Jan 11, 2014

Singapore GDP fueled by revenue accounting of Microsoft and Apple

According to this US report on tax loopholes, just accounting shifting by Microsoft alone shows $3 billion revenue for Singapore.
In 2011, two controlled foreign corporations established by Microsoft paid the U.S. parent corporation $4 billion for certain intellectual property rights to reproduce and distribute Microsoft products abroad. Microsoft Singapore paid $1.2 billion for rights to Asia; Microsoft Ireland paid $2.8 billion for rights in Europe. That same year, Microsoft Singapore reported revenue of $3 billion from relicensing those same rights in Asia, while Microsoft Ireland reported $9 billion from Europe. In short, Microsoft USA “sold” rights to its intellectual property to those subsidiaries for $4 billion, and its offshore subsidiaries then turned around and sold those same exact rights for $12 billion, in effect enabling Microsoft to shift $8 billion in taxable income offshore in a single year.
By doing good accounting, Microsoft increases Singapore's GDP. Microsoft is not the only company doing this. See this US report about Apple. According to Reuters,
Apple South Asia Pte Ltd, however, its Singapore entity, booked $14.9 billion in revenue for the 12 months to September 2012 - more than it would have received had the country's entire 5.3 million population each bought an iPhone 5S, an iPad Air and a MacBook Pro.
With Singapore's GDP at about $300 billion, such accounting practices from Microsoft, Apple and other giant corporations have a huge impact on GDP growth statistics.
Should such Goodwill of a country be counted as a common wealth, belonging to its citizens?

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