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Comment by albntomat0 | Hacker News Reader

It’ll have to be a highly concentrated effort, as (to my understanding) taxation policy is pretty much prisoners dilemma. One state has incentive to have slightly lower taxes than all the others to get companies to incorporate there, and then it’s a race to bottom.

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This is exactly the goal of the global minimum tax rate the US is pushing for right now.

And yet it hasn't been that. Plenty of countries with 0 corporate tax, Why aren't all the companies incorporated there? Plenty of places with 0 income tax too, why isn't everyone moving there? The truth is balanced and properly planed taxes with a stable economy are only a minor part of doing business.

That assumes countries have to accept that the licensing fees are tax deductible.

Putting some tariffs on licensing intellectual property seems like a non-prisoners dillema solution

Not sure I follow. If US Multinational charges license to Italian Subsidiary, then the pricing impacts the profit allocation between the two entities. The IRS will say "the license should be really high" so the profits in the US are higher. The Italian tax authorities will say "the license should be low" so they get more tax revenue.

For a complicated technology that's licensed, remember that neither taxing authority has any clue as to what it's actually worth. They don't care. They just want tax revenue. Remember to think about both taxing authorities when analyzing these transactions and imagine the ridiculous situations multinationals are put in.

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