How do you place value on an import? Let's say you import an Airbus, and you have to declare its value. Do you just add up the kgs of aluminium and plexiglass and carbon fibre and steel? Or do you itemise it and say you paid this much for the engines and this much for the fuselage? How do you account for the labour? Or the R&D? Nevermind the computer system(s) that flies the thing.
In the world of physical things we know the value of something based on how much someone is willing to pay for it. That should include all the materials and labour and R&D etc. So we can know how much someone paid for the Airbus and that's it's market value.
In the past, if you filmed something overseas or maybe just did the VFX work, you would send back reels of film. I imagine that most of the time when getting them through customs just the physical value was declared - ie $10k for some Kodak film. Nevermind the fact that you may have paid someone overseas $100 million for the completed movie. From a customs point of view it's impossible to tell the difference between someone's student film and a Hollywood blockbuster, the medium is the same.
Now deliver the film digitally and all trace of it goes away. So Hollywood can send a check for $100 million to the UK and get back a digital copy of a film which doesn't show up as being imported at all.
The complicating issue here is that someplace like the UK might offer a 25% subsidy to make the movie there, so you spend $100 million, get a digital copy of the film and a check for $25 million from the UK (or just pay $75 million depending on how it's arranged). Which causes jobs to be lost in the US, but it's harder to see than when someone changes the price of steel because the actual product is invisible to the normal import process. Why is a movie different than an Airbus? (This could be used as an argument against tariffs and import duties in the first place (even on Airbuses), ie free trade, which is why they're pursuing CVDs which came into effect through various free trade agreements.)
Not really. If the studio is HQed in California, and they paid a studio in Taiwan, they must declare that money. it is trivial to trace that and tax service accordingly.
What they do, is to "hire" those people as contractors just for that job, pay the upfront price of setting up a fake shop, and avoid all those service taxes.
Similar to you paying someone overseas for a work, versus your company having a research dept in india while HQ in Palo Alto. The upfront costs for the later are higher, but the return if you want to have the indian team larger than the US team will be better in the long run.
Of course Hollywood has accountants that have figured all of this out, they're notorious for it. It's even easier when you do business everywhere, so you can just keep profits from showing movies in the UK in your bank account in London, and the next time you want to make a movie there just pay them out of that account, and export the finished movie back to LA, and the US govt will never see any of that money.
The example about India is a good one, as we know lots of development work is outsourced. The point that this article is making is that the MPAA has argued in court that intellectual property should be imported like any other property. Of course they're doing this to stop "piracy", but the unintended side effect could be that their own IP (the original films) becomes subject to free trade agreements. If that's true, then it could also affect the software industry which is doing essentially the same thing (possibly without subsidies, just taking advantage of different costs of living and wages).
In the world of physical things we know the value of something based on how much someone is willing to pay for it. That should include all the materials and labour and R&D etc. So we can know how much someone paid for the Airbus and that's it's market value.
In the past, if you filmed something overseas or maybe just did the VFX work, you would send back reels of film. I imagine that most of the time when getting them through customs just the physical value was declared - ie $10k for some Kodak film. Nevermind the fact that you may have paid someone overseas $100 million for the completed movie. From a customs point of view it's impossible to tell the difference between someone's student film and a Hollywood blockbuster, the medium is the same.
Now deliver the film digitally and all trace of it goes away. So Hollywood can send a check for $100 million to the UK and get back a digital copy of a film which doesn't show up as being imported at all.
The complicating issue here is that someplace like the UK might offer a 25% subsidy to make the movie there, so you spend $100 million, get a digital copy of the film and a check for $25 million from the UK (or just pay $75 million depending on how it's arranged). Which causes jobs to be lost in the US, but it's harder to see than when someone changes the price of steel because the actual product is invisible to the normal import process. Why is a movie different than an Airbus? (This could be used as an argument against tariffs and import duties in the first place (even on Airbuses), ie free trade, which is why they're pursuing CVDs which came into effect through various free trade agreements.)