
Activision Blizzard has moved billions of dollars of profit into tax havens - danso
https://www.taxwatchuk.org/reports/world_of_taxcraft/
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FDSGSG
It's downright ridiculous to complain about companies taking perfectly legal
steps to reduce their tax burden.

As the oft-quoted US judge Learned Hand said:

> Anyone may arrange his affairs so that his taxes shall be as low as
> possible; he is not bound to choose that pattern which best pays the
> treasury. There is not even a patriotic duty to increase one's taxes. Over
> and over again the Courts have said that there is nothing sinister in so
> arranging affairs as to keep taxes as low as possible. Everyone does it,
> rich and poor alike and all do right, for nobody owes any public duty to pay
> more than the law demands

~~~
devwastaken
Legal /=/ moral

~~~
FDSGSG
One could argue that they have a moral obligation to their shareholders to
minimize their tax burden.

I can't even imagine a moral obligation to pay excess taxes, that's simply not
how taxes work.

~~~
Scoundreller
It's a problem for shareholders too: When the money is "stuck" ex-US and can't
be brought back to the US to pay its shareholders.

If your money is in a shell that you cannot reach/touch, do you really have
it?

And if you can't, why is it on the balance sheet as if it were cash that you
could reach?

~~~
FDSGSG
This is about money that was _already_ outside the US. I'm not convinced that
shuffling euro money around hurt the shareholders.

~~~
Scoundreller
I can't admit I understand exactly what's going on in this case, but usually
the story is that companies claim they have no US tax liability on revenue
kept in a non-US subsidiary.

And the same companies stuff all the non-US revenue into a low-tax subsidiary,
even when it's effectively earned in high-tax ex-US jurisdictions to avoid
their taxes too.

~~~
FDSGSG
> I can't admit I understand exactly what's going on in this case

That's exactly the problem! These are extremely complex situations where there
usually doesn't exist any clear answer. If there did, large corporations
almost certainly would not take these steps.

If there were clear laws, then taking these steps could be criminal tax fraud.
Blame the regulators.

There's nothing stopping nations from writing clearer tax laws.

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Operyl
I, unfortunately, can't really blame the company for doing something that's
legal. They're literally just doing what's best for the company's
shareholders, and they'd be yelled at for doing anything otherwise.

If we want this fixed, our lawmakers need to change the laws.

~~~
shaftoe
Curse them for not wanting to pay extra money for no gain. How dare they act
out of a rational self interest.

~~~
scarejunba
Rational self-interest isn’t an unalloyed good (or even necessarily a good of
any sort) so I don’t understand why you’re saying what you’re saying. Yes,
sometimes for some people “fuck them for acting out of rational self-
interest”. Rational self-interest for Intuit is lobbying to keep the tax code
complex, but fuck them for it.

~~~
shaftoe
It's reasonable to assume all entities act out of rational self-interest.

To be angry with someone when they simply defend their own interests is to
either hate the person/entity or to be angry with nature itself. That was my
only point.

~~~
scarejunba
It is because that assumption is reasonable that it doesn’t work as a defence.
My objective is also to act in rational self-interest. And so it is no
surprise that I will use mechanisms other than law to bring pressure to bear.

For instance, someone is legally permitted to call me an asshole. They may
choose to do so completely in self-interest. I am then permitted to ask my
friends to shun him and they may. I may use this implicit threat to ensure no
one calls me names. I am not required to change the law to prevent being
called an asshole in order to reconfigure the incentives.

In the same way, I may determine it to be in my self-interest to have a large
company pay my government extra taxes, even in an ex post facto manner (though
the constitution bans laws, it does not ban agreements that clearly are
mechanisms to bypass that prohibition). I may then bring other weapons to bear
to get things to happen. The most common such technique is by directing public
opinion in a certain manner.

If someone were to tell me that the company dumping, entirely legally, in the
waterway is just acting in self-interest, that’s irrelevant. I still don’t
want the waterway dumped in so I’ll tell everyone anyway and we’ll kick up a
fuss and make life hard for them, even though they are acting legally and
rationally in their interest.

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ravitation
There seems to be some confusion about the point of the article... The point
is to, using the example of Activision Blizzard, point out how tax is avoided.
For example, with the use of royalty payments.

The title of the original article actually includes a prepended "How", which
illustrates that it is primarily about the specific mechanisms of tax
avoidance.

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Trias11
As long as it is legal - tax avoidance strategies makes perfect sense.

Why waste money on buying extra taxes?

Tax evasion does not count of course.

~~~
adonnjohn
I just wish they would go back to making satisfying games.

~~~
jakear
Tax management as a strategy/puzzle game would honestly be a great time.

~~~
arkitaip
^ How you know you've become middle-aged.

