Popular franchises such as Transformers, SpongeBob and more may have cost U.S. tax payers quite a few dollars. This, according to a newly revealed study from The Centre for Research on Multinational Corporations. The nonprofit group determined that ViacomCBS, the parent company to Paramount Pictures, used tax shelters to avoid paying billions in taxes, potentially costing U.S. taxpayers a great deal of money over the last couple of decades.
The Centre for Research on Multinational Corporations, which is funded in part by the Dutch Ministry of Foreign Affairs, took a deep-dive look at how ViacomCBS used tax shelters to its advantage. Per their findings, the massive multimedia corporation avoided paying $3.96 billion in U.S. corporate taxes. Per the published report, here is how they explained it.
"Media companies like Disney, Netflix and ViacomCBS produce digital content such as television shows, movies and subscription channels. All of these intangible 'goods' are protected by intellectual property rights (IPs), and they are represented as intangible assets on the balance sheet. By nature, intangible assets are easily relocated from one jurisdiction to another. This means that companies that rely on intangible assets can easily shift a large part of their global profits to tax havens, where most of their profits remain untaxed. As this report will show, the international rules for the taxation of multinational companies have not been adjusted to the economics of value creation through intangible assets."
ViacomCBS has franchises such as Transformers, SpongeBob SquarePants, Mission: Impossible and Star Trek under its umbrella. All of these franchises have earned billions for the company in the 2000s. Because the company used subsidiaries located in Barbados, the Bahamas, Luxembourg and the Netherlands, some $30 billion in non-U.S. royalty revenue generated by these franchises had not been subject to corporate taxes in the U.S. ViacomCBS refuted much of the report's findings and has released the following statement on the matter.
"It is filled with mischaracterizations, material omissions and numerous false claims. ViacomCBS fulfils its tax obligations in all 180-plus countries and the territories we operate, and all of our revenues, including those identified in this report, are fully taxed in relevant jurisdictions around the world, including the United States, as required by applicable law."
While the company is standing its ground, there are more damning elements of the report. For one, ViacomCBS set up numerous Dutch subsidiaries, called letterbox companies, to funnel TV revenue through. Per Maarten Hietland, one of the authors of the study, the majority of these companies "did not even have a single employee."
Since its inception in 2007, the Transformers franchise alone has brought in more than $4.8 billion at the global box office. Mission: Impossible, Meanwhile, has taken in more than $3.5 billion since it kicked off in 1996. And both franchises have further entries on the way. Plus, SpongeBob has become a huge part of the Paramount+ streaming service, with multiple shows and movies. The Star Trek universe is also of huge importance as it anchored CBS All Access, which was the predecessor to Paramount+. This news was previously reported by the New York Times.