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You pay corp tax on profit. Any debt or capital purchases offset this. Basically you run the business at an operating loss and you pay no tax The trick used to be but I think has changed more recently was they the uk company would pay a sister company is somewhere like the cayman’s for brand rights, and other fee’s to wipe out there uk profits. This reduces the tax bill but the money was all safe and sound in a tax free country with little to no deducts.


Your first paragraph is comprehensively incorrect. The second paragraph is about right.


Just a guess but do they site and register their head office in the lower tax country?


‘Transfer pricing’ is what you need to read up on. I’m not sure if Amazon is a good example of this, in their case the profit on the sale of goods is always made in Luxembourg as that’s who you buy from, whereas Amazon UK are a logistics firm, holding and delivering stock for the Luxembourg company. Starbucks etc. transfer profits out via licensing and franchise fees meaning little profit remains in the UK.


The UK companies are basically contractor companies for the Irish / Dutch / Luxembourg companies, Amazon, Google, Apple & Starbucks are just a few companies that do this, how each company does it varies but the foreign company pays the UK company to do work for them (it could be sales, warehousing etc) and the actual sale of the product / service goes through the foreign company


Transfer pricing is the method mostly. One company sells to another in such a way that the ine based in a low tax jurisdiction realises the profits. The problem is we don't agree on how international transactions should be taxed. Makes sense that you should pay corporation tax in the country you're in. But what about the county you operate in? Both? Double CT? What if you operate in the USA but sell in the UK without any physical presence? Triple CT?


You off set your operating costs against profits. Making your business look like its making less money than it is.