Taxation of MNC

Gio Wiederhold

Chapter Chapter 7 in Valuing Intellectual Capital, 2014, pp 181-201 from Springer

Abstract: Abstract Prior chapters have provided the background of the structures that enable tax avoidance. Moving operations offshore alone does not reduce taxes. Transferring rights to exploit MNC’s intellectual capital in a buy-in allowed MNC’s taxhaven, CONCH, to collect earnings from foreign sales. Those earnings are held offshore, and while shown on MNC’s consolidated books, they are not subject to US taxes. The value that MNC’s tax advisors, ATA, assigned to the rights to share MNC’s intellectual capital buy-in by CONCH was $50M, whereas a simple average of the seven valuations performed in Chap. 5 was about $783M. ATA’s valuation for that initial offshoring transaction is 6.4 % of that average [F7.1]. The resulting imbalance has the effect that MNC pays much less tax than we expect for a successful public US company. The financial and intellectual capital held at CONCH is available for subsequent investments, which will not be subjected to taxation if made offshore.

Keywords: Interest Rate; Foreign Direct Investment; Taxable Income; Intellectual Capital; Purchase Price (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:mgmchp:978-1-4614-6611-6_7

Ordering information: This item can be ordered from
http://www.springer.com/9781461466116

DOI: 10.1007/978-1-4614-6611-6_7

Access Statistics for this chapter

More chapters in Management for Professionals from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().