Paramount Pictures a found a way to avoid paying franchise taxes, including Sponge Bob SquarePants, Impossible mission, and Star Trek by channeling international license revenues through a complex network of foreign affiliates, new study finds.
Researchers from the Center for Research on Multinational Nonprofit Corporations, partly funded by the Dutch government, published a report indicating that the ViacomCBS-owned company has saved approximately $ 3.96 billion in corporate taxes in the United States since 2002 by passing it through Barbados, Bahamas, Luxembourg, the Netherlands, and Brittany.
This holds true for all of ViacomCBS’s entertainment properties (and those of its predecessors, Viacom and CBS), the researchers wrote. All in all, most of the $ 30 billion in royalty revenue that companies brought in from outside the United States never saw the collector take a dime. the new York Time characterized the report like showing the Redstone family, who controlled both companies before the merger and currently has member Shari Redstone as CEO of ViacomCBS, played a “cat and mouse” game in which they moved tax payable to countries with the most favorable rates. Viacom split from CBS in 2006 but refused in 2019 once it became a convenient way to adapt to rival mega-corporations like Disney / Fox, AT&T / Time Warner, and the streaming giants.
Report co-author Maarten Hietland told The Times that most of the shell companies involved didn’t even bother to hire a single employee (this isn’t necessary, as the revised tax structure doesn’t exists only on paper). The Netherlands, in particular, was at the heart of the plan as it allows some multinational companies to establish subsidiaries there and pay taxes on as little as 0.8% of income from distribution rights in foreign countries – using those subsidiaries, in turn , to establish itself even more in other countries. The report also shows that Viacom transferred some intellectual property rights to Britain, creating a significant tax advantage, before using subsidiaries in the Netherlands for distribution.
As the Times noted, this all appears to be technically legal even when the content was made in the United States, although a 2016 lawsuit by a former Viacom executive claimed she was fired in retaliation for challenging what she called “a tax evasion scheme illegal in violation of federal law “.
“If you take money or other assets like license fees and move them from one branch to another, have you done something that changes the whole group economically?Jeffery Kadet, a tax expert at the University of Washington Law School, asked the paper. “The answer is no. It’s like taking a dollar bill from your left front pocket and moving it to your right back pocket. You still have the dollar.
ViacomCBS more or less told The Times that everything it does is legal and therefore OK:
ViacomCBS disputed the results, saying in a statement that the study was “deeply flawed and misleading” and that it “demonstrates a fundamental misunderstanding of US tax law.”
“It is filled with false descriptions, significant omissions and many false claims,” the company said in a statement. “ViacomCBS meets its tax obligations in more than 180 countries and territories where we operate, and all of our income, including that identified in this report, is fully taxed in relevant jurisdictions around the world, including the United States, such as applicable laws require it. law.”
Joe Biden’s administration has sought to impose rules that could close many of the tax loopholes used by giant corporations to hide massive overseas profits from tax collectors, although it is lowered his proposal to 15%, down from the 21% initially sought, in an effort to get the economically powerful Group of Seven countries to approve the imposition of identical rules. Such international cooperation would be necessary to minimize the potential of multinationals to concoct new and exciting ways to get rid of their tax obligations.
According to Washington post, a deal could “possibly produce the biggest global tax change in decades” and help Biden raise the U.S. corporate tax rate to 28%. However, the the opposition is fierce to corporate lobbyists and representatives of countries accused of functioning as tax havens and tax shelters, as well as complicated by the simple fact that many countries might simply refuse to comply. The 15 percent minimum tax for multinationals is separate but tied to recent laws and proposals imposing taxes on digital revenues levied across national borders, a thorny issue the United States has balked in the past but the UK asked be grouped together. The sought-after approval of the G7 amounts to little more than political pressure for member countries to pass legislation reforming their tax codes, which could face long chances in places like the United States that have bowed in four appease companies in their tax codes for decades.