How do big corps avoid CFC?
- Thread starter inector
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Many factors.
It's all about scale. Big companies play by different rules. Some of these companies can be very influential and can negotiate directly with the government in some cases.
Once you reach a certain size, having proper substance in Bermuda, BVI, or wherever it may be is just a rounding error compared to saving millions in taxes.
These companies are also so big that they can easily take a tax authority to court and keep escalating, whereas most individuals and SMEs would rather pay up than fight. For the tax authority, this means they have to have a much stronger case against a large enterprise.
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This is the probably the answer to your question.
It's all about scale. Big companies play by different rules. Some of these companies can be very influential and can negotiate directly with the government in some cases.
Once you reach a certain size, having proper substance in Bermuda, BVI, or wherever it may be is just a rounding error compared to saving millions in taxes.
These companies are also so big that they can easily take a tax authority to court and keep escalating, whereas most individuals and SMEs would rather pay up than fight. For the tax authority, this means they have to have a much stronger case against a large enterprise.
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This is the probably the answer to your question.
They do that by carefully choosing where to build substance.
Ireland is the country of choice for many US multi nationals
That's not true at all.
While the little guy is sweating to move money to Cayman, the big guys leverage BEPS tools created in high tax countries.
Have a look at the irish CAIA instrument if you never heard about it.
As always, it's the rich and ultra-rich who win the battle against the tax authorities and end up paying the least tax, if any at all.
I'm not sure whether to think it's unfair or just the way it is. It's like in nature - the strongest survive, and the weakest don't. Those who can't afford to pay lawyers and accountants to push a case so far that the tax authorities give up end up losing, even if they have a solid case and are in the right.
But I still get really frustrated and annoyed by this. There should be a fair middle ground for those who are actually doing something and starting businesses.
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I'm not sure whether to think it's unfair or just the way it is. It's like in nature - the strongest survive, and the weakest don't. Those who can't afford to pay lawyers and accountants to push a case so far that the tax authorities give up end up losing, even if they have a solid case and are in the right.
But I still get really frustrated and annoyed by this. There should be a fair middle ground for those who are actually doing something and starting businesses.
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Disclaimer: Nothing I say should be taken as tax, legal or financial advice. Anything I say is for general informational purposes only. Always seek independent professional advice.
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