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ViacomCBS Avoids Nearly $ 4 Billion in Franchise Taxes Like Spongebob and Star Trek: Report


Illustration for article titled ViacomCBS Avoids Nearly $ 4 Billion in Franchise Taxes Like Spongebob and Star Trek: Report

Photo: Valerie Macon / AFP (Getty Images)

Paramount Pictures has has found a way to avoid paying taxes on the included franchises Spongebob Squarepants, Mission: Impossible, and Star Trek from routing revenues from international licenses through a complex network of foreign subsidiaries, according to a new study.

Researchers with the Non-Profit Research Center on Multinational Corporations, partly funded by the Dutch government, published a report noting that the ViacomCBS-owned company has saved about $ 3.96 billion in U.S. taxes since 2002 by moving it to Barbados, the Bahamas, Luxembourg, the Netherlands, and Great Britain.

It’s true for all of ViacomCBS ’entertainment properties (and those of its predecessors, Viacom and CBS), the researchers wrote. In all, most of the $ 30 billion in royalty revenue that companies have brought in from outside the United States has never seen the public take a penny. U new York Time characterized the report as show the Redstone family, who controlled the two companies before the merger and currently has member Shari Redstone as CEO of ViacomCBS, has played a “cat and mouse” game in which they have transferred tax responsibility to the countries that offer the most favorable rates. Viacom split from CBS in 2006 but reunited in 2019 once again it became a convenient way to scale against rival megacorporations like Disney / Fox, AT & T / Time Warner, and streaming giants.

Maarten Hietland, co-author of the report, told the Times that most of the shell companies involved have not even bothered to hire a single employee (not that the fact is necessary, since the revised tax structure exists). only on paper). Netherlands, in particular, was central to the plan because it allows certain multinational companies to set up companies here and pay taxes for only 0.8 percent of revenues from distribution rights in foreign countries – using those subsidiaries, in turn, to settle even more in other countries. The report also shows that Viacom transferred some intellectual property rights to Britain, creating a massive tax benefit, before using the subsidiaries in the Netherlands for distribution.

As the Times noted, this seems to be technically legal even when the content was made in the United States, although a lawsuit in 2016 by a former Viacom executive said she was fired in retaliation for challenging what she called “an illegal tax prevention scheme in violation of to federal law. ”

“If you take money or other property like license fees and transfer them from one branch to another, you’ve done something that changes the group all over economically,Jeffery Kadet, a Washington University tax expert at Law School, asked the letter. “The answer is you don’t. It’s like taking a dollar bill out of your left front pocket and moving it into your right back pocket. You always have the dollar.”

ViacomCBS more or less told the Times that everything he did was legal and so OK:

ViacomCBS disputed the results, saying in a statement that the study was “deeply flawed and misleading” and that it “demonstrates a fundamental misunderstanding of U.S. tax law.”

“It is fraught with mischaracterization, material omissions and numerous false claims,” the company said in a statement. “ViacomCBS fulfills its tax obligations in all of the more than 180 countries and territories in which we operate, and all of our revenues – including those identified in this report – are fully taxed in relevant world jurisdictions, including the United States, including is required by applicable law. “

Joe Biden’s administration has sought to impose rules that could close many of the tax loopholes used by giant corporations to hide massive overseas profits from taxpayers – even if it is he lowered his proposal at 15 per cent, compared to the original 21 per cent sought, in an offer for the nations in the economically powerful Group of Seven to approve the imposition of identical rules. Such international cooperation will be necessary to minimize the potential for multinationals to cook up new and exciting ways to reduce their tax obligations.

According to u Washington Post, An agreement could “eventually produce the most significant global tax change in decades” and also help Biden raise the U.S. corporate tax rate to 28 percent. However, the the opposition is fierce by corporate lobbyists and representatives of countries accused of operating as tax havens and refuges, and also complicated by the simple fact that many countries could simply refuse to respect it. The 15 percent minimum tax for multinationals is separate but in line with recent laws and proposals that impose taxes on digital revenues raised across national borders, a thorny issue that the United States has. balked in the past but the United Kingdom asked be grouped together. G7 approvals are little more than political pressure for member countries to pass legislation reforming their tax codes, which could face long odds in places like the United States that have fallen behind. to appease companies in their tax codes for decades.

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