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Activision Blizzard has moved billions of dollars of profit into tax havens (taxwatchuk.org)
212 points by danso 80 days ago | hide | past | web | favorite | 203 comments

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

> It's downright ridiculous to complain about companies taking perfectly legal steps to reduce their tax burden.

How ironic that you had to post (as of now) 24 times in this very thread defending this condescending viewpoint. You're not at all addressing what the article mentions.

I'll address what the article mentions. The article (quite clearly, in bold) mentions, at the top:

> The company is currently under investigation by tax authorities in the UK, Sweden and France over alleged transfer pricing irregularities and is is facing a potential bill of over $1.1bn in back taxes and penalties.

> In the United States, Activision Blizzard has recently settled a transfer pricing dispute with tax authorities for $345m

It appears these steps may very well be not legal.

If you deal with your tax in countries such as:

> The multinational company has a complex structure with subsidiaries in a number of tax havens including Malta, the Netherlands, Barbados and Bermuda.

(Yes, I'm including my own country here.)

Then you're appearing to do something shady with regards to tax. You can expect something shady in return. And of course, since they're also using Delaware, it could very well be that they do pay fair (or "fair") tax over their US part. If so, would you argue Americans have no say in this, given that they're not losing out on tax from Activision-Blizzard?

There appears to be a lack of political willpower here in The Netherlands to combat this issue. No surprise, given how far right the current leading party (VVD) is. As a result, The Netherlands wins a little bit, but the EU as a whole loses out. Its stupid egoism like this which makes the EU lose on an international scale, akin to Germany allowing the NSA to tap data as long as it wasn't about Germans.

This effect is not limited to the EU. US suffers a similar problem with the GOP actively trying to shrink the IRS budget, even though it has an incredible ROI (estimated at >$4 for every dollar spent) https://www.nytimes.com/2018/10/01/business/economy/irs-tax-... discusses in further detail

>how ironic

I don't think that word means what you think it means.

>You're not at all addressing what the article mentions

Weird, I think I've addressed pretty much everything your comment brings up.

However, I'd like to point out that there's nothing shady about structuring to minimize your tax burden. If the lawmakers didn't want you doing this, they'd simply write laws that don't allow it.

Some of us believe digital shouldn’t tax at all. Despite us using electricity. Invalidating all your points.

Not even slightly. You don't get to "believe" that laws do not apply to you. They still do.

What is the argument against taxes on digital goods? How does it differ from a broader argument against taxes?

Why tax something that provides only positive value without using local ressources.

For one, because we don't tax to "punish" (e.g. use of local resources) or to encourage, but to create a pool of money our governments can use for country-wide works, defense funding, and so on.

To be fair, our sales, income, and wealth tax policies also reflect our societal values. Some jurisdictions tax sugary drinks partly as an attempt to "punish" or reduce consumption.

The correct word is discourage, not punish.

Depends who you ask though, who is paying the taxes.

But true, the real punishment comes if you decide not to pay your taxes...

Those who claim they're being punished whilst paying taxes are being dishonest and inaccurate. Unless they got punished after they decided to not pay their taxes (that is, as we agree, a punishment). However, such is a punishment by law, and therefore we should assume the punishment is fair (until proven otherwise).

The -in this example- sales tax gets in a big chest. Some of that chest goes to healthcare. Same for smokers.

You may disagree how your government spends their income (part of which comes from taxation). I don't agree with a lot of things my government does either; still I pay tax.

In our democratic societies there are various ways to take action. For example, you're free to vote for a different leader. We (in "the West"), at least, have these liberties.

Where did you read me writing this?

Only positive value? That's quite naive.

Electricity (energy) is a resource.

As is overwhelmingly the telco that delivers those bits to screens/devices. Whether wireless or wired. Very expensive infrastructure in fact, as with electricity (generation, delivery, reliability).

Why not apply that to teachers and doctors etc?

I think this kind of reasoning needs to be questioned since the mechanisms available to large corporations and the wealthy completely outclass those available to less wealthy citizens and small business.

Additionally, despite the delusion that some companies and individuals may have, they damn well do have similar and perhaps greater obligation to work towards the betterment of society. For some reason, we seem to think that a group of people somehow have less ethical obligations than individuals.

Don't make the mistake of equating paying more tax with the betterment of society.

I think it was PJ O'Rourke who said something like giving money and power to politicians is like giving whiskey and car keys to teenage boys.

Oh goodness, well if a pithy quote said it then it must be true.

In retort I'd offer the pithy quote by Churchill that democracy is the worst form of government, except for all the other ones. But as is usually the case I don't think Churchill ever even said it.

Well, I don't know if you have seen the places where politicians have neither money nor power, but it's not pretty.

Where are these places where politicians have neither money nor power?

Theocracies, military dictatorships

It’s possible the causality is backwards here.

Maybe theocracies and military dictatorships are what happens when politicians have all the money and all the power, and thusly become theocracies and military dictatorships.

Only a very narrow definition of politician would exclude generals and theocrats. They rise to power through politics too.

Is that a semi-ironic joke? The elite in theocracies have plenty of money.


