Ireland and corporate tax avoidance

djpbarry

Fratton Fred wrote: »

Britain, Germany and the eu in general can, because the MNCs need access to those markets.

Eh, Britain allows the City of London to operate according to its own set of rules - it's essentially an "onshore" tax haven.

Scofflaw

djpbarry wrote: »

Eh, Britain allows the City of London to operate according to its own set of rules - it's essentially an "onshore" tax haven.

Actually, increasingly Britain operates according to the rules wanted by the City of London. It's a tax haven city state with a large dependent ex-industrial hinterland.

cordially,
Scofflaw

djpbarry

Scofflaw wrote: »

Actually, increasingly Britain operates according to the rules wanted by the City of London.

Absolutely - the UK is worryingly over-dependent on London's financial district. In that context, Dave C's rhetoric rings awfully hollow.

Fratton Fred

antoobrien wrote: »

But the do pay 12.5% corporation tax on their profits - which is the important word here.

The 2% (or in google's case 0.14%) figures relate to turnover, not profit - gross or net.

The Apple argument is extremely disingenuous as the company in question is an investment vehicles that takes after tax proceeds from other countries and are used to manage Apple's after tax cash pile, which counts as foreign income for tax purposes in the US.

I think we can all recognise the difference between reported profits and actual profits.

Fratton Fred

djpbarry wrote: »

Eh, Britain allows the City of London to operate according to its own set of rules - it's essentially an "onshore" tax haven.

And subsequently runs a mile when Europe starts to get too involved.

Scofflaw

djpbarry wrote: »

Absolutely - the UK is worryingly over-dependent on London's financial district. In that context, Dave C's rhetoric rings awfully hollow.

Particularly given the Tory party's similar over-reliance on City funding.

cordially,
Scofflaw

antoobrien

Fratton Fred wrote: »

I think we can all recognise the difference between reported profits and actual profits.

Reported profits=actual profits. After all it's not really a profit if you still have to pay royalties, license fees etc. on what you are producing.

jmayo

No matter how people try to swing this that what they are doing is legal, it still looks bad and it draws some unwanted attention to little old Ireland.

It is not just that we have a low rate of official corporation tax, it is that we are now seen as a conduit to affectively wash profits through.
And I am not forgetting the role of the Netherlands and ultimately places like Bermuda, Caymans, Virgin Islands, etc.
Big difference is these other countries are not in hock and visiting capitals of the world looking for handouts.

20Cent wrote: »

Anyone know if one of these IFSC based postboxes banks goes bust or is found to be laundering money or whatnot is Ireland liable?

There was a case of a Bank called Depfa which was bought by a German bank just before it imploded. Ireland would have been liable for the losses except the sale had gone through just in time. Dodged a bullet there but could there be more like that?

The German taxpayers love us for that little incident which sunk Hypo Real Estate.

antoobrien wrote: »

And they'll be very slow to do anything about it because of the nature of the trade & tax agreements. There are very few global or region-region agreements. There are over 3,000 tax treaties alone, each of which will have to be changed in order for them to get what they want.

The one to watch is the US.
Most of the companies are US multinationals HQed in the US.
Now they have huge clout, but the question is if the US government finally decide that the clout is outweighed by how much can be gained from clamping down on them.

People appear to forget most western countries, including the US, are fooked with massive deficits.
They are looking for ways of increasing their revenues and then they see multinationals, particularly those in technology, making billions in profits every year and not paying really any tax.

The move to start recovering more money is already happening with the moves on the likes of Switzerland to start opening up it's bank secrecy.

creeper1 wrote: »

...
Ireland has the right to set low tax on corporations and if anything we should lower it further to piss off the likes of Sarkozy etc.

You do know they are not even paying our low rate of corporation tax ????

creeper1 wrote: »

I understand that whistleblowers were at the root of the current issue with google (sales allegedly were made in England -something I personally don't believe) If I were google plc I'd be severely reprimanding or even firing such "whistleblowers".

It is a good thing to have whistleblowers and to have protection for whistleblowers or perhaps you have never heard of the likes of Jeffrey Wigand or even our own Eugene McErlean?
If anything we need more whistleblowers so that we know about dodgy behaviour rather than find out about it when we are all paying for it.

Cookie_Monster wrote: »

There are essentially two schools of thought: the UK / US model where nothing apart from shareholder return matters and the Japanese model where stakeholder return is more importtant (ie consideration for employees, owners, mgt, community, enviroment, gov etc is all equally important.

In fact some see a problem with Japan being the lack of thought for shareolders as illustrated with Olympus.

antoobrien wrote: »

I give you bono.

