Go read up on Broadcom. This US Company is called a Fabless Semiconductor company – it doesn’t own any manufacturing resources because 100% of it’s manufactured products are either outsourced or licensed to other manufacturers.
The company in Singapore is purely a tax shelter office configured to capture all the transfer pricing/accounting profits & loss machinations from their operating activities free of taxation from the other tax jurisdictions.
People who used to work at regional MNC HQs should know all the tricks in the book that MNCs used to capture profits at the HQ level. The corporate HQ engages outside tax consultants. employ sophisticated accountants to keep a set of books that do not pay any tax to the authorities & allow global profits to be kept offshore away from the US IRS.
These offices don’t employ a lot of people and actually a lot of the business decisions originate from the country of domicile ie. the US. Singapore & HK are home to a lot of these tax exiles because they have both a financial centre & a transshipment port. A lot of these tax routing activities involves financial transactions as well as container transshipment to generate a certificate of origin to justify the tax incentives. The other thing is the raft of tax treaties & double taxation treaties that Singapore loves to sign with other countries.
The problem is that these are replicable in other tax jurisdiction. Ireland, for example, is a favourite of Apple & Google because it is a lot closer to the US than the Singapore & HK locations. There are also a lot of independent banking jurisdictions in nearby localities such as Jersey, Guernsey & Isle of Man which operates important financial activities for the ultra-rich & the wealthy.
A lot of Singaporeans are not worldly wise enough! – they see Ireland’s minimum wage as a disincentive compared to Singapore but Ireland’s attraction is more than just the minimum wage – there are the length & breadth of financial services, offshore banking services and tax-free residency. A great number of City (of London) fund managers & private equity managers are physically based in Jersey & Guernsey for tax residency reasons splitting their time between the islands and their London office.
At the end, Singaporeans are just land turtles in an international world of sophisticated financial flows and offshore tax avoidance. Singapore is not sophisticated enough! Truth is Singapore don’t have the finance environment to attract the big fishes of the financial world! No true financial genius would want to live in Singapore – it is too far flung, not financial communities of like minds & the climate is oppressive – too hot & humid!
Angry Singaporean