The big difference is that the elite here invent crazy-useful shit like online-shopping or iPhones or map-reduce. The elite in a theocracy or military dictatorship accomplish and contribute nothing.

>The big difference is that the elite here invent crazy-useful shit like online-shopping or iPhones or map-reduce.

No elite ever invented any such things. Engineers working for the elites (and getting shit all for their invention most of the times) did. Same way the Pharaohs didn't built the pyramids themselves...

> No elite ever invented any such things.

That's very easy to disprove as a claim. Engineers in the US and elsewhere routinely get very wealthy from companies they found or are involved with and their inventions.

Robert Noyce invented the first practical integrated circuit and was quite wealthy. As a brilliant engineer he co-founded both Intel and Fairchild. There's probably nobody in the history of the semiconductor industry that had a greater impact. He's a big part of the reason Silicon Valley exists. Gordon Moore was another talented engineer along with Noyce and a co-founder of Intel (resulting in a ~$20b fortune).

Ray Dolby was a brilliant engineer that became a billionaire from his inventions and eponymous company.

Linus Torvalds, a very skilled engineer, created Linux and is now quite wealthy. He was a self-made millionaire in his 30s.

Thomas Edison was both relatively rich and a very prolific inventor.

George Westinghouse was a very skilled engineer as well as a prolific inventor and became extremely wealthy.

James Dyson is both an inventor and extraordinarily rich.

Robin Li was a skilled engineer and helped pioneer search engines.

John Carmack and Tim Sweeney are both inventors and rich (extraordinarily rich in the case of Sweeney).

Larry Page invented PageRank, which was a critical shift in the way search engines work versus all the existing peers at the time. It was in fact the very foundation of Google's dominance.

Bill Gates started the first software company. It's easy to argue he didn't invent much, however he did help blaze the trail of software as an industry unto itself.

Larry Ellison - a skilled engineer - along with his co-founders, launched one of the first relational database products.

The founders of Cisco were both skilled engineers and got very wealthy from their ownership (despite conflicting with the VCs and being tossed out later).

Steve Wozniak was both a very skilled engineer, an inventor, and someone who got relatively wealthy.

Paul Allen was both an inventor, skilled engineer and someone who got extraordinarily rich.

Jensen Huang was a skilled engineer and got extremely wealthy by founding nVidia.

Robert Metcalfe, a talented engineer that co-invented ethernet, got wealthy from 3Com and various companies he was involved with over the years.

Andy Bechtolsheim was a very talented engineer that became wealthy from Sun Microsystems, Arista and investments.

Marc Andreessen was an engineer that helped to co-create Mosaic and went on to found Netscape. Few people did more to spark Internet adoption than Andreessen's early browsers.

James Clark was a skilled engineer that founded Silicon Graphics.

Pierre Omidyar was a skilled engineer and helped write the early code for eBay, which was one of the first online auction sites.

This list keeps going. These people all fall into the "elite" category and they're all engineers.

Is this supposed to be a counter argument to what I wrote? As if I wasn't aware of those stories?

Many of those (the ones who still do relevant work themselves) are hardly elites -- rather small change (e.g. Torvalds).

And the elite rest did their personal inventing before they become elites (Jobs or Ellison, for example, didn't do much inventing as billionaires).

Afterwards the inventing (when they were not actively stifling innovation, like Oracle and MS) was done by their employees...

> Bill Gates started the first software company.


I googled that...

The first company founded to provide software products and services was Computer Usage Company in 1955.


Download the referenced article about CUC, Recollections of the First Software Company here:


Gordon Moore had a chemistry degree but point taken

It’s not meant to be an ideology indented to be implemented.

It’s meant only as a critique.

I've seen the places where politicians have all the money and power and those countries also are not ones I'd live in

Where’s the evidence to suggest repatriating these huge sums of money will be used to improve society?

Where’s the evidence to suggest the money would be used to build public transport, improve the education system, reduce poverty, build more public / affordable housing?

The preponderance of evidence suggests any and all of these things would be poorly managed, massively over budget, and approximately a decade behind schedule.

No it's not. That's how change happens.

It's still perfectly legal to destroy the environment in many ways, it doesn't mean we can't complain about it.

If we don't talk about it, nothing happens.

No one designed the environment to be destroyed. But tax laws are often designed precisely to incentivize people to behave in a certain way. If we raise taxes on cigarettes, and then people smoke less, and tax revenue goes down, does anyone complain? Of course not; that's why we raised taxes on cigarettes.

Now sometimes you have tax laws that are poorly designed, where we don't like what happens when people follow the incentives they create. Or other times you have tax laws where people debated about what things to incentivize, and one side won the debate, and you might be on the other side. It's perfectly fair to want to change them. But it doesn't really make sense to criticize people for responding to incentives per se.

If you find a legal loophole that lets you steal cars and subsequently take advantage of it to steal cars then you are still a car thief, still a bad person, and the theft is still newsworthy. The fact that your were "merely following incentives" does not make it right and does not make it uninteresting. Quite the opposite.

You're even more culpable if it is later discovered that you lobbied for the loophole.