Didn't know he was a plumber, although always reckoned he knew a lot of sh**e.

antoobrien wrote: »

This attitude shows an utter lack of understanding of just how seriously companies take Corporate Social Responsibility. They are far more common than one might believe, the problem is that the projects tackled rarely get any kind of media coverage so they get little or no visibility, unless provided in the form of sponsorship, despite the millions in time put into it by employees of these companies.

These PR/marketing schemes as you describe them get help where it's actually needed, rather than where a TD/senator/councillor/interest group lobbies for it and cost the taxpayer nothing.

Didn't you say you worked for multinational with similar selling techniques to Google ?

Duggys Housemate wrote: »

More nonsense. Ireland is a country with a lower tax take than some others, it is NOT A TAX HAVEN.

No we just help the money to get to the tax haven.

Duggys Housemate wrote: »

Utter rubbish. Corporation tax does not benefit, or harm, billionaires. Just the companies and shareholders - none are billionaires.

WTF.
Can you connect dots ?
You do know some of the richest people in the world i.e. the tech billionaries, made their money from the very fact their companies were so successful and one of the reasons they were so successful is because they were so profitable, which is thanks to them not paying as much tax as everyone else ?
Will you look at the major tech multinationals in Ireland, then look at their founders/owners and work out how many of them are billionaires ?

One the determing factors in share price is company profitablity.
And those share prices determines what level of billionaires the founders/major shareholders are.

oppenheimer1 wrote: »

It doesn't really matter what other countries think because the system as it is set up suits everyone and what we are hearing is actually bluster. If there was a real desire for change it would already have happened but there isn't.

Only fly in your argument is that most of the countries that these companies derive their wealth from, i.e. where they sell most of their products/services, are up to their ears in debt and are seeing nothing back from these companies.
These countries are looking around for new cash cows to milk and most of those cows are operating out of Ireland.

antoobrien

jmayo wrote: »

Didn't you say you worked for multinational with similar selling techniques to Google ?

Yes and they take their social responsibilities seriously. Paying the legal taxes in the countries, rather than what begrudgers would like them to pay, is one of them.

Another one is the anti-corruption & ethics measures taken. The EMEA companies sell into some fairly dodgy markets where bungs are the order of business. You should see the amount of red tape everyone has to go through because of that, same with the ethics training we all have to do because of the misdeeds of certain people in Enron, Worldcom & Tyco.


I've said it before and I'll say it here again, a "fair" tax is one that somebody else pays so that one doesn't have to. A little amendment makes it a fairer tax is one that somebody else pays more of so that one can pay less.

The Rooster

jmayo wrote: »

You do know they are not even paying our low rate of corporation tax ????

The fact of the matter is that all companies pay tax at 12.5% on their profits attributable to Ireland.

The Apple 2% "deal" is a complete misnomer, which seems to have originated from the Apple CEO - the feckin eejit!

My understanding is that Apple don't use the "normal" double Irish structure, but a derivative of it that is rarely used these days.

Irish resident companies are taxed in Ireland on their worldwide income at 12.5%. Non-resident companies are taxed in Ireland on any Irish source income (eg Irish rental income) or profits from an Irish branch.

The Apple 2% company is an Irish branch of a non-resident company (i.e. the company is managed and controlled from the US and not from Ireland, but it does have some Irish operations).

The "deal" done with Revenue was to determine how much of the company's profits is attributable to the branch. Revenue looked at it and (in accordance with OECD principles) determined that somewhere between 15%-20% was attributable to the Irish operations, with the balance attributable to the IP held in the US where the company is managed and controlled.

So if you see the accounts of that company you will see profits of (say) 100 and tax of only 2. (And this is where the reported 2% tax came from). But what won't be clear from the accounts is the Irish element of those profits is less than 20, and that tax at 12.5% was paid in full on those profits.

There was a Reuters article linked in the last couple of pages that stated this was an Irish loophole. Utter nonsense; it would be more correct to state it was a US loophole. Its absolutely not Ireland's fault that the US decides not to tax the other 80% of that company's profits because of the way the US ignore the "managed and controlled" (M&C) test. If the company was M&C in the UK, the UK would tax the other 80%, as would most countries in the developed world.

The anti-Irish spin that US and UK politicians have put on recent announcments has been incredible, and mostly their motivation is nothing more than headlines and votes. And it galling to see so many Irish commentators jump on this bandwagon to get more digs in.

antoobrien

The Rooster wrote: »

The fact of the matter is that all companies pay tax at 12.5% on their profits attributable to Ireland.

The Apple 2% "deal" is a complete misnomer, which seems to have originated from the Apple CEO - the feckin eejit!

