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SpongeBob And Transformers Cost US Taxpayers $4 Billion, Says Study

by : Julia Banim on : 02 Jun 2021 13:03
SpongeBob And Transformers Cost US Taxpayers $4 Billion, Says StudyNickelodeon/Hasbro

A new study has found that SpongeBob Squarepants and Transformers have cost US taxpayers a whopping $4 billion.

This report, published Tuesday, June 1, by the Centre for Research on Multinational Corporations, details ViacomCBS’s use of a tax shelter set up so that the company can avoid paying billions of dollars worth of taxes in several countries.

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ViacomCBS is known to be one of the world’s leading content producers, with franchises including the likes of SpongeBob Squarepants, Transformers, Mission: Impossible, and Star Trek.

Spongebob Squarepants (Nickelodeon)Nickelodeon

ViacomCBS reaches approximately 700 million consumers in more than 180 countries worldwide, with around 24% of its total revenue coming from content that is licensed outside the North American market.

As claimed in this report, ViacomCBS and its predecessor firms, Viacom and CBS, have dodged paying $3.96 billion worth of US corporate income tax since 2002, by using a system involving subsidiaries in Barbados, the Bahamas, Luxembourg, the Netherlands and Britain.

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The study found that the majority of the $30 billion worth of non-US royalty revenue raked in by ViacomCBS franchises, such as SpongeBob and Transformers, had not been subject to corporate taxes.

As per this report:

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.

Transformers (Paramount Pictures)Paramount Pictures
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As reported by The New York Times, ViacomCBS has since disputed these findings, describing the report as being ‘deeply flawed and misleading’ as well as demonstrating ‘a fundamental misunderstanding of US tax law’.

ViacomCBS has given 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.

The company then went on to add that its ‘overall global effective tax rate’ was 32.6% for Viacom between the years 2006 and 2019 and 33.8% for CBS within that same time period.

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Featured Image Credit: Nickelodeon/Hasbro

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Julia Banim

Jules studied English Literature with Creative Writing at Lancaster University before earning her masters in International Relations at Leiden University in The Netherlands (Hoi!). She then trained as a journalist through News Associates in Manchester. Jules has previously worked as a mental health blogger, copywriter and freelancer for various publications.

Topics: Film and TV, Now, Spongebob Squarepants, Tax, US

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SOMO and 1 other
  1. SOMO

    The tax avoidance structures of ViacomCBS

  2. The New York Times

    ‘SpongeBob’ and ‘Transformers’ Cost U.S. Taxpayers $4 Billion, Study Says