Electronics Weekly Electronics Design & Components Tech News
The tax trick is to transfer a subsidiary’s core business to the parent, sell off the company for a cheap price to a subsidiary and then set the difference between the purchase and sale prices as a loss against taxes.
In March 2018, a three-quarters stake in Arm’s core business – Arm Ltd – was transferred to the Softbank parent company. This depressed Arm Holdings’ value.
SoftBank then sold nearly 80% of its shareholdings in Arm Holdings to Softbank group subsidiaries including the SoftBank Vision Fund.
A big fall in Arm Holdings’ book value from the $32 billion paid for the company in 2016 allowed Softbank to declare a loss which cancelled out all the profits made elsewhere in the group and reduced Softbank’s 2018 tax bill to nothing.
Throughout this stratagem, Arm remained part of the Softbank group.
Japan’s Finance Ministry is now trying to figure out how to stop the stratagem recurring.
Softbank is currently planning to put another $5 billion into WeWork and it is understood that it doesn’t want to offend the Saudis by using Vision Fund money to do it.
I would suggest, Arvin, there was an earlier and more significant success – selling 10,000 units of the Acorn Atom at £200 each. The Atom model preceded the BBC Micro model which was built to a BBC spec by Acorn who produced a working prototype for the BBC people to use in three days – that was another huge achievement!
Yes I think you’re right, zeitghost, not Clive and Hermann – Clive and Curry – I was wrong. But Hermann and Clive were certainly fierce rivals for the BBC Micro contract.
Yes an incredible journey indeed Arvin, though I would say the origins were with Uncle Clive whose sales guy Chris Curry hooked up with Hermann Hauser to try and replicate what Clive had done. It was later on that Hermann and Clive fought eachother (inc fisticuffs) to get the BBC contract.. And now it’s a pawn in a money game. But a lot of Cambridge guys have picked up a lot of dough along the way and that is good for the UK angel/VC/startup scene
Was it not Chris Curry and Uncle Clive who had the punch up in the Baron of Beef?
At least that’s what I seem to remember from the BBC drama doc of yore.
Yes, you are right about the origin, David. The BBC contract was the first success I would think.
Incredible journey for a company that can trace its origins back to an educational programme run by a state-owned broadcasting company, and state-financed schools.