Deswell Industries (DSWL) Message Board

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Technology Stocks : Deswell Industries (DSWL)

DSWL 3.630

-1.6%

Nov 28 12:53 PM EST

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To: Ron Bower who wrote (668)	4/17/1998 1:18:00 AM
From: James R.	Read Replies (1) of 1418

Another factor you have to consider is that Deswell's tax structure is built around diversification. Part is taxed using Chinese tax code, part in Hong Kong and part in the British Virgin Islands (BVI). Paul & Ron (ref: 656 and 659) accurately described the situation with a normal 30% Chinese rate, discounted to 15% if you reinvest. Since Deswell makes a point to keep reinvesting (e.g. Toshiba machines), the tax rate is probably around 10%. Remember, this in only for part of Deswell's income. The remaining two portions are taxed in H.K. and BVI. The H.K. rate is around 16.5% and BVI is ZERO tax. If you use equal ratios (most logical guess), the average rate is probably in the 8 to 10% range. Bottom line is that Deswell pays very low taxes and it will stay this way in the future. I really like this taxation structure. Deswell may have competition, but how can they compete with this kind of diversified exposure to minimize tax liability? This is very smart management. -James

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