How do big corps avoid CFC?

[inector]

All big corps shift money in the form of "royalties / franchise fees".

That's passive income, moved offshore, exactly what CFC is about.

Do they get away with it because of solid substance in offshore countries?

 

[Sols]

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.

 

[Marzio]

Do they get away with it because of solid substance in offshore countries?

They do that by carefully choosing where to build substance.

Ireland is the country of choice for many US multi nationals

moved offshore

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.

 

[JohnLocke]

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.

 

[JackAlabama]

All big corps shift money in the form of "royalties / franchise fees".

That's passive income, moved offshore, exactly what CFC is about.

Do they get away with it because of solid substance in offshore countries?

they get away with it all and more because of lobbyism.

 

[fighthorse]

they get away with it all and more because of lobbyism.

and lot's of money for lawyers and tax consultants