Society's reaction should be to disseminate the surprising story and use it to drum up support to fix the law. At that point, the only reason to not pursue the matter further is to serve the higher principle of avoiding ex post facto legislation. It's an important principle, so we allow the crime to go unpunished, but the morality of the situation is still that the theft was wrong.

That is more one type of tax, being punitive taxes. Laws used in tax avoidance are generally designed to make things easier. The flaw isn't usually in the host country (the US is sort of an exception), but more a feature in the tax haven. A simplistic version would be that you say "we shouldn't pay tax here, but there" and then you don't pay much tax there either, because the tax haven is in on it. But you can argue that there are many parties also in the host country who are just as in on it. There are just plenty of people who support that powerful people shouldn't pay much tax, and sometimes they manage to convince everyone else.

But overall you can't really stop anyone doing almost anything. If people don't want large companies to pay taxes, or favor property values instead of building more housing, or reward working in finance instead of engineering so be it. Just don't come and complain a few decades later when everyone is greedy and things are falling apart. Because if moving money around is the way to make money successful companies are going to be just as good at that as anything else.

> If we raise taxes on cigarettes, and then people smoke less, and tax revenue goes down, does anyone complain? Of course not; that's why we raised taxes on cigarettes.

In this exact scenario, people complain all the time. They start talking about how we need to raise other taxes to make up for the new shortfall in cigarette-related revenue.

> No one designed the environment to be destroyed. But tax laws are often designed precisely to incentivize people to behave in a certain way. If we raise taxes on cigarettes, and then people smoke less, and tax revenue goes down, does anyone complain? Of course not; that's why we raised taxes on cigarettes.

Ah yes a terrible example for the argument you're trying to make. In NYC bodega's sell cigarette "illegally" imported from VA. It doesn't and hasn't stopped people from smoking, at all. It's a vanity bill. Also, it helps generate revenue because most people from outside of the city won't have a bodega that will sell them untaxed cigs, which is always the easiest way to pass taxes, have a non-local pay them. Does government run lotto help stop gambling? No, they just want a piece of the pie.

In general, the average income tax law (the basic stuff) isn't poorly designed, its just under enforced and the extra tax law makes the rest very difficult to work with. Right now, what is poorly designed in tax code is the effect of increased globalization, software and international tax treaties/law. a Also, not paying your taxes when you're using government benefits should be criticized, 100%. For example, Walmart formerly not paying a living wage and making the tax payers support some of their employees, while the founders kids are all billionaires, is totally broken.

Raising taxes on cigarettes or liquor with the intent of influencing behavior is big brother BS. If however you're doing it to pay for the future health care costs that smoking incurs I'm all for it (if the health care system is public).

The whole "nudge" practice because nosy people want to decide what's best for others drives me nuts.

following the cigarette example though at some point the trend seems to stop declining and the black market fills the gap

in some sense tax havens are kind of like black market banks

The problem isn't with the corporations, the problem (if it exists at all!) may be with the legislation.

Complain about the law.

E: CogitoCogito is absolutely right, there are companies spending lots of money around the world to push these regulations. I just seriously doubt that Activision Blizzard is one of these.

> The problem isn't with the corporations, the problem (if it exists at all!) may be with the legislation.

> Complain about the law.

Do you not suppose that these large corporations with so much money at stake do not in fact use their resources to ensure that laws take their current form? Do believe they are somehow innocent actors in this drama?

I'm absolutely sure Activision Blizzard (a relatively small company) had no significant impact on how these laws were written.

In fairness the quote I responded to was this:

> The problem isn't with the corporations...

Are you saying that _none_ of the corporations with large money at stake are taking the financially rational approach of influencing the current state of the laws to have these "loopholes" or are you just saying that Activision Blizzard hasn't done so. If you're saying the latter, maybe you should edit the post I responded to to make that clear.

Edit: Small edits fixing terrible writing.

You're right. I'm sure there are many such companies, I just seriously doubt Activision Blizzard in particular is one of them.

E: I edited my prior comment.

I love hacker news. The only place you see this on the internet.

ActiBliz is "small" compared to companies like Verizon and comcast etc.. but dont be under the delusion that they dont have capital to make things happen, they're one of the big 3 western game companies (I would say the other two are probably EA and Take Two Int.) with the biggest MMO still alive and kicking (along with other well selling IPs). This industry isnt incapable of touching legislation, one of the biggest thing in the industry right now is EA's legal conquest of keeping lootboxes (or "surprise mechanics" as they call it) in games legal.

I doubt they dreamed up these schemes themselves. Rather they hired some big accountancy firm that does have impacts on how laws are written to do this work.

I wish people would stop bullying these modest ~$40B companies.

Why can’t we complain about both the laws and the companies? I will complain when companies make low quality products, treat their staff badly or whatever. If our only requirement on companies is to follow the law I think we are setting the bar extremely low.

Who do you think lobbies for such laws?

Politicians don’t have to listen to lobbyists. The blame lies with politicians.

Everyone talking to a politician about an issue is a lobbyist, that’s what lobbing means.

