• Skip to primary navigation
  • Skip to main content
Market Hill | a northdoor group company |

Market Hill | a northdoor group company |

Working on big, expensive, complicated technology problems.

  • Home
  • Market Hill in the news
    • The Library
      • Guide to Tech Value Creation
      • AWS re:Invent 2020 simplified
      • AWS Cheat Sheet
  • What you can expect
  • | Tech Product Value Creation™, by Market Hill |
  • About Market Hill
    • Our relationship with Northdoor
  • How to get in touch
  • Show Search
Hide Search

Cloud cost optimsation

How to net out the Global Minimum Tax (GMT) by reducing cloud cost

Thomas Ballard · June 11, 2021 ·

A G7 announcement out of Cornwall that you won’t have missed is the introduction of a global minimum cooperation tax (GMT). Some PortCos could see their corporation tax bills increase by 5-10% overnight.

Today we’re going to look at how you could net out this increase using the same model cost introduced last week. If you missed that you can find it here.

https://themarkethill.com/putting-a-dollar-value-on-cloud-cost-optimisation/

This might feel like one of those school exam questions by the end. You remember the ones…

‘Jane drives at an average speed of 45 mph on a journey of 135 miles. Chris cycles at an average speed of 8 mph for 15 miles. If they all leave their homes at the same time, who arrives at their destination first?’

Let’s assume your PortCo currently pays 8% corporation tax

They are a SaaS service provider. They have an annual revenue of $100m and make 50% profit. We’ll call them PortCo B.

PortCo B can offset at least 20% of their tax bill through legal mechanisms.

Their corporation tax bill after these offsets would be $3.2m before the GMT.

With a GMT this, would be $6m.

You need to find a spare $2.8m from somewhere

As a SaaS business, It’s not uncommon for a firm PortCo B to spend at least 20% of their revenue on Technology, $20m p.a.

If we assume that 30% is allocated to cloud infrastructure and services this would be $6m p.a for PortCo B.

Most cloud estates are oversized at least 50-70%. The optimisation opportunity for PortCo B would be at least $3m p.a.

What other mechanisms are you looking at to reduce the GMT impact?

How long do you think it will take to net out this impact? Has the discussion started yet with your PortCo leaders? Who is leading the charge?

Even if you aren’t impacted by this tax increase this cloud cost is still sitting there…

Until next time.


Thomas

  • Twitter
  • LinkedIn

You can sign up for more ‘unconsidered needs’ below.

If you want to get more ‘unconsidered needs’ direct to your inbox you can sign up below…

Market Hill | a northdoor group company |

· Market Hil © 2023 | a northdoor group company ·

  • Privacy Policy
We use cookies on our website. By clicking “Accept”, you consent to the use cookies.
Cookie settingsACCEPT
Privacy & Cookies Policy

Cookie Policy

Cookies

  1. A cookie consists of information sent by a web server to a web browser and stored by the browser. The information is then sent back to the server each time the browser requests a page from the server. This enables the webserver to identify and track the web browser.

  2. We may use “session” cookies, “persistent” and “Google advertising” cookies on the website. We will use the session cookies to: keep track of you whilst you navigate the website. We will use the persistent cookies to: enable our website to recognise you when you visit. We will use Google advertising cookies to collect data about your traffic and identifiers, also to link activity across devices and measure conversion events but it is done in a way that does not personally identify you.

  3. We use Google Analytics to analyse the use of this website. Google Analytics generates statistical and other information about website use by means of cookies, which are stored on users’ computers. The information generated relating to our website is used to create reports about the use of the website. Google will store this information. Google’s privacy policy is available at: http://www.google.com/privacypolicy.html.


Disabling cookies

You can typically remove or reject cookies via your browser settings. In order to do this, follow the instructions provided by your browser (usually located within the “settings,” “help” “tools” or “edit” facility). Many browsers are set to accept cookies until you change your settings.
Further information about cookies, including how to see what cookies have been set on your computer or mobile device and how to manage and delete them, visit www.allaboutcookies.org and www.youronlinechoices.com.uk.

Conversion / Tracking pixels

We pay for advertising from marketing partners on other sites, for example, Facebook/LinkedIn. These third parties sometimes require that we put a tiny image (“pixel”) from their site on any landing pages that users might arrive at. These pixels can create cookies for the third party so we can work with them to understand how successful their marketing campaign was. We also need to understand where a user came from, so that, if the user goes on to sign up on our Website, we can pay the correct marketing partner for their service. This website uses retargeting services from the social network LinkedIn. LinkedIn collects certain information via cookies to determine which web pages are visited. This data is then used to associate your browser with demographic categories, and serve LinkedIn ads based on your past visits to this website. Please note that any information collected by LinkedIn via cookies is not linked to any customer’s personal information collected by us.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT