Nvidia Singapore Sales: A Peek Behind the Curtain
- Mar 4
- 3 min read
Every tech company CFO knows the double Irish Dutch sandwich. Before you start fantasizing, no, this is not the theme of an OnlyFans threesome. It is a tax planning scheme used by US Big Tech to lower their tax rate.
Nvidia (NVDA) has found a better one – Singapore. No sandwich, no satay. Just Singapore. @chsmrrll and @kakashiii111 managed to obtain records of Nvidia Singapore (turns out, anyone can buy this information directly from the public registry, but nobody else thought of it!).
Let’s start straight from the shocking news. Singapore accounted for 71% of Nvidia group revenue in FY 2024.
Group revenue? Every big company uses a holding structure with a parent company and multiple subsidiaries. When they file financial statements, they eliminate intra-group company transactions and present consolidated financials for the entire group of companies.
A single Nvidia subsidiary – Nvidia Singapore Pte Ltd – accounted for 71% of group revenue.
For the 2024 financial year (ended Jan 28, 2024), Nvidia reported an overall gross margin of 72.7% and net income margin of 48.8%.
Any guesses as to the profitability of the Singapore entity? Singapore has lower corporate tax rates than the US and is a whitelisted, business-friendly jurisdiction. One could reasonably expect the company to report at least a 30% net income margin. The actual number: 6 basis points.
For FY 2024, Nvidia Singapore reported a net profit margin of 0.06%!
The company reported profits of $26.9 million on revenue of $43.2 billion.
Let that number sink in.
OK, maybe the company has better tax structuring than other Big Tech companies. Nvidia’s auditor – PwC – invented the Double Irish Dutch Sandwich. Recently, they played both sides of the table in Australia. PwC “consulted” with the Australian government in framing new tax laws, while simultaneously leaking the proposed new rules to its Big Tech clients so they could front run them. In fact, PwC partners actually marketed their access to privileged information when talking to prospective US tech clients!
A less damning explanation: maybe Singapore sales simply aren’t as profitable for Nvidia as anticipated.
Now comes the next plot twist. Nvidia’s Form 10-K shows Singapore contributed $6.83 billion in revenue in FY 2024.
The way Nvidia defines it, the end customer may be a member of the Taliban, but as long as the invoice is raised to a Singapore company, his location is Singapore. Let’s say all revenue from Singapore clients get booked at Nvidia Singapore. Let’s also assume all revenue from Taiwan, China, Hong Kong and Other get booked at Nvidia Singapore.
That still amounts to only $34 billion of the $43.2 billion.
Recall what I said earlier about consolidated financials. The remaining part of the Singapore revenue can reasonably be presumed to be intra-group transfers.
If Nvidia’s actual sales to its customers are wildly profitable, as the company's gross margin indicates, then the revenue associated with intra-group transfers needs to be wildly un-profitable in order to get the net profit margin down to 6 basis points.
Singapore has transfer pricing laws to prevent such abuse. Transfer pricing rules broadly state that intra-group deals need to be negotiated on an arm’s length basis, as if the transaction is occurring between Nvidia and a real customer.
If the $34 billion in real sales has a 50% profit margin, the remaining $9.2 billion in intra-group sales needs to result in a net loss of $16.97 billion to arrive at the reported net income of $26.9 million. And this net loss is presumably captured as a gain by a subsidiary in a tax haven, which makes the group P&L look great.
Alternative explanation: Nvidia is overstating its net income and the 6 basis points profit margin of the Singapore entity presents the true picture.
Or, the data published by ACRA Singapore is wrong.
Or, PwC is just too darn good at its job and reverse engineering this will be up to forensic accountants.
I’ll wait for the movie to find out. This is getting too bizarre and figuring out what Nvidia and PwC are up to is now well beyond my pay grade.
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Good Trading!
Kashyap