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Principles of Finance Videos 156 videos
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Principles of Finance: Unit 3, “Offshoring” for Tax Benefits 4 Views
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Description:
How does a company "offshore" for tax benefits? What does that even mean? And is it, uh...kosher?
Transcript
- 00:00
Principles of finance a la shmoop offshoring for tax benefits hot topic
- 00:08
[Man and woman arguing] what does that mean well in 2016 what was left of Europe post brexit submitted
- 00:14
to Apple a tax bill for 15 billion dollars
- 00:18
well that event shined a light on global tax policy in a way that had never quite [Global Tax Policy speaking into microphone]
- 00:22
hit the limelight basically Europe claimed that Apple owed them for a
Full Transcript
- 00:26
decade in change of past tax bills.. Apple had created a ton of jobs all over [Apple logo all across Europe]
- 00:32
Europe and had believed that it was to receive a tax waiver in return for doing
- 00:37
so well Europe is economically weak and you know fading fast so it is
- 00:41
desperately trying to cut deals with anyone who will employ its desperate
- 00:46
socialist masses but there's another side of the story here as well when
- 00:49
American domiciled corporations do business in other countries they [Plane travels to Europe from USA]
- 00:54
typically set up a subsidiary corporation there which exists pretty
- 00:58
independently that corporation has its own set of accounting books and
- 01:02
maintains its own definitions of profits and it is taxed independently as well so
- 01:07
hewlett-packard France face a 35% tax for the privilege of operating in France
- 01:12
it would love to wire home to its Palo Alto California offices to cash profits [Stack of money lands outside HP headquarters]
- 01:18
it has retained overtime from doing business in France but if it does so the
- 01:23
American government will tax those profits again so hewlett-packard would
- 01:27
turn a dollar into about 35 cents really quickly by paying tax twice once to
- 01:32
France and then once to the good ol US of A well why would Hewelett Packard do
- 01:37
that yeah wouldn't so it leaves money in France hires French workers and builds a
- 01:42
tech business offshore outside of America..Fair, not fair, smart politics
- 01:47
dumb politics smart economics you tell us...[Man looking confused]
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