ByteDance Expects to Pay Billions in Taxes, but Says Unaware of $5B 'Educational Fund'

September 21, 2020 11:16 am

Chinese internet giant ByteDance released a Chinese statement on several issues surrounding the Oracle-Walmart-TikTok deal, responding to US President Donald Trump's claim and media reports that the company is giving the US Treasury $5 billion in taxes as part of the deal, and/or establishing a so-called education fund.

The company said that the reported $5 billion amount is actually a rough estimate on the corporate income tax and other operating taxes it might pay in the future years for the continued operation in the US. 

"TikTok is fully optimistic in its future development, but the exact amount of tax will depend on the actual development of the business and the tax structure in the US," ByteDance said in the statement, adding that this tax estimate is unrelated to the TikTok deal.

ByteDance said the company had reached a deal with Oracle and Walmart to set up a new entity called TikTok Global (TG for brevity). TG will be 100% ByteDance owned at first, but will become a joint venture after a Pre-IPO financing round with Oracle and Walmart taking as much as 20% stake, in exchange for letting the two US companies take initiatives in TikTok's cloud infrastructure and e-commerce businesses.

ByteDance founder and Global CEO Zhang Yiming, together with the company's current board members, and Walmart CEO Doug McMillon, will all sit on TG's board.

The company said that the deal with Oracle does not include any transfer of technology and algorithm, and Oracle will only be given privilege to audit TikTok US' source code. The company added specifically that showing source code is a common practice used by multi-national companies, such as Cisco and Microsoft, to resolve data security issues.

ByteDance claimed that it is unaware of a so-called $5 billion "education fund" that President Trump mentioned and media outlets reported.