A trove of leaked documents published last week by the International Consortium for Investigative Journalists (ICIJ) have confirmed how the world’s ultra-rich become richer by exploiting tax shelters.
Nike’s European headquarters is based in the Netherlands. In 2006 the Dutch government granted the brand a new tax deal that allowed it to open a subsidiary in Bermuda (which is of course a shell company). This subsidiary owns Nike’s intangible design assets – like its logo and trademarks – for all markets outside of the United States. Since it is based in Bermuda, which is a tax-free country, Nike is not taxed at all on the billions in revenue these licensing fees generate.
But this was not enough. In 2014, Nike found a way to successfully exploit a Dutch tax law from 1830 called a “commanditaire vennootschap” (CV), or limited partnership, which lets multinational corporations skirt taxes in the Netherlands and abroad, too.
Thanks to its corporate restructuring, Nike’s tax global rate dropped from 34.9% in 2007 to 13.2% this year.
Other leaked documents show how other multinationals like Uber are doing the same thing. The UK is losing out on much-needed tax dollars from Uber. Yet another reason why I don’t want them in this country.
Speak next week!