👽ENS: EP8

Proposal to reimburse TNL for unexpected tax burdens on behalf of ENS.

Summary:

This proposal has been introduced in an effort to compensate True Names Limited ( for an increase in taxes due to revenue for ENS far exceeding estimates, and resulting in an increase in TNL’s tax burden in Singapore.

Prior to ENS becoming a DAO, TNL had identified themselves as the beneficiary owner of the multi-sig wallet that received taxable revenue accrued from ENS annual-fee model. The reason TNL was named the beneficiary for the multi-sig was in an effort to ‘shield them [7 individuals drawn from the Ethereum community] from tax liability.’. This made TNL responsible for tax on revenue from ENS, which historically was paid for using revenue from short-name auctions. However, when ENS announced their plans to decentralize revenue jumped to a point where these tax obligations were no longer sustainable, thus TNL is requesting additional funding to cover these tax obligations.

Rationale From EP8 proposal:

The calculation used to determine the tax owing used the actual income to October 20th, plus a 1/12th buffer to cover the anticipated income between the launch of the DAO and its potential request for control of the funds from the keyholders. This total came to $2,163,921 USDC. However, this failed to take into account the enormous uptick in interest that the announcement of the DAO produced, and so falls significantly short of True Names’ actual tax obligations for FY 2021. This proposal requests that the DAO sends True Names the remainder of the funds required to cover the multisig’s income during the period that True Names was the beneficial owner.

After deducting the estimated $2,163,921 pre-payment by the multisig, TNL's remaining tax liability for FY2021 is $1,232,770. TNL also incurred expenses in January 2022 on behalf of the DAO, in the amount of $48,637. The total compensation proposed is $1,281,407

Total 2021 Revenue: $19,980,536.41 Singapore’s Tax Rate: 17% Total 2021 Taxes: $3,396,691 Pre-Paid by ENS: $2,163,921

Remaining Taxes Owed:

$1,232,770

January 2022 Expenses:

$48,637

Total Compensation Proposed:

$1,281,407

Proposal:

Snapshot:https://snapshot.org/#/ens.eth/proposal/0xdf7e59e58ab0cf5ee0a591bd65369db3ee5091ae3b7ca696a0d31c2eac9959f5 Governance Doc:https://docs.ens.domains/v/governance/governance-proposals/ep8-executable-reimburse-true-names-for-expenses-and-tax-obligations-incurred-for-the-dao ENS Forum Discussion:https://discuss.ens.domains/t/ep8-executable-reimburse-true-names-for-expenses-and-tax-obligations-incurred-on-behalf-of-the-dao/10053

Recommendation:

I recommend that the Rabbithole metagovernance pod vote 'Yes' on the proposal to reimburse TNL for the increase in unexpected tax costs. This appears to me as a pretty straightforward and respectable business practice on behalf of ENS.

Open Questions:

Feedback:

Execution status: Executed

Vote: Yes

Community Vote

• 13 Y

• 0 N

Pod Vote

• 19 Y

• 0 N