increasing taxes makes tax-reduction-strategies _more_ profitable, not less
also, tax-evasion and tax-reduction are two different things, equating them is an argument in bad faith
also, tax-evasion and tax-reduction are two different things, equating them is an argument in bad faith
You have a point here, but what really is at stake here is tax-evasion, not reduction.
The company declares no profits in France (and thus pays no tax) because its profit is fraudulently passed as costs to pay for IP or services for the mother company in another country.
If a US company develops IP in the US, is it not normal that they then get to charge a royalty for use of said IP globally?
If a French company develops IP in France, is it not normal that they then get to charge a royalty for use of said IP globally?
If you have a centralised office somewhere supplying back office services to all entities within Europe, does it not make sense to allow companies to tax deduct these expenses?
It seems like an easy thing to fix, but it's not. Particularly because multinationals _do_ actually operate in many countries and can pick where to base their operations.
I beg to differ, the only difference is that one is by definition illegal and the other is by definition legal. Tax reduction can mean chasing tax incentives responsibly, which is fine, but can also mean deliberately engaging in weird financial engineering that violates the spirit of the law but not the letter.
Like if I max my 401k and HSA, get a $600k mortgage to max out the mortgage interest deduction, and count all my professional electronics as business expenses I am reducing my taxes but I am following the spirit of the law because I am reducing my tax burden by making decisions that tax policy is meant to encourage. If I incorporate in the Cayman islands and declare all my income through a Virgin Islands subsidiary operating through Panamanian bank accounts so that I can sell off shares of my business to a trust which I also own, all so I can turn personal income into capital gains earned in a different country even though I do my actual business and live in the US, I would definitely be violating the spirit of the law.
But what if I have businesses in Poland, the UK and Belgium and I can book my investment gains in either of those countries? Am I evading tax because I book it in the country with the lowest taxes? No. You'd be crazy to book it in the highest tax county if you have the freedom to not do so.
The spirit of the law is an extremely hairy discussion, exactly because different people have different views on this. In my view only the exact letter of the law can be interpreted as a set of rules to determine whether you're breaking the law or not.
True, and that's what happens in practice. Which is why it's fine and understandable, to me, when countries take measures to close tax loopholes.
"But what if I have businesses in Poland, the UK and Belgium and I can book my investment gains in either of those countries? Am I evading tax because I book it in the country with the lowest taxes? No. You'd be crazy to book it in the highest tax county if you have the freedom to not do so."
Yeah, that makes sense. But going out of your way to create an optimal corporate structure of subsidiaries, licensing agreements, etc. all based in particular tax advantaged countries based purely on tax law is a lot more involved than that.