~~~
pdpi
Lucas Pope has made very successful games out of being a passport control
officer and an insurance agent, so I'm sure he can manage a tax optimisation
game too.

~~~
Scoundreller
I could see it now.

Starbucks develops a "new brew". They fly the best coffee connoisseurs to a
Liberian-flagged, Korean-built ship sailing from Saipan to Nauru, and develop
a new formula there with equal parts Arabic beans and Robusta beans. They sell
this new product worldwide, with marketing from a PR team domiciled in Malta,
but operating in the Netherlands.

Where was the value created?

~~~
FireBeyond
Blizzard's programmers develop a game in the US. It's hosted on US servers. It
has an in-game currency system/DLC system, also hosted in the US, and
processes card transactions in the US.

However, at the same time, they claim that the entity that runs the DLC
purchase system is in Malta, where Blizzard has no employees, but uses an
outside legal and accounting firm.

They claim all the value is in Malta.

I tend to disagree.

~~~
Phanyxx
Bingo! This cuts right to the heart of the issue.

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lunchladydoris
We are surrounded by more and more genies that have escaped their bottles. The
current tax systems we have are the result, and I'm afraid I don't see any way
that's going to change.

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daemin
To me taxing revenue rather than profits seems like a better idea more and
more now. Instead of taxing profits which makes it easy to do accounting
tricks and export IP to other countries, a revenue tax would be applied
wherever a company takes money in a given country.

It doesn't have to be high, maybe 1% or even less. It will drastically
increase government revenue from company taxation and it would be much easier
to administer.

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tjpnz
Why is your average citizen seemingly unconcerned about this? Is it a lack of
reporting (awareness) or the misplaced belief amongst the masses that maybe
one day they too could be the next Bobby Kotick?

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bashwizard
Bobby wants a new yacht.

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rolltiide
if anyone wants a slightly deeper discussion can someone tell me honestly, how
is Activision Blizzard they fucking this up?

They settled with the US government to the tune of $300 million over this
setup, and European area governments are seeking $1.1 billion.

Setting up transfer pricing arrangement to tax havens literally involves
paying kickbacks to the IRS via an advance pricing agreement _before_ you
start doing the IP revenue games.

Something went wrong.

My guess is that there also was some incompetence outside of the APA
arrangement. I would see new employees interpreting something in a more and
more warped way getting this messed up, along with incompetence in the island
countries used changing rules under their feet.

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mettamage
Ah, ever since I'm doing consulting prep (for a couple of weeks now), I have a
new perspective on this. It's just a new perspective, that I happen to trade
in in for my soul, not as a price, but as a side effect really, but whatever.
I guess that had to happen if you want to know what game the executive suite
is playing :D

The question is: why wouldn't they?

Big corporations exist for one reason which is brought about by a myriad of
incentives from stakeholders (e.g. consumers, shareholders, employees and the
state).

That reason is: _to generate as much profit as possible._ Some say it's about
growth or revenue, IMO those are all indirect ways to potentially generate
more profit.

That's it, that's why big corporations exist. They're quite mindless in that
sense because this mostly comes about by the interaction of all the
stakeholders.

So from Activision Blizzard its perspective, I applaud them. This is what they
should be doing. There's less financial pressure on employees (aka layoff
season is probably even further away now), shareholders see more signs of
their favorite currency in their eyes, the regulator/state is simply picking a
victim that isn't as savvy and the consumers can play new amazing Warcraft
games for years to come! Oh, and the victim has trouble to organize itself, so
that helps.

In short, they are doing well.

For the state and economics researchers I'd say: if you care about wealth
distribution to the people, then figure out how to get their money.

I wonder, if the state wants tax money so badly and the state is represented
by the public, then why doesn't the state compete or invest in companies? You
can't tax Activision Blizzard, but you definitely can tax a state owned
company (right? Or is there something I'm missing).

~~~
simplify
I hate it when people rationalize-justify this behavior of corporations. Look
up the history around the Freedman doctorine. It wasn't always like this, and
it doesn't _have_ to be.

~~~
mettamage
Thanks! I'll look into it, I'm curious about the Freedman doctrine.

I also hate it when people do rationalize this, but at the same time not
really. It depends on the perspective I have at the time. I switch in it. The
rest of my comment shows how.

As a member of the public, consumer and human being I'm pretty mad about this
and I don't like this type of analysis because it looks like a justification.

As an employee and in some cases as a consumer, I'm not mad about this and
it's not a justification, it's just as I simply see how the world works.
Companies are tigers, they kill other organisms. It sucks, but alright that's
the state of the world. Humanity is driving other species extinct. Alright,
that sucks, but it is the state of the world.

In all this confusion of perspectives, I do know one thing. If one doesn't
dare to look at how they see the world is, that's when things go even more
dark than they already are.

Which is why I'm simply stating how I view what I believe to be the self-
interest of a global giant corporation: which is making profit.

It sucks, but it is how it works. I don't want it to work this way, but I
don't have enough of an incentive to change it. Do you?

At least you pointed me to a new source of knowledge to look at, so I suppose
that's something. If I had knowledge that would wield the power of change for
a better world, I would've used it.