That's not even accurate, it came up as part of a question that was asked by one of the senators. At no point did he say that they had a deal on CT, he said they got tax breaks to come to Ireland, something that is available to all companies.

The Rooster wrote: »

My understanding is that Apple don't use the "normal" double Irish structure, but a derivative of it that is rarely used these days.
..

The "deal" done with Revenue was to determine how much of the company's profits is attributable to the branch.

The structure they use is one that has nothing to do with Ireland, but rather it is an agreement that is with the US Treasury.

The Rooster wrote: »

The anti-Irish spin that US and UK politicians have put on recent announcments has been incredible, and mostly their motivation is nothing more than headlines and votes.

The problem isn't that it's spin, most of it is outright lies.

The Rooster wrote: »

And it galling to see so many Irish commentators jump on this bandwagon to get more digs in.

Ah sure what do you expect, most of them couldn't tell their rear ends from their elbows and the rest have ulterior motives.

maninasia

antoobrien wrote: »

But the do pay 12.5% corporation tax on their profits - which is the important word here.

The 2% (or in google's case 0.14%) figures relate to turnover, not profit - gross or net.

The Apple argument is extremely disingenuous as the company in question is an investment vehicles that takes after tax proceeds from other countries and are used to manage Apple's after tax cash pile, which counts as foreign income for tax purposes in the US.

That is correct, but by using transfer pricing they cut their taxes by more than 80% BELOW the already low tax rate, this is a far bigger issue than the tax rate ,which at 12.5% would offer a tax reduction of perhaps 50% at most compared to other states.

So transfer pricing, which allows massive under reporting of profits, is the real problem in terms of Ireland's tax take

maninasia

Scofflaw wrote: »

Particularly given the Tory party's similar over-reliance on City funding.

cordially,
Scofflaw

The clue being the B in the BVI!
Supposedly a very large wodge of the investment money that the City of London gets to play comes out of these British territories.

professore

antoobrien wrote: »

Yes and they take their social responsibilities seriously. Paying the legal taxes in the countries, rather than what begrudgers would like them to pay, is one of them.

Another one is the anti-corruption & ethics measures taken. The EMEA companies sell into some fairly dodgy markets where bungs are the order of business. You should see the amount of red tape everyone has to go through because of that, same with the ethics training we all have to do because of the misdeeds of certain people in Enron, Worldcom & Tyco..

I have no issue with a company paying as little tax as legally possible. I do have an issue with companies being portrayed as some sort of Father Christmas or Mother Teresa figure dispensing charity and helping out the community. They do this for self interested marketing reasons - not out of the goodness of their hearts.

Again the governments in the various jurisdictions are to blame for allowing these loopholes.

Madd Finn

halkar wrote: »

What they dont tell us is how much Google or Amazon paid in national Insurance, business rates, VAT, PAYE, PRSI, wages, payments to contractors and how much they pay in the economy.

Corporation tax should be abolished for such a big companies that provide thousands of jobs.

This mindset is reprehensible and idiotic. It is a forelock-tugging, subservient, sycophantic, craven and ultimately self-defeating kow towing to wealthy corporations which says that they can avail of the benefits of a modern society, much of which is provided by government spending (eg education, basic healthcare, reliable public services including emergency services and civil order) without having to pay anything towards it.

They can reap the benefits of educated industrious employees without contributing ANYTHING while those same employees will be only too pleased to "pull on the green jersey" and hand over a massive share of their income to a variety of taxes.

Leave aside the fact that what the US senate committee seems most angered by is not our corporation tax rate at all but the fact that Apple, to name only the most reprehensible example, is laundering royalties through an international chain of companies in such a way as they avoid paying ANY tax to ANYONE on hugely valuable IP and patent licences; leave aside the fact that international companies have to operate internationally and if they want any sales at all in Europe then they pretty much have to have some sort of presence here; leave aside the fact that Apple does pretty well out of Ireland and has done for decades; Leave aside the fact that the work done by Apple employees in their operations here has little to do with the sort of royalty management and international routing that is angering so many people. And leave aside the fact that nobody is alleging that Apple is doing anything illegal.

The notion that having a "job" whose remuneration, competitively determined by comparison with lower-cost countries is sufficient to foot the bill to pay for modern infrastructure and services while the big money remains virtually untouched is unsustainable in the long run.

I am not one to advocate bigger and more expensive government but equitable taxation should be about everyone paying a fair share. I don't believe in progressively taxing profits so that the more you make the bigger percentage you have to fork over. But a corporation paying an effective 2% on PROFITS while a lowly employee pays close to 30% on everything is ridiculous.

Yes we need entrepreneurs, but we, and they, also need skilled employees to make their businesses a reality.

