Rekindle 2003

Chapter 1177 Life and Survival

After hearing this, Kong Ziqian immediately got the point, "So, this is the key point he is focusing on?

Related-party transactions involve country-specific parts and there is also a value-added part in the middle, so he thinks this is not tax-exempt? "

During this month on the ship, he did more than just play on the computer.

Although he had just finished his freshman year, as a Chinese university student who could prepare for the entire semester in a week, a month on the ship was enough for him to finish the courses in international economics, tax law, and international trade practice.

After going through one semester in college, you will understand that if you just want a passing score or a score that is not too bad, it is enough to memorize the condensed version of the summary before the exam.

For most people, college actually can be summarized into three courses.

Study, interpersonal relationships, and love.

Kong Xiaopang was not burdened by the third course and his first two courses were doing well.

What's more, the people on the ship were all practical people who were far better than university teachers in practical operations. Kong Ziqian, who was good at interpersonal relationships, could easily "know the facts" and "know the reasons behind them".

Bai Le, who likes to talk to smart people, sighed and said,

“That’s right. It was then that I realized that the entire VAT (VAT) system in Tanzania was established by him.

Ken understood this very well and hit the nail on the head, which is something Hua Wei couldn’t explain before.”

Kong Ziqian was also dumbfounded when he heard this.

This round...

Theoretically it is unbreakable.

As Bai Le said before, in this matter, the timing and location are not on their side.

As for people and...

"So, you want to establish a gaming relationship with Ken?"

Teachers who have never actually had experience in running a company will say that taxation is a set of rules and regulations, and they will ask students to memorize and follow the rules.

However, Confucius Qian, who was forced to teach himself, did not experience this kind of torture.

Under the guidance of a group of practical people, he believes that tax relations are never dogmatic but rather game-based.

Because schools only teach tax laws, but after entering society, the actual operations are called tax practice.

Theoretically speaking, taxpayers lose and the government gains, and the sum of their gains and losses is zero. From the perspective of game classification, this is a zero-sum game.

Illegal tax evasion and tax avoidance is definitely wrong and should be severely punished.

However, tax avoidance within the rules is permitted by the spirit of the legal system.

Tax evasion and anti-tax evasion between tax authorities and multinational corporations has always been a battlefield without gunpowder in international trade.

However, for the tax department, there must be a limit to anti-tax avoidance.

The ultimate goal of taxation is to obtain sustainable fiscal revenue, not to drain the pond to catch fish.

Especially for small countries, if the tax burden is too heavy and multinational corporations become unprofitable, they will simply vote with their feet and leave, and the tax bureaus should commit collective seppuku.

There is a certain amount of room for modification in the design of the tax system, especially in its implementation, in order to address and balance different interests and demands in practice.

Therefore, the real tax relationship is not the fighting and killing in the underworld, but the human relationships in teahouses, coffee shops, and drinking parties.

This is not about corruption, it's just reality.

For the Yanhuang Group at this moment, solving the historical problems left over by Huawei is also a form of tax planning for itself.

Truly effective tax planning is actually based on business relationships. The core of tax planning lies in the business itself, rather than simply accounting processing.

Reasonable business model and organizational structure design can reduce tax costs.

Therefore, tax planning is not just the job of accountants, but a process involving business, finance and senior management of the company. In fact, accountants should be ranked after business in this process.

The prerequisite is that there must be a business model before there can be tax planning. Businesses that do not understand finance or have no awareness in this area are only qualified to be small Karami, or in other words, this company is a small Karami company.

Thinking of this, Kong Ziqian looked at Bai Le in confusion and added, "So, what we need to solve now is to reach an agreement with Ken on the profit retention rate of overseas subsidiaries?"

Since it is a game, it is about how the benefits are distributed.

Bai Le looked at Kong Ziqian and nodded with satisfaction, "Not bad, young man, you have a very intelligent way of looking at things."

Confucius danced proudly at his eyebrows.

It’s not for nothing that I get the second highest GPA in the department!

Second only to a certain shameless cheap boss.

They are aliens, there is no comparison.

“So, how much should we leave for them?”

But at this time, Bai Le smiled and shook his head, "Our demand is not to leave a single cent for overseas subsidiaries.

In other words, subsidiaries established in overseas countries cannot retain any sales gross profit on their books. This is the iron rule set by President Xiaoqing.

All the funds needed for its operations are financed by internal bank loans of the parent company.”

Kong Ziqian looked at Bai Le in confusion, waiting for his explanation.

He thought this was a bit too much.

Under the turnkey distribution model, all goods sold by the subsidiary come from internal transaction purchases of the parent company, and the subsidiary's profits come from the difference between purchase and sales prices.

In order to achieve zero gross profit on sales, the difference between purchase and sales prices must be zero. In fact, when the subsidiary purchases from the parent company, it has already imported all the profits from the transaction into the country.

If the subsidiary has no gross profit from sales, there is no question of any operating profit.

After operating for several years, the book revenue looked good, but the costs were always being spent, and there was no profit at all. The book loss was directly negative, and the assets were not enough to cover the debts...