It’s easy to think only those people you disagree with are lobbyists, but even just sending a letter to your congressional representative is lobbying. And there are paid lobbyists on both sides of almost every issue.

This is at best half true. There are professional lobbying organizations that have vastly more resources and know how than individuals. And when people complain about lobbyists everyone knows that a this is what is being referenced.

The well connected, paid, lobbyists, who need to register, are only the tip of the iceberg.

So called grass roots lobbying generally involves well funded groups organizing or convincing individuals to do the talking. Pretending that’s somehow different from paid lobbyists is missing how politics works.

Companies and Unions for example are often at odds on specific issues, but they both get sincere individuals to be doing some of the communication.

I only assume the poster above is really referring to corruption, where companies with vested interests are not just 'lobbying' for their outcome, but buying them outright...

Otherwise there is (or at least should be) no difference.

What happens to politicians who don't listen to lobbyists? Do they win reelection?

> Politician's lies are to blame.


But with the high cost of being elected, of course politicans follow the money and the corruption that goes with it.

It's helpful to have real world examples for context.

Oh, absolutely. But then the headline would be "$country missed out on $amount in taxes because of lacking regulations" or something similar.

Hmm. When the date rolls around to file your returns, I'm assuming you don't actually attempt to maximize your returns?

Few people do.

Most people attempt to fill out their returns in a rather straightforward manner as laid out by the forms. The loopholes are not published in the tax forms.

I don’t think it’s a few.

Did you put money in a 401k?

Did you buy a house and calculate the tax deduction?

Did you hold onto a stock so you’d get the lower long term capital gains rate?

Did you contribute to an HSA or FSA?

The majority of people make decisions that optimize their tax rate.

Only 30 percent of Americans itemize and less than half even have a 401(k). 46% do not own any stock at all, either directly or indirectly through retirement savings. We are definitely not talking about the majority here.

Owning a house pre-SALT changes? Home ownership rates are in the 60% range.

Have an FSA or HSA?

You can cherry pick my examples.

If you think minimizing your tax rate starts and ends with line items on the 1040, you are not minimizing your tax rate.

Not by a long shot.

It is double think to call the act of minimizing the state of having achieved the absolute minimum while still using the word to describe corporations which are indeed paying more than the absolute minimum.

You are being dishonest in discourse to use that word with different definitions depending on who you apply it to. Either regular people are minimizing taxes when they use rules to reduce taxes, and thus so are corporations. Or neither regular people nor corporations are minimizing taxes because neither has achieved the absolute minimum.

That's my point. They're not opting to do so morally. They're not aware such loopholes exist. I'd be willing to bet most people you talk about wouldn't think twice to reduce their tax bill

> The company is currently under investigation by tax authorities in the UK, Sweden and France over alleged transfer pricing irregularities and is is facing a potential bill of over $1.1bn in back taxes and penalties.

> In the United States, Activision Blizzard has recently settled a transfer pricing dispute with tax authorities for $345m.

Maybe not so legal?

Hard to say before the courts decide.

I've personally been through such disputes with tax authorities and prevailed.

Settling a tax dispute with $345 million owed is indicative of doing something wrong. It's different than you just being audited.

At best it's indicative of bad accounting, but for a company like Activision Blizzard and at that amount that seems unlikely.

Not really, taxation at this level is extremely complex. $345 million could just be because of unclear phrasing.

It's kind of a joke though, isn't it? Like, Blizzard isn't doing any real work in Barbados or Bermuda. So you could probably argue it's wrong, unless you feel like arguing that all taxation is wrong from an Individualist perspective (which I'd be fine with).

And aside from wrong, the fact that they've agreed to pay a fine of $345 million means it was probably illegal. If they just phrased something wrong they could probably just correct the phrasing, and, more importantly, I think they probably tried really hard to get the phrasing right when transferring billions from one company to another.

I own offshore companies and minimize my tax burden, but let's call a spade a spade.

It doesn't matter. Like I said, either way, it is indicative of doing something wrong.

Not really, it's simply indicative of a disagreement. wrong tends to suggest tax fraud.

I think you're being a little consciously naive.

Choosing not to prosecute (especially because prosecuting tax fraud requires proof of willfulness) and simply collecting a tax deficit is pretty common, especially in cases of corporate tax evasion.

The disagreement in this case is called a tax deficit, and is what I meant by wrong. It's also the first necessary part of tax fraud.

EDIT: Also, if you read about the source of the $345 million tax bill (from the article), it's hard to see how this would've been a problem with "unclear phrasing"...

It all depends on the amounts being moved. Transfer pricing is complex because what is market rate in situation A is not market rate in situation B. $345 million could be a minor difference of a few percentage points on tens of billions in revenue.

Just like FDSGSG wrote above, I went through a sizeable tax dispute (for an individual, outside of the US) and won. I have a good understanding of tax law yet it was nothing more than a bullshit money grab. No merit, nothing. More along the line; that's a very nice outcome for you but we don't really like it -- so pay up regardless. Like trying to shake a tree.

In this case, I can imagine for Activision (as a publicly traded company) it is better to settle a case for an OK amount than take it to court and run through the process. You have to make a risk reward analysis of whether it's worth spending time and resources on.