If the Irish government is facilitating massive tax avoidance then this needs to stop. And that has NOTHING to do with our apparently generous corporate tax rates. At least that's the same for everybody in the country.

jmayo

antoobrien wrote: »

Yes and they take their social responsibilities seriously. Paying the legal taxes in the countries, rather than what begrudgers would like them to pay, is one of them.

There were companies with social consiousness who drove social schemes long before your favourites appeared on the scene.

You can put "legal" in italics alright.

They don't pay full taxes here as they ship the money through the Netherlands, back again and off to Bermuda, use Luxemburg or some such.

Maybe it is begrudgers, but what if you setup a mail order business in competition to Amazon.
For instance it appears you live in Galway, so you must have heard of Kenny's bookshop ?
They have to compete with Amazon, but do they get all their profits washed through some entity in Luxemburg.
What about the homegrown coffee shops that have to compete with Starbucks ?

antoobrien wrote: »

Another one is the anti-corruption & ethics measures taken. The EMEA companies sell into some fairly dodgy markets where bungs are the order of business. You should see the amount of red tape everyone has to go through because of that, same with the ethics training we all have to do because of the misdeeds of certain people in Enron, Worldcom & Tyco.

FFS you really are laying it on thick there.

You would swear the only ones that have to do business in sh**holes where bungs are the order of the day or the only ones run ethically are the major corporations. :rolleyes:

antoobrien wrote: »

I've said it before and I'll say it here again, a "fair" tax is one that somebody else pays so that one doesn't have to. A little amendment makes it a fairer tax is one that somebody else pays more of so that one can pay less.

Isn't that the motto of the multinationals you are lauding ?
They reckon it is fair if they pay shag all.

The Rooster wrote: »

The fact of the matter is that all companies pay tax at 12.5% on their profits attributable to Ireland.

Attrbutable is the major word here.

The Rooster wrote: »

The anti-Irish spin that US and UK politicians have put on recent announcments has been incredible, and mostly their motivation is nothing more than headlines and votes. And it galling to see so many Irish commentators jump on this bandwagon to get more digs in.

Perish the thought some of us might not keep stum, doff our caps to the major multinationals who give some employment in return for our tax avoidance systems.

What concerns me is that there is going to be a major clampdown of some sorts.
Too many major economies are losing out too much and these same economies are in sh**.
And who is left looking like the bad guy, but little old us.
See how banking secrecy is getting hammered as an example of how things can change.

It makes you wonder why should some of us be concerned that a lot of people in the world, the same people we invariably cadge money off to keep the bloody place afloat, would now see us a means to avoid tax in their countries.

I have no problem with a 12.5% corpo tax and believe we should vehemently defend it, but I do have a problem where we facilitate companies channeling money through us, with the help of other jurisdictions, so that major multinationals pay shag all tax anywhere.
These companies do not even pay our 12.5% rate on half the money they earn from bases here.

But of course maybe I am not as enthralled by the great multinationals or quiet as sycophantic as some it appears.

halkar

Madd Finn wrote: »

This mindset is reprehensible and idiotic. It is a forelock-tugging, subservient, sycophantic, craven and ultimately self-defeating kow towing to wealthy corporations which says that they can avail of the benefits of a modern society, much of which is provided by government spending (eg education, basic healthcare, reliable public services including emergency services and civil order) without having to pay anything towards it......

So where is the money coming from for government to provide all this? Tax the corporations run them out and we can all go back to grow potatoes. They generate jobs, jobs generates taxes. Do you really think Ireland would have been a better society without the multinational IT, parma companies and others here? Can we imagine Leixlip without Intel? Or Sandyford without IT companies there?

As I have put before, we are taking around 3 billion in CT a year. How much PAYE, VAT and other stealth taxes being paid by the workers in multinationals and their contractors and restaurants, shops, bars used by these workers? We will never know but I am sure it is far more than 3 billion a year.

Rightwing

Madd Finn wrote: »

This mindset is reprehensible and idiotic. It is a forelock-tugging, subservient, sycophantic, craven and ultimately self-defeating kow towing to wealthy corporations which says that they can avail of the benefits of a modern society, much of which is provided by government spending (eg education, basic healthcare, reliable public services including emergency services and civil order) without having to pay anything towards it.

They can reap the benefits of educated industrious employees without contributing ANYTHING while those same employees will be only too pleased to "pull on the green jersey" and hand over a massive share of their income to a variety of taxes.