Kong Ziqian seemed to get the point. "When the time comes, will the parent company directly restructure the debt of the subsidiary? Will debt be converted into equity?"

Bai Le shook his head. "What Xiaoqing meant is that when that day comes, we should just go bankrupt and liquidate, and set up a new one."

He licked his lips and continued, "Xiao Qing always said that the registered capital of overseas subsidiaries should not be too large and should be based on the minimum registered capital required by the local authorities.

For example, in Tanzania, our registered capital is 20 Tanzanian shillings, equivalent to RMB 2600.

In this way, even if we lose the lawsuit in the future, we will only bear the legal responsibilities within the limit of the registered capital, and we will not need to make up the registered capital additionally because the court ruled that the debt-to-equity swap is invalid. "

Bai Le also felt at first that this operation was too extreme and too shameless.

But after fully understanding the tax practices of various countries, especially the magical operations of a major country in South Asia, he also understood.

Debt-to-equity swaps seem reasonable and are generally recognized by the world, but in this kind of situation, if things go wrong, the tax authorities of other countries can use litigation to determine that the action is invalid.

This is something that a certain mysterious country in South Asia often does.

He could understand that the so-called "speak first and then avoid confusion" is a way of interaction between gentlemen.

And interacting with people of other races, even if they are the ones with whom you have a very sweet relationship today, is interacting with villains.

'Those who are not of my race must have different hearts'. There is no pure friendship between countries. Interests are the only bond of communication. He understands these principles.

Although he understands it, he feels that some things are always a win-win situation through cooperation.

Setting up various rules and regulations to prevent thieves is actually not conducive to the development of business.

In other words, standing in his current position at this moment, he felt that all these rules and principles of the cheap boss were just an incentive for employees to be lazy.

Moreover, for a moment, he even wondered if Bai Le had offended that cheap boss?

It seemed as if this task was deliberately arranged.

In Kong Ziqian's view, this was simply an impossible task.

If you operate here but do not contribute any tax revenue, it will be a typical case of anti-tax avoidance by the tax department and will be investigated and dealt with directly wherever you are.

Taxation should be moderate, and tax evasion is even more so.

Especially what Bai Le had said before about the "right time" for Tanzania's financial problems, made Kong Ziqian feel that this was just a deliberate trick by the cheap boss.

but……

Did Bai Le bring him here in order to pass the blame on to him?
Kong Ziqian rolled his eyes after hearing this. "He's treating others as idiots, right? How could other countries agree to this? This won't work, Brother Bai, I suggest you report this to the headquarters right away and don't waste time."

Bai Le raised his eyebrows and squinted at him when he heard this, "You kid, you finally finished reading this book."

Looking at Kong Ziqian who was somewhat unconvinced, Bai Le burst into laughter.

He asked Confucius in return: "Why don't these small countries agree?"

Confucius was stunned for a moment, looked at him in confusion, and said: "Taxation is the foundation of government revenue. If you don't let these countries make money, how can they agree to do business with you?"

Bai Le smiled and said, "But we have already signed the order."

Kong Ziqian immediately retorted: "Yes, the order has indeed been signed, but the tax cannot be exempted. Isn't this the problem you are facing now?"

Bai Le patted him on the shoulder and said, "Taxes are indeed the foundation of government revenue. You have learned this very well and have understood it correctly. However, taxes are also divided into direct taxes and indirect taxes..."

Confucius Qian opened his mouth to speak, wanting to interrupt him and explain to him what direct taxes and indirect taxes are.

Bai Le chuckled, waved his hand, and said, “Don’t interrupt me.

You know, I just graduated from a non-key university and I am not good at tax law.

But putting aside the rules and regulations of turnover tax and non-turnover tax in the tax law and the definitions of direct tax and indirect tax in the books...

In my opinion, there are two kinds of taxes: one is collected directly from the taxable object, and the other is collected indirectly. "

He smoked a cigarette and continued, "If the government wants to obtain income from taxes, one way is to collect taxes directly from enterprises, such as corporate income tax and profit tax, and the other way is to collect taxes from people's consumption in the circulation and sale of goods, such as value-added tax and consumption tax.

The definitions of various taxes in the book are too complicated. In fact, they are just trying every possible way to explain the rationality of this tax.

In my opinion, it is about how to meet the interests of small governments.”

Confucius frowned and said, "But you are cutting off the source of the problem, which will harm the interests of these small governments."

Bai Le shrugged his shoulders and said, "Why do you think so?"

Kong Ziqian frowned, thinking that this guy was just quibbling.

Bai Le smiled and said, "Let me ask you, under this model, our products do not have additional value-added tax, so who is the beneficiary?"

Confucius thought about it, understood, and said: "It is the people of these small countries. The price of goods is cheap, so the people can naturally afford it."

Bai Le clapped his hands upon hearing this, but Kong Ziqian could not see a smile on his face, only ridicule.

Confucius Ziqian naturally knew that he had probably said something stupid, but he was thick-skinned and immediately asked humbly.

Bai Le rolled his eyes and said, "The capitalist people are worthless."

