alex_greene
Guest
Or, the real reason why everybody would prefer Esalin to remain neutral territory:-
Double Esalin Arrangement
The Double Esalin Arrangement is a tax avoidance strategy that Imperium-based megacorporations use to lower their income tax liability. The idea is to use payments between related entities in a corporate structure to shift income from a higher-tax country to a lower-tax country. It relies on the fact that Esalin tax law does not include effective transfer pricing rules.
Overview
Typically, the company arranges for the rights to exploit intellectual property outside the Imperium to be owned by an offworld company. This is achieved by entering into a cost sharing agreement between the Imperium parent and the offworld company, in the terms of Imperium transfer pricing rules. The offworld company continues to receive all of the profits from exploitation of the rights outside the Imperium, without paying Imperial tax on the profits unless and until they are remitted to the Imperium.
It is called "The Double Esalin" because it requires two Esalin companies to complete the structure. The first Esalin company is the offworld company which owns the valuable non-Imperium rights. This company is tax resident in a tax haven, such as Arden, Darrian, Gram or even Trexalon. Esalin tax law provides that a company is tax resident where its central management and control is located, not where it is incorporated, so that it is possible for the first Esalin company not to be tax resident in Esalin. The first Esalin company licenses the rights to a second Esalin company, which is tax resident in Esalin, in return for substantial royalties or other fees. The second Esalin company receives income from exploitation of the asset in states outside the Imperium, but its taxable profits are low because the royalties or fees paid to the first Esalin company are deductible expenses. The remaining profits are taxed at the Esalin rate of 12.5%.
For companies whose ultimate ownership is located in the Imperium, the payments between the two related Esalin companies might be non-tax-deferrable and subject to current taxation as Subpart F income under the Imperial Internal Revenue Service's Controlled Foreign Megacorporation regulations if the structure is not set up properly. This is avoided by organizing the second Esalin company as a fully-owned subsidiary of the first Esalin company resident in the tax haven, and then making an entity classification election for the second Esalin company to be disregarded as a separate entity from its owner, the first Esalin company. The payments between the two Esalin companies are then ignored for Imperium tax purposes.
Zhodani Sandwich
The addition of a Zhodani Sandwich to the Double Esalin scheme may further reduce tax liabilities. Esalin does not levy withholding tax on certain payments to some member states. Some money destined for the first Esalin company in Esalin moves from the second Esalin company to the Zhodani Consulate first, taking advantage of generous tax laws there. This money moves from the Zhodani Consulate to the first Esalin company in Esalin. If the two Esalin holding companies are thought of as "bread" and the Zhodani Consulate company as "meat", then this scheme is like a "Zhodani Sandwich".
Companies using the arrangement
Major companies known to employ the Double Esalin strategy are:
. SuSAG
. Hortalez, et Cie
. General Products
. Sternmetal Horizons
. Ling Standard Products
. Tukera Lines
Double Esalin Arrangement
The Double Esalin Arrangement is a tax avoidance strategy that Imperium-based megacorporations use to lower their income tax liability. The idea is to use payments between related entities in a corporate structure to shift income from a higher-tax country to a lower-tax country. It relies on the fact that Esalin tax law does not include effective transfer pricing rules.
Overview
Typically, the company arranges for the rights to exploit intellectual property outside the Imperium to be owned by an offworld company. This is achieved by entering into a cost sharing agreement between the Imperium parent and the offworld company, in the terms of Imperium transfer pricing rules. The offworld company continues to receive all of the profits from exploitation of the rights outside the Imperium, without paying Imperial tax on the profits unless and until they are remitted to the Imperium.
It is called "The Double Esalin" because it requires two Esalin companies to complete the structure. The first Esalin company is the offworld company which owns the valuable non-Imperium rights. This company is tax resident in a tax haven, such as Arden, Darrian, Gram or even Trexalon. Esalin tax law provides that a company is tax resident where its central management and control is located, not where it is incorporated, so that it is possible for the first Esalin company not to be tax resident in Esalin. The first Esalin company licenses the rights to a second Esalin company, which is tax resident in Esalin, in return for substantial royalties or other fees. The second Esalin company receives income from exploitation of the asset in states outside the Imperium, but its taxable profits are low because the royalties or fees paid to the first Esalin company are deductible expenses. The remaining profits are taxed at the Esalin rate of 12.5%.
For companies whose ultimate ownership is located in the Imperium, the payments between the two related Esalin companies might be non-tax-deferrable and subject to current taxation as Subpart F income under the Imperial Internal Revenue Service's Controlled Foreign Megacorporation regulations if the structure is not set up properly. This is avoided by organizing the second Esalin company as a fully-owned subsidiary of the first Esalin company resident in the tax haven, and then making an entity classification election for the second Esalin company to be disregarded as a separate entity from its owner, the first Esalin company. The payments between the two Esalin companies are then ignored for Imperium tax purposes.
Zhodani Sandwich
The addition of a Zhodani Sandwich to the Double Esalin scheme may further reduce tax liabilities. Esalin does not levy withholding tax on certain payments to some member states. Some money destined for the first Esalin company in Esalin moves from the second Esalin company to the Zhodani Consulate first, taking advantage of generous tax laws there. This money moves from the Zhodani Consulate to the first Esalin company in Esalin. If the two Esalin holding companies are thought of as "bread" and the Zhodani Consulate company as "meat", then this scheme is like a "Zhodani Sandwich".
Companies using the arrangement
Major companies known to employ the Double Esalin strategy are:
. SuSAG
. Hortalez, et Cie
. General Products
. Sternmetal Horizons
. Ling Standard Products
. Tukera Lines
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