Leave aside the fact that what the US senate committee seems most angered by is not our corporation tax rate at all but the fact that Apple, to name only the most reprehensible example, is laundering royalties through an international chain of companies in such a way as they avoid paying ANY tax to ANYONE on hugely valuable IP and patent licences; leave aside the fact that international companies have to operate internationally and if they want any sales at all in Europe then they pretty much have to have some sort of presence here; leave aside the fact that Apple does pretty well out of Ireland and has done for decades; Leave aside the fact that the work done by Apple employees in their operations here has little to do with the sort of royalty management and international routing that is angering so many people. And leave aside the fact that nobody is alleging that Apple is doing anything illegal.

The notion that having a "job" whose remuneration, competitively determined by comparison with lower-cost countries is sufficient to foot the bill to pay for modern infrastructure and services while the big money remains virtually untouched is unsustainable in the long run.

I am not one to advocate bigger and more expensive government but equitable taxation should be about everyone paying a fair share. I don't believe in progressively taxing profits so that the more you make the bigger percentage you have to fork over. But a corporation paying an effective 2% on PROFITS while a lowly employee pays close to 30% on everything is ridiculous.

Yes we need entrepreneurs, but we, and they, also need skilled employees to make their businesses a reality.

If the Irish government is facilitating massive tax avoidance then this needs to stop. And that has NOTHING to do with our apparently generous corporate tax rates. At least that's the same for everybody in the country.

Similar argument over in the rugby forum today, folks thinking it's great giving rugby players, horse racing tycoons tax breaks and grants.

The era of low Corp tax is fast coming to an end, the main countries are bust,,,,they'll need the revenue, and companies are going to have to pay their fair share,,and rightly so imo.

K-9

seamus wrote: »

You're fairly mistaken here. Job boards in Ireland are awash with high-skill positions, primarily technology positions, primarily from foreign companies who have located offices here.

There is of course a tax aspect to their reason for relocating, but only in a small number of cases are they locating shell companies here. In most cases they recognise that in Ireland they have access to a skilled EU workforce, so they use that to their advantage.

The figures really speak for themselves. Apple employ 4,000 people. Google nearly 2,000, Intel 4,500. In other countries these figures are typical of regional facilities. In Ireland these figures are enormous, putting these technology companies in the list of the biggest employers in the country.

We are at risk of deluding ourselves here, same as we deluded ourselves with the "well educated" line in the 80's. We lost competitiveness over the last couple of decades, and we are slowly cutting back our uncompetitiveness.

Our low tax rate masked our rising costs, and in effect was a way around the EU banning giving companies State hand outs, we did it by lowering our tax rates, and when that wasn't enough, exploiting lax tax rules. The IFSC had a 0% tax rat for many years, when that was scrapped we made lax regulation and tax rules our selling points.

The evidence over the last 2 decades shows people are deluding themselves if they think low tax rates and lax tax rules are not a big factor in multi nationals coming here, it's believing our own self publicity, like the bankers did.

There are some Apple subsidiary companies that aren't tax resident anywhere, totally against even the spirit of even lax tax laws, they exist in the universe in a black hole somewhere, meanwhile retaining Billions in cash reserves.

It's funny corruption comes up so often in Irish politics, but not mentioned here at all. If this was an Irish property developer you'd have page after page about corruption, not a bit when it comes to Apple or Google. Those voices go very quiet, meek and almost subservient.

maninasia

The corporate tax helps to give them a good reason to set up shop here.

But the fact is Dublin in particular is an attractive hub for IT companies to setup in, English speaking, fairly easy to source European workers and persuade them to move to Dublin, enjoyable place to young people to base out of, good transport links to Europe, good pool of established IT workers, the ear of the government, IDA support, fairly friendly local population.

The tax is important but it really is only one part of the ball game. Even if it WAS the whole ball game, it was a successful strategy measured in results.

The fact that they can do transfer pricing would exist with or without Ireland.

Wompa1

maninasia wrote: »

The corporate tax helps to give them a good reason to set up shop here.

But the fact is Dublin in particular is an attractive hub for IT companies to setup in, English speaking, fairly easy to source European workers and persuade them to move to Dublin, enjoyable place to young people to base out of, good transport links to Europe, good pool of established IT workers, the ear of the government, IDA support, fairly friendly local population.

The tax is important but it really is only one part of the ball game. Even if it WAS the whole ball game, it was a successful strategy measured in results.

The fact that they can do transfer pricing would exist with or without Ireland.

Hungary have some great IT workers. Bulgaria isn't bad either. The UK have some good IT workers with better graduates too. Irish IT Graduates are nothing to write home about, just because our college courses are sub par.

The IT workers will go where ever the work is. The US senate just passed a bill to allow visa for Tech workers, so I would expect a lot of the top talent to move to the US for higher pay with lower taxes.

