Feeds

US software exports illegally subsidised, rules WTO

And Microsoft may have been a major winner...

  • alert
  • submit to reddit

Bridging the IT gap between rising business demands and ageing tools

The World Trade Organisation has ruled against a US tax scheme designed to boost exports, and according to Brussels, US software companies have been prime beneficiaries of what the WTO now says is an illegal subsidy. Do we hear the M word? Well yes, we do. Noises coming out of the EU's Directorate General for Trade (DGT)indicate that major winners from the scheme have been Boeing and, yes, Microsoft. The total subsidies (for the whole of the scheme, not just Microsoft) are estimated by DGT at S2.5 billion. It works like this. The US allows US companies to set up Foreign Sales Corporations (FSCs). These have to be incorporated in one of a clutch of US offshore locations (e.g. Virgin Islands, Samoa or Guam) or in another qualifying country. There's quite a long list of these, but the DGT says Barbados is the second most common location (after Virgin Islands), and the list also includes Ireland, which houses Microsoft's European Operations Centre and is the hub of the company's European software distribution operations. The FSC scheme reduces tax paid on export income. The EU argued, and a WTO disputes panel agreed last week, that this constituted an illegal export subsidy. New trade commissioner Pascal Lamy welcomed the ruling, and commented that the subsidy "has created an important distortion of international trade by granting an unfair advantage to US products in third markets, and has expanded over the last decade to more sectors, including computer software and agricultural products." (Our italics) Unsurprisingly, The Register hasn't had a vast amount of success in tracking down US software company subsidiaries with FSCs established in nice places that are tax-efficient. Nor does the DGT specify precisely how much the software business benefits from the scheme. But we did find a Cirrus Logic sub in Barbados, dealing in "purchasing and billing functions." Nice. Any other bids, readers? ®

The Power of One Brief: Top reasons to choose HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple ran off to IBM
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.