
How Nike Avoids Paying Taxes in Australia - wasx
http://abc.net.au/news/2017-11-07/paradise-papers-the-journey-your-money-takes-after-buying-nike/9075626
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atonse
I’ve had this very cynical idea for a while now. And that is, the only way we
will get governments to stop this nonsense is if we democratize the extreme
tax evasion... ahem ahem.. sorry, “smart tax planning” that these companies
take advantage of.

Perfect opportunity for the Stripe Atlas team :-)

If you make it so an individual can pay $50 a month and they get this full
double Dutch Irish sandwich shell company crap setup for them, and millions of
citizens start to get incomes this way and pay their “lawful amount” rather
than their fair share, then governments will start to clamp down.

Because right now we (private citizens who pay 25-40% in income taxes) are
powerless in convincing our governments to do something about this travesty.

Thoughts? Remember, as these companies say with their weasel words “we pay the
full taxes we owe!” So it would be legal.

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xmodem
That would be funny, but I think if you actually tried to do it, you would
very quickly run into overheads which make it unviable for most individuals. A
lot of tax havens outsource the cost of compliance by requiring all financials
to be independently audited, for instance, and when you have a couple of
layers of shell companies that's 15-20k right there.

That, and you probably still end up having to pay income tax on it when you
bring it into the country.

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paulddraper
Exactly. And that is why you won't see small or even mid-sized companies
arranging their taxes like this: it's just too expensive.

Only big companies -- Apple, Nike, Amazon, Google -- can afford to save
international taxes like this.

IMO, the better solution is 100% sales tax (ala the US FairTax proposal
[https://en.m.wikipedia.org/wiki/FairTax](https://en.m.wikipedia.org/wiki/FairTax)).
Companies avoid paying corporate income taxes far easier than avoiding sales
tax.

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brokenmachine
How many individuals would we need in order to make it worthwhile? Asking for
a friend.

Maybe we could work together with people in another country - because we all
want to pay "the full taxes we owe".

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paulddraper
...how many people do you file taxes with?

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6nf
Transfer pricing. It's the same for all big companies operating in Australia
(and probably most other countries)

Of course there's nothing illegal about this and it's very difficult to really
do something about it. The Australian Tax Office is struggling with this
problem every day.

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turc1656
I think it's pretty easy to deal with it actually. Just apply a top line
revenue tax of something like 2%. That can't be avoided because it is incurred
at the point of sale. So it becomes an effective tax on accessing the market
of that state/country. Then you would still have the corporate income tax that
gets applied but companies would be able to offset their income tax liability
with taxes paid for this new top line revenue tax. So it essentially becomes a
sort of AMT tax for companies to ensure that they are paying some sort of
minimum tax. 2% might not sound like much but when you consider that it's top
line revenue and the majority of companies have profit margins in the 10-25%
range, this equates to a minimum tax rate of 8-20%.

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photojosh
How does that differ significantly from sales tax/GST? We'd get the same
government revenue increase from increasing GST from 10 to 12%, no?

Ultimately the cost of all taxes will be borne by consumers anyway.

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Gustomaximus
I think there is one solution to this, the G20/WTO type organisations need to
come to an agreement that to trade with each other they have minimum tax
rates. Countries are free to tax higher but if say these nations agree to say
a minimum 25% type thing, then any country or company operating outside of
this agreement is not welcome. I'd be inclined to do the same thing for
personal tax. Otherwise we risk a race to the bottom for tax rates if we let
cooperates continue this.

And this is 'capitalism' done right. Part of governments role is to create a
'level playing field' for business and stop a handful of larger/international
companies having a non business advantage.

Further, I'd be inclined to go a bit nuclear with punishments and make rules
that abuser pay 100x what they gained and the company assets/brand in which
they did this for are seized and auctioned.

This later seems harsh but if we don't stop companies doing this we may see
serious repercussions on government's ability to provide for society as we
know it. Companies need to feel the risk is not worth the reward. I doubt this
will happen, as an Australian our Prime Minister us known to have his hundreds
of millions stashed in the Caymen Islands. What an example for the nation and
likelyhood of crackdown seems low.

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wtfstatists
_And this is 'capitalism' done right. Part of governments role is to create a
'level playing field' for business and stop a handful of larger/international
companies having a non business advantage._

States do not exist over capitalism but under it. States competing for tax
money is capitalism working perfectly, and about time this tax nonsense (or
atleast overcharging productive class) comes to halt.

To give an contrarian opinion, I am extremely happy that states are finally
made to work for the money.

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exidy
I agree that corporate tax avoidance is a problem and needs to be addressed on
a global basis.

But as an Australian, I think we're missing the elephant in the room. We hold
up these prominent brands like Nike and Apple, but ignore the fact that they
are products designed and manufactured elsewhere. All we do in Australia is
open the shipping container and distribute the goods to stores. Very little
value is added in Australia. Regardless of tax changes, the tax revenue from
simple distribution is always going to be low.

If we want to improve our corporate tax revenue, we need to _create things in
Australia_ , whether that's manufacturing, software, services or whatever.

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plaguuuuuu
I don't think that closes the loophole. Although I don't know much about
taxation. AFAIK an Australian manufacturer could just as easily do the same
thing - set up a shell company in Ireland or wherever then fund the local
company's operations and factories through 'loans' which must be paid back to
the parent company in Ireland

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beckler
This reminds me of how some pairs of Converse sneakers have a thin layer of
felt on the bottom that rubs off, so that they're considered "slippers" at the
time they're exported and not "sneakers" to get a cheaper tariff.

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Froyoh
This is not fair

