Extraordinary Genius

Kirilenko returned home to take part in the big show, and Feng Yu, accompanied by Ralph, inspected his property in North America.

Ralph and Masao Tortoise have recently talked to Feng Yu about the idea that Amazon, Facebook, Ancient Songs, MGM and other subsidiaries could all set up a subsidiary in the “Tax Haven” Cayman Islands and then shift profits and stuff to avoid tax rationally.

They were unable to relocate their corporate headquarters because of the scale and impact involved. Many large multinational corporations do so.

Like Windstorm Holdings, it's registered here.

Amazon and others calculated that they could pay billions of dollars less a year, and even more in the future. Microsoft, Coca-Cola and other companies do this.

If those companies can, why can't they? In particular, their subsidiaries abroad could be classified under the name of the Cayman Islands, so that tax avoidance could be justified abroad.

Taxes on enterprises vary from country to country, especially among State enterprises, private enterprises and foreign enterprises, as do individual incomes.

To give a simple example, Pierce and Dayao of Windstorm, their tax rates are completely different. Because Pierce is a US national and enjoys more US public benefits, the tax is higher.

Dayao is from Huaxia. He only works in the US. He also pays taxes on Huaxia, so the taxes here are lower.

The same is true between firms, and foreign firms certainly cannot pay the same amount of tax as domestic firms, otherwise how can they guarantee profits if they pay double taxes?

If you don't have the money to make money, you'll have to go to your company.

If Amazon is not a listed company, then it is much simpler to operate, financial disclosure is not required, and many accounts operate better.

But they're publicly traded companies, and that's a lot of trouble.

They would like to be able to use the channels of their parent company's storm holdings to help them avoid taxes reasonably. In this way, the company's net profits will phase up, and each shareholder will receive more money.

Feng Yu remembers that such an approach was banned by the US side, especially the listed companies, and this can still be clearly identified.

Not just in the US, but in many countries like the UK.

Facebook subsidiaries in the UK, for example, earn more than £1 billion a year, but after transferring profits to the Cayman Islands, Facebook pays only a few thousand pounds in taxes. Yes, it's thousands of pounds, and a British individual earning £26,000 a year pays higher taxes than that.

Microsoft, for example, played with this hand in Huaxia, but it wasn't discovered, and then paid taxes, not to mention late fines and high fines.

The reason for this is that there's a loophole in this tax method. If you drill and nobody finds you, it's okay. If anyone finds out, the amount is small, it's probably fine. For a little money, there's no need to work hard on the books or anything.

But if the amount is big, it's worth it. Microsoft, Coca-Cola, for example, get checked all the time. Who makes them big taxpayers?

Amazon and Ancient Song also grew up to be tax payers, or a listed company. It's too hard to operate.

Feng Yu also came to see what they really wanted to do. It's easy to say, it's not easy to do.

Bezos introduced Feng Yu to his plan, which was devised by the company's CFO, who had previously worked in Coca-Cola.

But with this approach, Coca-Cola is used differently.

Because Amazon is not only a retail business, it's also a cultural enterprise, but most importantly, it's an online technology enterprise.

Amazon also has many patents, such as the current cloud technology, and Amazon is the best in the world.

There is also some big data analysis, which is also very valuable.

Amazon's main consideration is the transfer pricing of intangible assets.

The intangible assets that Amazon is going to transfer, not trademarks or anything, but patented technology, intellectual property, trade secrets, etc.

These are difficult to price because they are invisible.

They simply grant subsidiaries or affiliates access to technology or intellectual property through low-cost licensing or selling, and the subsidiaries then authorize other companies to use the profits.

So the companies that originally developed the technology would have less profits, and the subsidiaries or affiliates would have made profits that belonged to the companies that developed the technology, but they could have paid a lot less taxes in the Cayman Islands, which would not only keep the high profits, but pay less taxes, but also be legal, although, as you know, there must be a cat in there.

This is also why many large companies have many lawyers, not just to prosecute problems that may arise with other partners, but also to support these tax avoidance practices by proving that I am a legitimate trade, not a tax evasion.

Another simple solution is that Amazon, Ancient Song and other companies all have R&D centers, and technology R&D is one of their most expensive projects.

Placing these R&D centres in areas with high corporate income tax rates reduces the profitability of enterprises in the region as a result of high spending on technology R&D, which naturally reduces the amount of income tax required.

With no change in revenues and expenditures, taxes are underpaid and net profits are naturally higher.

However, these legal provisions are now being refined in all countries and, once identified, additional taxes are required. Don't pay taxes to the US. Of course Feng Yu will be happy. He is not a US citizen.

But he also made it clear to Bezos that these are tax avoidance tools, and you have to be reasonable when you operate them, so that in the future you can find out, you only have to pay taxes and interest, and you don't have to face high fines.

Often, fines may be higher than the taxes you need to pay back.

Bezos, when they heard Feng Yu's agreement, arranged for someone to do it immediately. Ralph also notified the ancient song company, etc., and the owner said yes.

Bezos, they're trying to make more profits, more money, and Feng Yu doesn't care how much more money, he simply doesn't want to pay more taxes to the US political axe.

Feng Yu's companies in Huaxia don't even think about it. It doesn't matter how much taxes are paid, it doesn't matter how high the taxes are. Anyway, Feng Yu is not bad money, and no other shareholder will object to Feng Yu's decision.

After a circle back to New York, the owner of the New York Times, Bloomberg, came to Feng Yu's office to talk about a big thing about the media industry.

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