Yes, obviously the settlement reflects analysis by Activision Blizzard, which is exactly the point. The expected outcome of challenging an assessed tax deficit is part of that analysis, so the choice to settle must be viewed with that in mind.

I wish both you and the thread OP would stop comparing this to A) personal (or small business) tax disputes and B) tax disputes that resulted in no additional tax liability. This dispute did result in additional tax liability.

If it was a problem with “clear phrasing” it’d be called tax fraud, no?

I think in regards to OP, it'd only be called tax fraud if it was prosecuted criminally, regardless of the phrasing.

I regularly write cheques for $345m because of unclear phrasing. Who doesn't???

In the article they mention that they moved money to countries that are in a EU blacklist so for now i am siding with tax authorities

Doesn't sound "perfectly legal" when tax authorities are running after you.

At a certain level of complexity even the tax authorities can't decide what is legal and what isn't and they will basically try legal action against you to see what the court decides. I've pursued an official statement from my country's tax authority about a tax issue I had pertaining paying taxes when you do business in several countries at once, and after months of hassling the tax office through a lawyer we finally got a letter saying that "we cannot see anything wrong with what you are trying to do, but this letter is not binding, it is neither a promise nor a guarantee that we will never take any legal action against you if we decide differently at any point in the future. This is all advice that we will be providing on the matter".

Guess what happened - a year later they decided it wasn't ok, and of course the letter they wrote was worth as much as toilet paper in the court. It took 5 more years and a very decent amount of money to fight against it and finally get them to admit they were wrong and there is no issue. But of course no one will give you 5 years of not being able to run your business back.

Dunno, in my case the court agreed that my actions were "perfectly legal".

Care to share the details?

Nothing exciting, the government felt that imaginary internet money should not be treated like other similar assets. Luckily the courts disagreed in the end.

With tax laws being so complicated these disputes are everyday stuff for anyone engaged in any "unusual" activities.

Heh, the amount of people that think crypto is an asset class that would be taxed differently than any other asset class is astounding. Sounds like your tax jurisdiction was in that group (!).

Though there are a bunch of unanswered questions in a lot of jurisdictions: How do you treat a fork?

Is it income? A dividend? A stock split? A spinoff? Some of these require the originator to file paperwork, and no crypto chain could possibly do that.

And what initial value? $0? Day1 trading value?

Do you shelter your money into "tax havens" ? If so, why do you cheat the system this way (note: I didn't ask the question "is this legal", so please don't bake that affirmation into your response).

Yes I do! After I got sick and tired of the nonsense games my local tax authority was playing, I moved out of the country and took all of my assets with me.

I did not mind paying the taxes, I did however mind the authorities trying to defraud me into paying non existent tax liabilities. They've since been forced to stop doing that.

The players of the video games made by Activision-Blizzard complain every day about trivial and inconsequential aspects of the products and how they play. We don't say about them, "oh, but that is just the way the game is made, you should adapt to it." They are systems of rules akin to law enforced with computer code, designed, among other things, to demonstrate superior player skill, and one of the most common sources of player complaint is that they reward "wrong" skills that are not part of the competitive premise.

I say, if players are right to complain about rewarding the wrong skill in the games, the public is right to complain about business being rewarded for their tax evasion skills.

People don’t complain about specific twink characters, they complain about the rules that allow that.

This business-friendly, or rather business-subservient attitude is puzzling to me.

You do know that we have the right to complain about whatever we want in democracies, and this can be one of the paths that change is enacted through, I assume. So why exactly are you trying to censor those that complain, because it makes you feel uncomfortable?

We will criticize tax evasion and even lawful-evil tax avoidance. You will have to live with it. If free speech becomes unbearable, I'm afraid the only solution right now is moving to North Korea, China or any of those countries where it's not tolerated.

Disagreement and censorship are two different things.

The argument is "don't hate the player, hate the game". Complaining about the companies is wrongheaded is likely not going to get anywhere.

Targeting the tax system that got here, however, has at least a remote chance of affecting change.

Except the parent post was not "disagreeing", they were basically shaming those that criticize Activision by calling them ridiculous.

Your and their argument is also incorrect. It's perfectly fine to dislike the player, because the player will be motivated to be less of a player and more of a good corporate citizen if they see that everyone dislikes them for their action.

The tax system is immensely complex, laws are slow to pass and change. It is faced with smart adversaries which try to use the tiniest loopholes to get an advantage, while regular Joe has to pay their taxes and they're condemned immediately when they try anything funny with their taxes (which they can't anyway, because they can't afford it).

This argument that the players are innocent and should not be criticized is either naive or malicious.

You are, of course, in your right. It just won't have any effect.

Gp is probably on your side in wanting this sort of thing over, and just trying to redirect your energy towards a legislative solution.

A legislative solution would be hard, but a moral solution enforced by shame is borderline impossible. There are too many corporations, if we damage the brand of one once a month it's still a risk worth ignoring.

I operate a small business with 3 employees, I'm certainly incentivised to fend for us.

jnwatson worded my actual arguments better than I would.

