The short version: ViacomCBS’s films and television shows, such as Mission: Impossible and SpongeBob, are protected by intellectual property rights (IPs), which are considered corporate assets. Moving IPs from one country to another is simply a matter of paperwork, so ViacomCBS simply moves IPs to tax havens and licenses international rights from there. All of the resulting income goes to this country, not the United States.
The report claims that ViacomCBS has avoided nearly $ 4 billion in US corporation tax and approximately $ 1.2 billion in UK corporation tax since 2002, and has for the most part paid no corporation tax on the revenues of its large franchises.
This appears to be legal, and in part a holdover from the fact that tax laws were written for visible and tangible assets (“tangible assets”) rather than for concepts or intellectual creations that exist on paper or in a cloud (“intangible assets”) “).
The report was published by the Center for Research on Multinational Corporations, a non-profit organization partially funded by the Dutch government. The Netherlands has a particular interest in this issue: since 2002 ViacomCBS has reportedly passed at least $ 32 billion in revenue to Dutch subsidiaries, most of which have no employees. The Netherlands tax only 0.8% of the subsidiaries’ income from the licensing of international distribution rights. ViacomCBS also has subsidiaries in Barbados, Luxembourg, the UK and the Bahamas. The report indicates that ViacomCBS transferred IPs from one subsidiary to another, created a “sale” and then reaped the tax break.
We asked ViacomCBS to comment on the report. In a statement to the New York Times, ViacomCBS said that it is “performing its tax obligations” in the 180+ countries and territories in which it operates and that the report is “deeply flawed and misleading” and “a fundamental misunderstanding by the US -Tax law. “
Speaking of US tax law: President Biden is aware of the situation. His government is proposing a global minimum tax rate of 15%, which the three dozen member countries of the Organization for Economic Co-operation and Development (OECD) are considering.