Kirilenko had returned to China to attend an important event, and Feng Yu went to inspect his companies in North America with Ralph.
Recently, Ralph and Masao Kameda had mentioned to Feng Yu that Amazon, Facebook, Google, MGM, etc. had the same idea. They want to set up a subsidiary in the "tax haven" of the Cayman Islands and transfer their profits there to avoid taxes.
Because of the scale and influence of the Cayman Islands, they cannot move their headquarters there. Many multinational companies are doing this.
For example, Wind and Rain Holdings is registered in the Cayman Islands.
Amazon had done some calculations, and this will save them a few hundred million USD in taxes annually. Microsoft, Coca-Cola, and other companies are doing this.
Since those companies can do this, why can't they do the same? In particular, their overseas subsidiaries could be transferred under the name of this subsidiary in the Cayman Islands. This way, they could reasonably avoid taxes abroad.
Every country has different taxes on companies, especially state-owned enterprises, private companies, and foreign companies. It's the same for personal income.
For example, Team Wind and Rain's Pierce and Yao Ming's tax rates are different. Because Pierce was an American, he enjoyed more public benefits, so his tax amount was higher.
Yao Ming is from Hua Xia, and he is only working in the US. He still needs to pay taxes to Hua Xia, and that's why his taxes in the US are lower.
It's the same for companies, and foreign companies cannot pay the same taxes as their domestic companies. If not, how can they keep their profits?
If there are no profits, only idiots will set up a company.
If Amazon is not a listed company, it will be easier for them to do this. They do not need to disclose their finances, and it will be easier to manage their accounts.
But Amazon is a listed company, and it will be more troublesome.
Amazon hopes to make use of its parent company, Wind and Rain Holdings, to help them avoid taxes. This way, the company's profits will increase, and each shareholder will get more money.
Feng Yu remembered that in his previous life, this method was banned in the US. This was especially true for listed companies. This was something that could be investigated clearly.
Not only in the United States, but also in England and many other countries.
For example, in Feng Yu's previous life, Facebook's subsidiary in the UK had an annual revenue of more than 100 million pounds, but after transferring the profits to the Cayman Islands, Facebook only paid a few thousand pounds in taxes. That's right, it was a few thousand pounds. In the UK, an individual with an annual income of twenty-six thousand pounds paid more in taxes than that.
For example, Microsoft had done the same thing in Hua Xia, and they were found out. Microsoft had to pay taxes, late fees, and fines.
The reason for this was that there was a loophole in this tax system. If you took advantage of it and no one found out, then it would be fine. If someone found out, even if the amount was small, it would probably be fine. For a little money, there was no need to go through the trouble of checking the accounts.
But if the amount is high, it's worth it. For example, Microsoft and Coca-Cola had their accounts audited frequently as they are the biggest taxpayers.
Amazon and Google are also listed companies, and it will be difficult for Feng Yu to control them.
Feng Yu was also here to see how they were going to operate. It might sound easy, but it's not easy to implement.
Bezos told Feng Yu about his plan. This was thought of by Amazon's Chief Financial Officer, who had worked at Coca-Cola in the past.
But Coca-Cola's plan is different.
This is because Amazon is not only a retail company, but it is also a cultural company. Most importantly, they are an internet technology company.
Amazon also owns many patents. For example, their cloud technology is the best in the world.
They also have some big data analysis, which is very valuable.
Amazon's main concern is the transfer pricing of intangible assets.
The intangible assets that Amazon wants to transfer are not their trademarks. They want to transfer their patents, intellectual property, trade secrets, etc.
These are intangible assets, and it's hard to set a price.
Amazon can use low prices to let their subsidiaries or affiliates get some technologies or intellectual property. After that, the subsidiaries will let other companies use these technologies to make profits.
This way, the company that developed the technology will not have high profits, and the subsidiaries or affiliated companies can get the profits that belonged to the company that developed the technology. But they can pay less taxes in the Cayman Islands. This way, not only they can keep the high profits, but they can also pay less taxes. Although everyone knows there must be something fishy about this.
This is also why many big companies hire lawyers. It's not only for them to fight lawsuits with their partners, but also to support these companies to evade taxes. This is to prove that these companies are doing business legally and not evading taxes.
There is another simple solution. Amazon, Google, and the rest of the companies have their R&D centers, and R&D is one of their biggest projects.
These R&D centers can be located in regions with higher corporate income tax rates. This way, the companies in those regions will have lower profits due to the high R&D costs, and the taxes they have to pay will also be lower.
With the same revenue and expenses, the companies will have higher profits if they pay lesser taxes.
But many countries are perfecting these laws. If these companies are found guilty, they will still have to pay taxes. Feng Yu is happy to pay lesser taxes to the US as he is not an American.
But Feng Yu had told Bezos and the rest that these are all tax avoidance methods, and they must be reasonable. This way, if they are found guilty in the future, they will only have to pay taxes and interest, and they will not face high fines.
Most of the time, the fines might be higher than the taxes they have to pay.
Bezos and the rest heard Feng Yu's agreement and immediately arranged for their men to implement it. Ralph also informed Google and the rest to do whatever they want, and Feng Yu agreed.
Bezos and the rest are doing this to increase their profits, but Feng Yu does not care about the profits. He just does not want to pay more taxes to the US Government.
Feng Yu's companies in Hua Xia do not care about these. He will pay whatever taxes he wants, and it doesn't matter if the taxes are high. Anyway, Feng Yu does not lack money, and the other shareholders will not object to Feng Yu's decisions.
After returning to New York, the boss of the New York Times, Bloomberg, came to Feng Yu's office to discuss the media industry.
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