You're not fending for a small business with 3 employees, which anyway, let's be serious can't afford any fancy tax shenanigans, you're fending for a big business with several thousand employees.

This company had a record revenue year and yet they decided to cut 800 jobs.

Wasn't there a complete town in UK who went to offshore all of their assets? A quick search delivered me this source [1].

[1] https://www.independent.co.uk/news/uk/crickhowell-welsh-town...

> which anyway, let's be serious can't afford any fancy tax shenanigans

Dunno, I feel that as a small business it is much easier for us to minimize our tax burden than it would be for a larger business.

Much easier for 4 friends working together to relocate than it is for a big business with thousands of employees. We've got far more tools at our disposal.

Consider it from a bureaucratic efficiency perspective instead then, if the rules are too broad and there are too many exemptions then the cost of gathering taxes increases. The government should aim for a simpler system that is more efficient (so that it can pass on the cost saving in having an efficient tax system on as reduced taxation if you are a neoliberal believer).

It isn't economically beneficial for people to spend vast sums on creative accountancy in order to minimise their taxation. Tax minimisation encourages investment in areas that do not promote growth or bring new products to market. Yes, there is a personal or individual corporate reward for avoiding tax but there are significant economic downsides too. Tax havens allow corruption, terrorism and organised crime to flourish giving them a way to siphon funds around which is a massive societal detriment.

It's downright ridiculous to equate expressions of dissatisfaction with the current state of tax law (allowing wealthy entities to exploit all sorts of loopholes clearly not in the spirit of paying your taxes) with some straw-man "complaining" about such activity despite the fact that these entities are probably behaving mostly within the bounds of the law "just like everybody else".

Guess what: laws change, and some people think these laws should be changed so that these entities can no longer dodge the tax burden one might naively expect them to face if no loopholes existed. That's what people are talking about when these topics come up. Reducing that to "complain about [...] perfectly legal" is either disingenuous or ignorant on your part.

The parent didn’t create a straw man; you did.

The article is not criticizing the laws. The article is criticizing Activision for following the law, exactly what the parent stated.

Maybe you read a different article focused on the law, not a single actor?

I am reading the "Conclusions and recommendations" section and I am not seeing any such criticism of "Activision for following the law". Rather, I am seeing statements like this one:

> The case of Activision Blizzard is just another example demonstrating the need for governments to introduce more effective measures to deal with royalty-based tax avoidance schemes. In the UK this means changing legislation to make sure that royalty payments made to companies in jurisdictions where the UK has a tax treaty are included in the charge to income tax.

That is not a criticism of Activision Blizzard. It is a straightforward statement of the fact that "more effective measures [are needed] to deal with royalty-based tax avoidance schemes". So, I don't really see what you're talking about. Let's try this: do you agree that they are "using offshore tax havens to reduce their tax burden"? If so, would you further agree that this is a "tax avoidance scheme"? Why or why not?

Often with complex tax schemes we don't know if they're legal or not because they haven't been tested in courts.

Some governments focus on low-hanging fruit or on flagrant tax evasion. They don't want a long running court case costing millions with an uncertain outcome.

So we never get to find out whether this scheme is legal avoidance or illegal evasion.

But, even if it's legal avoidance: I pay my tax. Why shouldn't this huge company who seeks to benefit from tax-payer funded institutions also pay their tax?

So, what exactly stops the politicians from writing simple and clear tax laws?

It wouldn’t be hard for the lawmakers to eliminate this uncertainty, they just want to remain competitive.

Don't know the particular tax law in question, but perhaps it would help you if you thought you of lawmaking as making software (in fact in French the word for law is 'code')

Everything you code has to be coherent, requirements change, and when they do it is hard to get everyone to agree on the details. You have 200 years of legacy code, have to be compatible with other states and countries, have to support all possible edge cases, and your code is interpreted not by a computer but by a human.

Are there broken laws? Sure. Is it easy to make good ones? Not so sure.

I've always wondered what about the spirit of the law/contract in these cases?

Such schemes are sometimes described with the tongue-in-cheek term "tax avoision".

Learned Hand never sat on the Supreme Court; he was a district and appellate judge for the Second Circuit.

Thank you so much, I can't believe I got that wrong. I've been mistaken on this for far too long.

> Everyone does it, rich and poor alike

No they don’t. Even if a “poor person” wanted to, they have nowhere near the scope available to “arrange their affairs” such that they can minimise their taxes at the same percentage (of income) as the rich do. To believe otherwise is naive in the extreme.

I think OP was referring to the act of arranging one's affairs to make their taxes as low as possible, and not the ultimate reduction in tax rate achieved.

"The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread."

--Anatole France

Legal /=/ moral

But making them equal is the goal. When they are unequal we create moral hazards. Moral hazard like this has to be least appealing part of having shareholders.

Do you mean in all areas of life or specifically companies / shareholders?

A person cheating on their spouse would pretty commonly be considered to be doing something "immoral"

Yet it would be ridiculous to make something like that illegal

I think the attempt to make moral and legal always align creates plenty of hazards itself

Especially if the moral code the law is based on something external and nowhere near universal (like religious sources, which disagree with each other, etc)

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.

