[dongvsascript]

it's the method i used to move capital in my small american business when i opened an office in russia. a company in another country is a separate legal entity. you charge market rates, as you would any other company. it has zero to do with my post.

the complaint is profit is taxed instead of revenue. the complaint is not valid.

[nl]

Do you really believe Google makes no profit in Australia?

I understand for accounting purposes they don't. But they make a lot of money with very little expenses...

[dongvsascript]

Right - they have very little in expenses in Australia. Because all the development and maintenance is in other countries. That is my entire point. So they take the market value (transfer price) of the expenses and transfer that money to countries where those expenses are incurred. They then pay for expenses related to their local offices and 2000 employees. What's left over is called profit, is taxed in Australia, and they paid $100mil of taxes on that profit last year.

Lets say you are sitting in Chicago. You create a search engine, get a thousand developers working on it. You then set up an Australian portal for that web page, on which Australian businesses buy ads. In your version, the costs for Australia are zero. In reality, those costs include the development of the search engine in Chicago.