IDA support is a big one. As far as I can see the IDA and Enterprise Ireland exist as a liason between companies and the government to broker these deals and take their cut.

When it comes down to it, it's the bottom line. Have you ever worked for a large multi-national company before? Particularly in IT? You are a number to them...It's all about the bottom line. It doesn't matter if you are producing 100% reliability and high quality. It's bottom line over quality. If they can get it done cheaper in India, they will. Ireland get's the European chunk of the market for the low tax, they need somewhere in Europe strategically and we are the cheapest. That is the only reason. It has nothing to do with the people or the country. NOTHING

The Rooster

Madd Finn wrote: »

Leave aside the fact that what the US senate committee seems most angered by is not our corporation tax rate at all but the fact that Apple, to name only the most reprehensible example, is laundering royalties through an international chain of companies in such a way as they avoid paying ANY tax to ANYONE on hugely valuable IP and patent licences;

If the Irish government is facilitating massive tax avoidance then this needs to stop.

You see you've fallen square into the trap of believing politicians (in this case US senators) who only care about winning the next election, and therefore they spin the facts to suit their case and gullible people like you fall right into it.

If Apple or Google or anyone else move their IP from their US company to a Bermuda resident company, how do they do it?

Answer: They agree a valuation for the IP with the IRS, and the US company is taxed on this valuation. In effect the US get their tax up front.

The way these companies almost always work is the start off in the US and build up up their product. At some stage after they expand beyond the US borders they may consider whether to move their non-US IP offshore (they always pay full US tax on profits associated with their US IP).

Moving non-US IP offshore is completely legal within US rules, and as mentioned above they take a tax hit for doing so (its funny the US senators didnt mention this!). The value of the IP may move up or down, so some companies will lose out by doing this, others will ultimately gain handsomely. Its a legal risk they take.

If the IP had remained in the US, the Irish company would pay royalties to the US. If the IP is in Bermuda, the Irish company pays royalties to Bermuda.
And the US senators spin this as an Irish loophole or the Irish facilitating tax avoidance!! And of course plenty of Irish gullible begrudgers happy to jump on the bandwagon.

K-9 wrote: »

There are some Apple subsidiary companies that aren't tax resident anywhere, totally against even the spirit of even lax tax laws, they exist in the universe in a black hole somewhere, meanwhile retaining Billions in cash reserves.

We tax companies who are resident here. We use the OECD recommended model to test residence (i.e. where is the company managed and controlled).
The "resident nowhere" Apple company is managed and controlled in the US. Its up to the US, not Ireland, to fix that loophole

The Rooster

jmayo wrote: »

What about the homegrown coffee shops that have to compete with Starbucks ?

But for chrissakes, think logically about it.

If you set up two coffee shops side by side in a town in Ireland, one a Starbucks franchise and one called JMayos, who is going to sell the most coffee?
The answer is Starbucks will, because people will follow the worldwide brand. It guarantees the franchisee business. So of course the franchisee should be paying a royalty to the IP owner.

These royalty amounts aren't just made up - pick up a number so we don't have to pay tax! No. Studies are carried out to back up the price paid as being an arm's length price. The UK Inland Revenue issued a statement to say that the royalty paid by Starbucks UK was in accordance with international rules.

It works both ways. If you built JMayos coffee into a big brand over the course of a number of years and decided to expand into UK, US or wherever, then those operations would be obliged to pay a roylaty back to JMayos Ireland as the IP holder. Or if you think, "my JMayos IP is worth €5M now, but I think it'll be worth €50M in a few years", then you could transfer it to a company in the Cayman Islands. You would have to pay tax in Ireland on your €5M gain (so big up front cost), but you'd hoping/gambling that you'd get tax-free royalties from your international coffee shops to make up for that (bearing in mind that profits from your Irish shop would always be subject to tax in Ireland).

This would allow up to potentially build up tax-free profits in Cayman to reinvest in your business to expand worldwide. However, if you ever take cash out of the Cayman business to pay yourself or other shareholders, it would be taxed in full depending on where you were individually tax resident.

In basic terms this is what most of these MNCs are doing. Nothing illegal or even immoral about it.

listermint

K-9 wrote: »

We are at risk of deluding ourselves here, same as we deluded ourselves with the "well educated" line in the 80's. We lost competitiveness over the last couple of decades, and we are slowly cutting back our uncompetitiveness.

Our low tax rate masked our rising costs, and in effect was a way around the EU banning giving companies State hand outs, we did it by lowering our tax rates, and when that wasn't enough, exploiting lax tax rules. The IFSC had a 0% tax rat for many years, when that was scrapped we made lax regulation and tax rules our selling points.

