Entrepreneurs need to tackle three things to be successful: lure customers to a great product with a competitive price at zero tax.
A country provides us with safe living conditions, crucial infrastructure, and services to do business. A government allows us to operate in peace. For this privilege, we pay taxes. By adding jobs aka taxpayers to the economy, entrepreneurs get a break and leverage to negotiate better rates.
When I set out on this journey, I took the time to take a course on taxes. Following my first credo:
love the things you hate because they allow you to do what you love.
The other reason to learn more about taxes is that I heard Jeff Bezos – one of the world’s richest – did not pay taxes. Operating a borderless e-commerce platform at a loss automatically helps you evade local taxes. Nevertheless, this drove 137 countries to agree on a once-in-a-century global tax treaty to close just this single loophole faster than you can say: climate change.
Two things I learn during the tax course which really surprised me: all entrepreneurs made tax mistakes because they copy each other. Second, those mistakes usually originate from accountants doing the same copying from other accountants. Perhaps you wonder why mistakes perpetuate? Not getting caught doesn’t mean it’s legal, it’s just a lack of enforcement. Huh, why? Enforcement is a political nuclear bomb too explosive for me to handle.
Mistakes can be as simple as a correct invoice, or as complex as knowing the various rules and rates in each country. Especially the lather is a game of cat and mouse where the cat is any country and the mouse is any digital product. Ever wondered why many crypto companies reside in George Town. Or corporations in the USA all seemingly come from Delaware. Care for some Double Irish with a Dutch sandwich? Yes please, I’d love one with my Panama Papers.
An honest tax lawyer will say it’s complicated because every country wants its own taxes and has no authority over others. The only way to simplify rates is if all countries agree to them. Now grab the popcorn because this movie is about to have an unpredictable ending. Meanwhile, if you have a great digital product, your job is to sell to customers everywhere at the most competitive price. That price should include a fair tax rate, which can be zero. Why? Because we can use all the help to compete in a borderless market.
A good tax lawyer understands this and will help you figure that out. A smart government will support this because…just like Jeff, we could each deliver almost a million taxpayers within a year.
Any economist knows that this is the only way to stave off inflation and our ticket out of this recession.