> contractors will be hired typically to contribute to capital expenditure
You know, operational expenses are the ones that get an immediate tax break, and capital expenditure the ones with a depreciation period.
Changing the expenses that way can only increase the company's tax payments. The only reason one could possibly want to make that change is if they want to fraudulently show the money paid for the contractors as earnings.
This is exactly what has changed [1]: R&D costs had been an immediate tax break, but since 2022 became an expenditure requiring a 5-year amortization period.
That change had been planned to be canceled before coming into force, but it was not canceled on time.
Hence the wave of layoffs in 2022, as companies were urgently trying to improve their balance sheets, as investors and the Wall Street requested, AFAICT.
If you have time, how can capex, an expense, appear as earnings? (I'm pretty clueless about these things)
Aha, it's that: "Opex is subtracted from earnings before public reporting and before taxes" (I see in other comments here),
but capex is not subtracted, so then it looks as if the company is doing better, on paper, although it's not. And this works only for a while, maybe some years? Which might be long enough for the current management, if they leave before things get too bad?
You know, operational expenses are the ones that get an immediate tax break, and capital expenditure the ones with a depreciation period.
Changing the expenses that way can only increase the company's tax payments. The only reason one could possibly want to make that change is if they want to fraudulently show the money paid for the contractors as earnings.