The evidence over the last 2 decades shows people are deluding themselves if they think low tax rates and lax tax rules are not a big factor in multi nationals coming here, it's believing our own self publicity, like the bankers did.

There are some Apple subsidiary companies that aren't tax resident anywhere, totally against even the spirit of even lax tax laws, they exist in the universe in a black hole somewhere, meanwhile retaining Billions in cash reserves.

It's funny corruption comes up so often in Irish politics, but not mentioned here at all. If this was an Irish property developer you'd have page after page about corruption, not a bit when it comes to Apple or Google. Those voices go very quiet, meek and almost subservient.

You type this as if its an irish problem. The issue is global. The USA is a tax haven despite pretending not to be, great britain is a major tax haven despite pointing the finger elsewhere (at its former colonies) the french are at it too.

Everyone is pointing the finger at everyone else but the fact is that big business has its fingers in all these governments across the globe. Its not a conspiracy theory its plain fact. So where do you start to untangle this mess? All countries would have to get involved but you would never get cross platform agreement. Do you then keep the status quo ? probably going to happen anyway, so we just grumble on and keep pointing fingers at relatively easy targets alla ireland inc. (not that we dont deserve it)


Where is the answer to it ? Anyone ?

antoobrien

Madd Finn wrote: »

But a corporation paying an effective 2% on PROFITS

Let's get this blatant lie out of the way for once and for all.

Apple paid $8bn taxes on $156bn revenue for FY2012

Using the US tax model (sales-cost of sales) that is 18% tax on worldwide gross profits.

jmayo

The Rooster wrote: »

But for chrissakes, think logically about it.

If you set up two coffee shops side by side in a town in Ireland, one a Starbucks franchise and one called JMayos, who is going to sell the most coffee?
The answer is Starbucks will, because people will follow the worldwide brand. It guarantees the franchisee business. So of course the franchisee should be paying a royalty to the IP owner.

These royalty amounts aren't just made up - pick up a number so we don't have to pay tax! No. Studies are carried out to back up the price paid as being an arm's length price. The UK Inland Revenue issued a statement to say that the royalty paid by Starbucks UK was in accordance with international rules.

It works both ways. If you built JMayos coffee into a big brand over the course of a number of years and decided to expand into UK, US or wherever, then those operations would be obliged to pay a roylaty back to JMayos Ireland as the IP holder. Or if you think, "my JMayos IP is worth €5M now, but I think it'll be worth €50M in a few years", then you could transfer it to a company in the Cayman Islands. You would have to pay tax in Ireland on your €5M gain (so big up front cost), but you'd hoping/gambling that you'd get tax-free royalties from your international coffee shops to make up for that (bearing in mind that profits from your Irish shop would always be subject to tax in Ireland).

This would allow up to potentially build up tax-free profits in Cayman to reinvest in your business to expand worldwide. However, if you ever take cash out of the Cayman business to pay yourself or other shareholders, it would be taxed in full depending on where you were individually tax resident.

In basic terms this is what most of these MNCs are doing. Nothing illegal or even immoral about it.

But would JMayos get a chance to build up and expand because Starbucks already have the edge and the clout if they want to use it?

By giving the large established multinationals the ability to keep the vast majority of their profits you are already hampering the startsups who want to compete.

My point is that the multinational chains like this can destroy the small homegrown operations and in my opinion that is not good.
Maybe it is that belief, maybe it is my Western roots or maybe I just think the food is a bit better, but I always use Supermacs rather than any of the US chains.

To me diversity is good, the continous same is bland.
Of course some people want that, so that if they go into a fast food place be it in Bordeaux, Galway, San Jose, etc they basically get the same often non tasting product.

Anyway you have given me one idea though, maybe I should copyright my handle.
All so that I can start my inexorable rise to world domination within the fast food world

The Rooster

jmayo wrote: »

But would JMayos get a chance to build up and expand because Starbucks already have the edge and the clout if they want to use it?

By giving the large established multinationals the ability to keep the vast majority of their profits you are already hampering the startsups who want to compete.

My point is that the multinational chains like this can destroy the small homegrown operations and in my opinion that is not good.

Every business starts off small. Its the way of the world that there are advantage and disadvantages that come with size.

But Irish Revenue will tax you in the same transparent manner at a rate of 12.5% on profits calculated in accordance with OECD principles.

Duggys Housemate

TheVman wrote: »

Once again nothing to do with issue. The fact is FDI in Eire was 100% CP motivated.

The jobs created by these companies in EIRE are jobs that MONKEYS could fill bar 5 to 10%

Can you honestly say you believe that Eire has in an any way more educated workforce than another EU country. And the fact the Irish speak english, oh man. Half the graduates in Europe speaks english.

