interesting article. i don't believe the 'ark international' you have found is related to ark technologies or cettire in anyway, there is a ark technologies annual report (one of top results after googling) and it doesn't mention it as a subsidiary anywhere there or in the cettire annual report.
my gut tells me there is a elaborate system here that only works where you have multiple, legally separate retailers, in different geographies, in your 'drop-shipping' network. it seems that they could be splitting transactions and recording the value cettire is paying to the 'middle' retailer and not the fee paid by the customer.
there are some highly elaborate legal ways you could pay tax on the price the retailer who sends the goods received from Cettire instead of the price charged on the website - my guess is this is what cettire is doing.
also your article today about the lack of registered businesses under Ark and Cettire is a bit off the mark - i know a lot of retailers that have subsidiaries in various jurisdictions whose names have nothing to do with the parent companies name. needs more digging than that.
Hey gunter man, thanks for reading. I'm afraid you are incorrect regarding Ark International Pty Ltd - it's listed right there on page 20 in Note 16 of the accounts "Interests in subsidiaries". https://tinyurl.com/CTT1H2024
It was incorporated in October 2021 so perhaps you are googling an old Ark Technologies report.
Your understanding of US customs law also appears faulty - duties are payable on the price the customer paid irrespective of any intermediate recipients outside the US. If there was an interposed entity in the US, then that would be liable to duties - however it is the consignee who DHL is contacting to pay the missing duties.
State sales taxes would be payable on the amount the customer paid irrespective.
ah you are correct re ark international, chalk that up to a failed ctrl+f - must have misspelled it
i generally agree on the tax being dictated by the end customer transaction - though there are some hypothetical ways transactions could be structured across geographies/legal entities to reduce the paid price in the eyes of customs. highly sensitive area. i have discussed this while spit-balling with someone i know who is knowledgeable in the area, and they agreed there were some technically possible ways it could be pulled off - albeit legally risky.
but from a purely macro perspective - i find it difficult to marry up the fact that what your article potentially insinuates that grant thornton (auditor) has not caught onto the fact that cettire is selling into two major us states without paying tax and also avoiding duties. i haven't worked in a public company global retailer before but from asking around, these are pretty typical things that would be looked at in an audit of such a company. not sure how that could be missed over multiple audit periods?
"Legally risky" doesn't really accord with a listed company with a >$1.5bn valuation.
As to the general question whether audits can be expected to turn up any nefarious activities, your faith in the industry is touching. Past investors in Wirecard, Enron, Tingo - closer to home perhaps even current ones in Dubber - would be able to guide you on the limits of audits.
>"Legally risky" doesn't really accord with a listed company with a >$1.5bn valuation.
i fundamentally disagree with this point, grey areas in the law are excellent places to make huge returns on capital if you back your legal interpretation. i mean, to use an overused example, afterpay was considered by many to be a legally questionable product that was skirting multiple credit laws - it was one of the best investments in recent ASX history
Well there's no evidence they are doing what you suggested, where as it's been shown on this substack that they aren't properly registered for sales taxes in multiple states and that multiple shipments to the US have been undervalued for customs - so the point is somewhat moot.
Cettire's already been nearly a 10 bagger from float so it's been a fantastic investment to this point! As were ISX, BIG, BLA and a whole litany of one time market darlings that went to zero.
you are aware of companies like avalara, taxjar and vertex? you can be compliant with local sales taxes without ever needing to setup a subsidiary. these are very popular services with marketplace e-commerce plays. in an accounting sense it would be treated as a payment to a supplier and not sales tax - yet you would be fully compliant with the law.
interesting article. i don't believe the 'ark international' you have found is related to ark technologies or cettire in anyway, there is a ark technologies annual report (one of top results after googling) and it doesn't mention it as a subsidiary anywhere there or in the cettire annual report.
my gut tells me there is a elaborate system here that only works where you have multiple, legally separate retailers, in different geographies, in your 'drop-shipping' network. it seems that they could be splitting transactions and recording the value cettire is paying to the 'middle' retailer and not the fee paid by the customer.
there are some highly elaborate legal ways you could pay tax on the price the retailer who sends the goods received from Cettire instead of the price charged on the website - my guess is this is what cettire is doing.
also your article today about the lack of registered businesses under Ark and Cettire is a bit off the mark - i know a lot of retailers that have subsidiaries in various jurisdictions whose names have nothing to do with the parent companies name. needs more digging than that.
Hey gunter man, thanks for reading. I'm afraid you are incorrect regarding Ark International Pty Ltd - it's listed right there on page 20 in Note 16 of the accounts "Interests in subsidiaries". https://tinyurl.com/CTT1H2024
It was incorporated in October 2021 so perhaps you are googling an old Ark Technologies report.
Your understanding of US customs law also appears faulty - duties are payable on the price the customer paid irrespective of any intermediate recipients outside the US. If there was an interposed entity in the US, then that would be liable to duties - however it is the consignee who DHL is contacting to pay the missing duties.
State sales taxes would be payable on the amount the customer paid irrespective.
As for differently named subsidiaries - Cettire are required to list all of their subsidiaries in their accounts - I listed them here https://taxloss.substack.com/p/at-the-margin-cettires-taxing-issues#footnote-5-142898303
Hope this helps.
ah you are correct re ark international, chalk that up to a failed ctrl+f - must have misspelled it
i generally agree on the tax being dictated by the end customer transaction - though there are some hypothetical ways transactions could be structured across geographies/legal entities to reduce the paid price in the eyes of customs. highly sensitive area. i have discussed this while spit-balling with someone i know who is knowledgeable in the area, and they agreed there were some technically possible ways it could be pulled off - albeit legally risky.
but from a purely macro perspective - i find it difficult to marry up the fact that what your article potentially insinuates that grant thornton (auditor) has not caught onto the fact that cettire is selling into two major us states without paying tax and also avoiding duties. i haven't worked in a public company global retailer before but from asking around, these are pretty typical things that would be looked at in an audit of such a company. not sure how that could be missed over multiple audit periods?
"Legally risky" doesn't really accord with a listed company with a >$1.5bn valuation.
As to the general question whether audits can be expected to turn up any nefarious activities, your faith in the industry is touching. Past investors in Wirecard, Enron, Tingo - closer to home perhaps even current ones in Dubber - would be able to guide you on the limits of audits.
>"Legally risky" doesn't really accord with a listed company with a >$1.5bn valuation.
i fundamentally disagree with this point, grey areas in the law are excellent places to make huge returns on capital if you back your legal interpretation. i mean, to use an overused example, afterpay was considered by many to be a legally questionable product that was skirting multiple credit laws - it was one of the best investments in recent ASX history
Well there's no evidence they are doing what you suggested, where as it's been shown on this substack that they aren't properly registered for sales taxes in multiple states and that multiple shipments to the US have been undervalued for customs - so the point is somewhat moot.
Cettire's already been nearly a 10 bagger from float so it's been a fantastic investment to this point! As were ISX, BIG, BLA and a whole litany of one time market darlings that went to zero.
you are aware of companies like avalara, taxjar and vertex? you can be compliant with local sales taxes without ever needing to setup a subsidiary. these are very popular services with marketplace e-commerce plays. in an accounting sense it would be treated as a payment to a supplier and not sales tax - yet you would be fully compliant with the law.