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.
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Wiederhold, G. (2014). Taxation of MNC. In: Valuing Intellectual Capital. Management for Professionals. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-6611-6_7
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