After that, he shrugged his shoulders and continued, "My biggest feeling after being out for half a year is that, except for our country, in this world, the lives of grassroots people are just rotten lives.

And most of the time it’s worth less than a dog, less than you think.”

He paused and continued: “In capitalist countries, especially in places like Africa, the value of the people is often seriously underestimated.

The economic system here is aimed at capital accumulation and profit maximization, and the living standards and rights protection of ordinary people are often neglected.

The government and businesses are more concerned about how to make more profits rather than how to improve people's living conditions.

As a result, the quality of life of grassroots people is often very low, and in some cases, their lives are not even guaranteed.”

“For example, in some African countries, children cannot go to school due to poverty and have to engage in child labor, working in dangerous environments every day for only a meager salary.

Their life safety is not guaranteed and their health is seriously threatened. In some wealthy countries, however, the living conditions of pet dogs are much better than those of these children.

Dogs have special food, medical care, and even pet insurance, but these children are struggling to meet even the basic needs of life.”

“For example, when we talk about a mysterious country in South Asia, we often say that its residents live in extremely harsh environments, lack clean drinking water and sanitary facilities, and are rife with diseases, while residents in wealthy areas enjoy modern infrastructure and high-quality life services.

This huge social inequality has led to a serious devaluation of the value of life of slum residents.

But in Africa...

You can walk around the city and find slums that are much poorer than you would expect in such a poor part of Africa.

Even the slums in South Asia are a paradise for them.

Look at the internet now, many people in our country say that the life they lead "can't be called living, it can only be called survival".

But, if you let them come here and take a look, the people here...are the ones who really can't even talk about living, or even..."

At this point, Bai Le sighed, "I now understand more and more what He Shen said, 'Are the victims of the disaster still human beings?'

Indeed, they are no longer human beings. ‘People who are about to die of starvation are no longer human beings, they are animals’…”

Kong Ziqian was so shocked that he said with a sullen face, "How could it be so tragic? Where is the UN aid? Where is basic humanitarianism?"

He is not stupid. Being hungry is one thing, but when people are extremely hungry, they can do anything.

Eat by exchanging children...

Cooking the bones...

"Old and thin men are called 'Rao Ba Huo', young women are called 'Bu Xian Yang', children are called 'He Gu Lan', and generally known as 'Two-legged Sheep'" is the bloody record in "Jilie Bian" by Zhuang Chuo of the Song Dynasty.

Lu Xun's "Zhun Fengyue Tan·Copying Target" is even more straightforward:
"When Huang Chao rebelled, he used humans as food, but it is wrong to say that he ate humans. What he ate were called two-legged sheep."

Confucius swallowed hard, he wanted to say, now we have a civilized society.

At this time, Bai Le just sneered, "Kong Ziqian, you must understand in the future that in this world, not everyone can enjoy the most basic equality and dignity like in our country.

In many places, the lives of grassroots people are very difficult, and the value of their lives is seriously underestimated."

Having said this, Bai Le held back, not wanting to say anything more in front of the young man. He just patted Kong Ziqian on the shoulder and sighed.
Said: "Some things...you should see them with your own eyes in the future."

He continued: "To get back to the point, after excluding taxes, our products are cheaper for their own companies."

Kong Ziqian was so shocked by the previous words that he couldn't recover from his shock and just nodded mechanically.

But the clear stupidity in his eyes made Bai Le realize that this guy didn't understand at all.

He also knew that what he said today was too heavy for a college student like Kong Ziqian who was still in an ivory tower.

But there is no way.

This is Africa.

If we look at this place from the perspective of modern civilization...

The trip was fine, I just left after a few days, no big deal.

If you still look at business in this way, then in a few years the grass on your grave may be growing lushly.

Zhu Zhaojiang wanted to teach boy scouts like Kong Ziqian how to compete in international trade, but he...

Bai Le could only give them instructions like a nanny, telling them about the secretive and dark things under the card tablecloth that could not be shown in public or in the sun.

Bai Le paused and continued to explain, “In my opinion, for Hua Wei and even for us, in this kind of cross-border transaction, the beneficiaries in the countries where the products are received are divided into three levels.

In the sun, in the shadows, and those that cannot see the light.

Let’s first talk about the beneficiaries in the sun, who are the easiest to see.

The essence of taxation is how to meet the government's fiscal needs while minimizing interference with economic activities.

The difference between direct tax and indirect tax is that direct tax is levied directly by the government on businesses or individuals, while indirect tax is levied through the transaction of goods and services.

Under our model, through turnkey distribution, Huawei signs the project with the Tanzanian government customers, but the services are subcontracted to Huawei's Tanzanian subsidiary.

In this way, the profits of the subsidiary are actually transferred to the parent company through internal transactions. There is no profit on the books of the subsidiary, so there is naturally no corporate income tax.

As for the value-added tax, since we do not conduct value-added activities locally, we do not need to pay it.

As a result, these small governments are unable to obtain direct tax revenue from us.

So, at this level, we cannot deny that their interests have indeed been damaged.”

……

(End of this chapter)