Quote:
Originally Posted by tompe
Yes. And if your moral principle is to pay taxes you should pay what is intended and not minimize according to loopholes you can get away with. You should not use a bug in the implementation.
Sometimes you also have a law that say that transactions whose only purpose is to reduce tax is not allowed.
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...How do you prove that the only purpose is to reduce tax? If I have a successful company in the US, and decide to allow branches to open in Australia, but require the Australian branch to pay me 65% of the profits, then the Australian branch would only have to pay taxes on 35% of the profits.
From my viewpoint, I'm running the Australian part of the business as kind of a franchise, or licensee business. Would this be considered as a transaction whose only purpose is to reduce tax? Who would get penalized if it is considered as such? The licensee in Australia? Or me in the US?
Shari