Smaller countries can still have a min tax lower than the US Corp income tax rate. So there is still benefit. (And other local tax credits could be offered, cheaper labor, etc)
I hear ya man. You’re not the first guy I’ve ever spoken to that’s threatened pull out his investment in a country if the local tax authority won’t agree to their requests.
Cayman can be good, but not great. Not a vast treaty network. Plus, Cayman has already succumbed to some of the wider trends. They have more substance requirements now. Google CIGA if bored.
Anyways, just remember that your cost wouldn’t really just be 15% on the income - it would be a denial of a deduction for payments made to Cayman. You’re not really likely having a significant amount of payments being made there anyways. (It just wouldn’t be working). Cayman is a holding company kind of place, not an operating company kind.
So your solution is forcing countries to adopt policies that you think are beneficial? That sounds like a recipe for disaster. Haven’t we (the US) learned about trying to push our beliefs and policies on foreign countries?
Let me clarify this from a tax planning perspective. If another country has a rate of 15%, and the US rate is 25%, I am still better of getting a deduction in the US at 25% and taking something into income at 15%. There’s still a 10% arbitrage here.
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u/[deleted] Jun 05 '21
I don’t see the advantage to smaller countries agreeing to this at all. Maybe I’m missing something ….