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?

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

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.

> 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.

That would be a business or contractual obligation. There is nothing personal about that relationship.

There's nothing personal about my relationship with the tax authorities.

By phrasing it as excess taxes you've already begged the question. You could also phrase it as paying your share or pulling your weight.

Excess taxes, i.e. taxes not required by the law.

You've already linked the concept of excess to legality, definitionally. This is why you lack the ability to understand what a moral amount could be.

That's fair. Do you know what a moral amount would be?

I don't know, but I also doubt that anyone else really knows.

I assure you I don't know the exact number but I can imagine that non-zero moral amount exists.

That's fair, but the amount taxes Activision Blizzard are paying is non-zero. Are they doing wrong? If yes, how much should the pay?

which applies whether the stated tax rate is 1% or 75%, so a practically useless response

unless the idea is that any written tax rate is moral if it comes from the government, which also means any legal means to mitigate the tax rate is also moral because it comes from the government

Morality exists outside of what the law states.

You're suggesting that because you can imagine both a too strict and too lenient law, morality is an impossible concept?

> You're suggesting that because you can imagine both a too strict and too lenient law, morality is an impossible concept?

no, not enough information has been provided to make that decision and that grandparent-OP should elaborate on their stance

I believe everyone having the same morality is an impossible concept.

I'm not sure that's relevant to whether you personally find it moral. This conversation could exist from a personal perspective of what you find moral.

That said, even if we all have different morals it seems they're mostly compatible.

There is nothing immoral about legally minimizing your tax liability. This is like saying that it's immoral for me to contribute to my Roth IRA.

The tax law is written to incentivize desired behavior. We all benefit when you save for retirement so that you aren't a burden to society later.

But loopholes are different. If you discovered a loophole that made it so your landlord can not enforce rent collection, would you stop paying rent ? That's basically what these companies are doing.

One's person loophole is another person's well-lobbied IRS rule.

Many, many people would believe it is just fine if they found a loophole that set their personal taxes to 0%. Even more would be fine with a loophole that reduced their taxes by 50%. Nearly everyone would be fine with loophole that reduced it by 5%.

There's only one way to handle this large moral gray area: pass laws and IRS rules to close the loopholes that experts deem excessive.

> If you discovered a loophole that made it so your landlord can not enforce rent collection, would you stop paying rent

I certainly would. Thats why you have to be clear with the law and enforcement.

Blizzard takes significant advantage of the product of taxes massively disproportionate to any individual. They have an obligation to pay into it how they use it, and they have the money but purposefully are going around it. There is a lot immoral about it.

If you do it legally, there is nothing illegal about it. If you do it illegally then it's illegal.

If you are doing it in such a way as to violate the social contract, then regardless of legality, I think a case could be made that it is immoral.

The article you're replying to includes claims that amount to tax fraud. In other words, the governments in question are claiming that Activision is not paying what the law demands.

But more generally: I don't think anybody seriously believes that you should pay the government more than it's due. What people (myself included) believe is that the government is due more than it currently demands from the wealthy and from large corporations.

Yeah, I think people should complain about the lawmakers not the companies. Maybe that way we will see some changes but I doubt given the current administration stance on the subject(i.e Digital Tax)

Just because the law says so doesn't make it right or moral. Just legal.

In fact, the gov’t often uses tax policy to incentivize certain behavior (lower capital gains tax on long term capital gains).

The gov’t is expecting tax players to optimize for the lowest tax rate!

EDIT - For HN Guidelines: Any obligation (other than legal) that Activision Blizzard has to paying taxes is not the point of the article. The point the article makes is...

> The case of Activision Blizzard is just another example demonstrating the need for governments to introduce more effective measures to deal with royalty-based tax avoidance schemes. In the UK this means changing legislation to make sure that royalty payments made to companies in jurisdictions where the UK has a tax treaty are included in the charge to income tax.

Also, it's clear in the header that it's not all "perfectly legal".

> "Did you read the article? The point the article makes is..."

You're likely getting downvoted because you're explicitly violating the guidelines.


> Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."

Yes but you see if we publish articles discussing changes those laws, they might change.

How can we keep from publishing too many of those kinds of things?

Do you mean to say that complaining about laws is ridiculous?

That doesn't seem like an argument someone would intentionally make.

It should be obvious to anyone that some laws are unjust, insufficient, or overbearing.

It's up to us to have these conversations, and push our own, or our collective, agendas.

I'm usually pretty libertarian but I disagree here.

Yeah don't fault corporations for maximizing profits legally, that's literally their sole purpose.

But it is absolutely valid to say that the laws are bad laws and that we should change them.

And these laws are bad laws and we should change them.

Umm...you know that all the laws are made by rich people right? We just had the biggest tax write off in history and you're coming in here with this BS? WOOOOWWWW

I don't agree. People with enough money and expertise follow complicated routines to minimize taxes. People without the money or expertise don't have the same advantage. I don't think arranging tax payments in such a way as to require accountants and lawyers to get the most efficient tax burden is a good system.

