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Taxes are levied against profit, not revenue.

If you spend the money on operational expenses (OpEx), then you reduce your profit by that amount and thus your taxes.

If you spend the money on capital expenses (CapEx), you create assets that will depreciate in future. The depreciation can be deducted from your profit and also reduce your taxes in forward periods.

Thus a company can arrange its affairs to have very high free cash flow but low profits. And sometimes vice versa, which usually leads to unhappy surprises for careless investors.



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