jacquesm 14y ago
What they should do instead of a holiday is simply seize assets statesside with rouhgly the same bookvalue until the money was brought in and taxed in the normal way. That would close this loophole pdq. All this pussyfooting around just underscores that private individuals are on the hook but as a company you can do just about anything. I don't like taxes, I disagree with plenty of them, I disagree with how they are spent. But I still pay my taxes and the fact that I pay more tax on my income (which is a very small fraction of their turn-over) than some well known multi-nationals has me seriously ticked off.
- gadders 14y ago
  Nah, what should happen is that governments lower their extortionate tax rates so that these avoidance measures aren't neccessary. http://en.wikipedia.org/wiki/Laffer_curve http://en.wikipedia.org/wiki/Laffer_curve
  - wavefunction 14y ago
    The Laffer curve has never been shown to be true, and in fact has always been shown to be false in the real world.
    - davidw 14y ago
      So... if it's "not true", what sort of curve would you get if you plot government revenue as a function of tax rates? The Laffer curve makes a lot of sense. What is difficult about it, and where politicians are likely to try and push their own agenda, is finding where revenues are maximized, which is a far more difficult proposition than proposing that there is a revenue curve with a high point somewhere in the middle, which makes intuitive sense.

wilfra 14y ago

Not without paying taxes on it. Companies like Apple, Facebook and Google have many billions of dollars in foreign banks which they aren't bringing back because they'd have to pay huge tax bills if they did. There has been a lot of pressure on the government for awhile to allow a 'holiday' where this money could be brought back tax-free temporarily, but nothing has happened yet.

OGinparadise 14y ago

Is it easy for Microsoft to get this money back into the US? And how? Well, that's not something you want to do to Denmark, they are a member of EU and can make MS's life miserable. Plus, MS has so many assets, all over the world. They can contest it, appeal but then will pay.

skywalk 14y ago

classic double irish setup: https://en.wikipedia.org/wiki/Double_Irish https://en.wikipedia.org/wiki/Double_Irish