I'm not saying Blizzard employees or owners should be jailed for doing this. I'm saying we should realize this is a problem we should consider solving

Could you share with us the correct amount of taxes Activision Blizzard should pay?

As long as this remains an impossible question to answer then they should probably pay the least amount possible.

I'm all for improving current tax regulations, but first we must agree that the problem is with the regulations.

Yes, the correct amount is definitely at least whatever the settlement that they agreed to, where blizzard has effectively admitted that they were wrong and broke the law.

They broke the law. They lost. That's what the courts determined.

What, do you not believe in the law or something? Because this is what the courts did. They said that blizzard was guilty, and therefore I judge them as such.

> Because this is what the courts did. They said that blizzard was guilty

That is not what the courts said.

From the article:

"In the United States, Activision Blizzard has recently settled a transfer pricing dispute with tax authorities for $345m"

It looks like Blizzard was guilty enough of tax evasion that they had to settle the case for 345m$.

If you have to settle a case for 345m$, then you are guilty enough for me to condemn you.

Did you read the first few sentences of the article? It isn't clear that what they are doing is legal.

> The company is currently under investigation by tax authorities in the UK, Sweden and France over alleged transfer pricing irregularities and is is facing a potential bill of over $1.1bn in back taxes and penalties. > In the United States, Activision Blizzard has recently settled a transfer pricing dispute with tax authorities for $345m

Also, there is nothing wrong with pointing out what they are doing, even if it is by the books legal. You can still push for change in the system to make their gaming of it less possible, which requires people to be informed about what is happening first.

I did, and until there's significant evidence to the contrary I will assume that what they're doing is legal. I've been audited too, and not because I did anything wrong.

> Also, there is nothing wrong with pointing out what they are doing

Of course not, but the real problem exists outside of Activision Blizzard. Pointing fingers at specific companies simply detracts from the real problem.

Did you pay $345M to make the auditors go away? And I never said what they were doing was illegal. I said it isn't clear that it is legal. Hence the investigations.

I did. One American state tried to get taxes from me for money I earned in another when I was young. I disputed it via a letter and they cut it to 5% of what it was and then told me any further appeal needed to happen in person. So I’d have to fly by a certain date, spend time in court, and clear it.

I paid. Fuck the tax man.

That $345M settlement isn't definitive, watertight proof, but I sure hope it counts as "significant evidence"!

Not really. We're discussing extremely complicated multi-jurisdiction legislation here.

A criminal conviction for tax fraud could in fact be "significant evidence", a mere disagreement by itself is not.

Providing evidence of a problem doesn't detract from the problem.

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.

I don't think skimming countries of 1.1bn would be considered legal

"The company is currently under investigation by tax authorities in the UK, Sweden and France over alleged transfer pricing irregularities and is is facing a potential bill of over $1.1bn in back taxes and penalties."

Yes the laws need to be changed, but that does not absolve the companies - it's called 'lawful evil'.

Did you also not blame cigarette companies for advertising and selling what they knew was poison, or oil companies for keeping their knowledge about climate change secret?

I think you took a major step up from something that isn't actively killing anyone to something that is.

Just wanted to illustrate that it's not as simple as "legal = blameless".

For a less extreme example, what about Keurig's coffee DRM? Or the DRM on printer cartridges? Or Microsoft pushing the patented FAT32 (and now exFAT) filesystem? Or Disney lobbying for extended copyright? Google promoting AMP pages? Online stores using pressure tactics like "Hurry, only N left in stock!", and other dark patterns?

And I'm just saying that, for the company, if they don't take these measures their shareholders and their board could literally throw a fit. These loopholes exist, and if they don't use them they'll just get swapped out for executives/accountants that will. If you want this fixed don't blame the company, blame the lawmakers that refuse to fix this.

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

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.

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.

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.

Its in my rational self interest to rob you and steal all your money, If i can ensure i wont be caught.

Can't blame me right?

Then it is in our rational self-interest to be angry at them, so what is the relevance of your point?

While they take advantage of loot box gambling to minors.

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.

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.

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

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

I knew a retired guy just like this. He had lots of investments and shares in subchapter S corps (and some influence in the distribution rate). His idea of fun was gaming out the different options he had for filing.

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

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.

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?

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.

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

I don’t think any reasonable person disagrees.

We should send tax cases to juries for decisions.

They're not operating in The Netherlands. They're "operating" in The Netherlands. The "operating" refers to having a PO box. That's all they need to have a physical presence here.

See RamBam episodes (in Dutch, but contain some English too):

> S04E11 Nederland Belastingparadijs broadcasted 29 Apr 2015

> S05E05 Russische bedrijven in Nederland broadcasted 17 Feb 2016

[1] https://nl.wikipedia.org/wiki/Rambam_(televisieprogramma)

Become non-resident for tax purposes and move to tax free jurisdiction.

Game over.

They are about to release one of their better games .. for the third time in a row, COD4MW.

Blizzard makes the games, Activision avoids the taxes. Synergy!

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.

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.

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?

Bobby wants a new yacht.

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.

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).

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.

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.

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