Hacker News Reader

That's sensible, but I think accountants defeat it pretty easily. For example, suppose Acme EU, Inc. has $50MM in revenue from the EU, and $25MM in on-the-ground costs to deliver that revenue. Lo and behold, they also have a bill from The Real Acme, Inc. for $25MM for "intellectual property and technology services".

So using your equation, Acme EU would get taxed on $0 × $50MM / $50MM.

Of course, we want to have a way to say, "But wait, both Acmes are actually the same company!" I think that's the hard problem to solve.

Iterate recursively, The Real Acme, Inc. obviously also operated in the EU, they made a revenue of $25MM from goods and services they sold to Acme EU, Inc., therefore they owe taxes on global_profit * $25MM / ($25MM + non_EU_revenue). I admittedly didn't really think this through for more than a minute. This also feels like I am reinventing value-added tax, this is definitely not my area of expertise.

Yeah, a scheme like that would avoid killing low profit high volume businesses with long supply chains (which is otherwise favored by VAT).

Still a problem of being based in a "friendly" country which allows for liberal accounting standards.