Alibaba exec explains why company won't buy Yahoo

Alibaba exec explains why company won't buy Yahoo

Alibaba's Joseph Tsai said his company will not buy the remaining piece of Yahoo, which includes a large stake in the Chinese e-commerce giant, because it would face a hefty US tax bill in order to do anything with those shares.

"If there was an easy tax solution someone would have figured it out already," Tsai, Alibaba's executive vice chairman, said Tuesday at the Delivering Alpha conference sponsored by CNBC and Institutional Investor.

Last year, Yahoo had planned to spin off its roughly 380 million-share Alibaba stake into a separate entity before the deal lost tax-free status. It then sold its core internet business to Verizon for US$4.8 billion (S$6.6 billion), leaving the Alibaba stake within the company's remaining assets.

Tsai said buying back the shares contained in Yahoo "does not solve our tax problem" because it is still a US corporation.

Global tax issues are increasingly central topic for investors, businesses and policy-makers, as some large global companies increasingly use cross-border strategies in order to minimise their tax bills.

The United States has one of the highest corporate tax rates among developed nations at 35 per cent; at the same time, many US-based companies manage to avoid paying significant taxes thanks to loopholes in tax laws.

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