You call EIRE what you like thats ok with me.

There are very high level positions in Ireland as a cursory glance at the open positions on any jobs boards would prove.

The fact that graduates speak English as a second language is a boon to Ireland. If a tech graduate from France wants to work in Poland, or is offered a job he needs 2 languages extra to French.

1) English, which is the language of IT.
2) Polish, to live in Poland properly.

Coming to Ireland he needs English for both, which he has if he is in IT.

seamus wrote: »

I'm actually not arguing that Ireland specifically is a high-skilled workforce. Those who are skilled are fairly highly skilled, but the boom also left us with a huge legacy of low-skilled construction workers.
However, as an EU member Ireland has access to a huge workforce and despite what some peoples' sentiment is, Ireland appears to be a very popular destination for high-skilled EU workers.

Yes, we attract people from all over Europe, and we have a favorable attitude to non-EU skills based immigration. The dEpt will always issue visas if tech companies want them. Hence our increasing skill base is sticky. Claims of competitiveness can be ignored with high skilled workers. To attact high skilled IT workers, it helps to be

1) English speaking.
2) High waged.

maninasia wrote: »

That is correct, but by using transfer pricing they cut their taxes by more than 80% BELOW the already low tax rate, this is a far bigger issue than the tax rate ,which at 12.5% would offer a tax reduction of perhaps 50% at most compared to other states.

So transfer pricing, which allows massive under reporting of profits, is the real problem in terms of Ireland's tax take

Transfer pricing is exactly what the Americans want, except they want the transfer pricing back to the US. They want to keep IP there. And nobody here , nor did Senator Levin, notice that if Apple had paid 35% in Ireland then the amount the US could ever recover is 0%. If Apple paid 12.5% the amount that the US could ever recover is 22.5%. The avoidance of tax here will allow full repatriation back to the US in the future. Not avoiding tax here will reduce the amount payable in future( which won't be 35%).

So only we can complain since the laws here are not reducing anybody's tax take but our own, but is Ireland really entitled to 12.5% of Googles and Apple's worldwide share? Apple sells 60% outside the US, in future as China grows that will be 80% - assuming cheaper iPhones etc. Are we really owed more tax than the US?

If the US reduces it's repatriation tax then iP will be registered in the US and we will get worldwide sales, minus the IP charge, which in that case would be legit.

The frenzy of moralizing from Irish people is therefore ridiculous, we benefit from this - and we would with 0% tax - because of the jobs, taxes on high incomes, downstream effects and so on. We need to work with the US to agree to a repatriation law, the EU can then equalize taxes all it wants.

Fratton Fred

The Rooster wrote: »

But for chrissakes, think logically about it.

If you set up two coffee shops side by side in a town in Ireland, one a Starbucks franchise and one called JMayos, who is going to sell the most coffee?
The answer is Starbucks will, because people will follow the worldwide brand. It guarantees the franchisee business. So of course the franchisee should be paying a royalty to the IP owner.

didn't work like that in Dalkey. Starbucks only lasted six months.

djpbarry

jmayo wrote: »

Maybe it is that belief, maybe it is my Western roots or maybe I just think the food is a bit better, but I always use Supermacs rather than any of the US chains.

Supermacs drove the chipper in my home town out of business.

The absolute bastards.

antoobrien

djpbarry wrote: »

Supermacs drove the chipper in my home town out of business.

The absolute bastards.

And he started out as a teacher selling fast food to kids at lunch!

The Rooster

Fratton Fred wrote: »

didn't work like that in Dalkey. Starbucks only lasted six months.

Well exactly. When you've got big royalties to pay to support the brand you are using its not always easy to make money. That's why they didnt last in Dalkey and they don't make much of a profit in UK.

Advatages and disadvantages to being big as I said. But the key point is that Irish tax law doesn't hinder competition.

Potatoeman

Does it matter what these companies pay in any other country? They are not getting the money anyway. Why don`t they try and make them pay tax in their jurisdiction and keep their nose out of our national affairs.

carpejugulum

maninasia wrote: »

this is a far bigger issue than the tax rate ,which at 12.5% would offer a tax reduction of perhaps 50% at most compared to other states.

No, it wouldn't.

Cody Pomeray

Some more disturbing news in relation to corporsation tax today.

I happen to have some friends working at one of the companies mentioned. One can't afford to get married, the others are in other sorts of financial difficulty. There is a serious problem with a system which facilitates this depth of tax arbitrage and in so doing necessitates such a disproportionate burden on below-average-income households.

http://www.irishtimes.com/business/sectors/manufacturing/irish-boston-scientific-company-paid-effective-tax-rate-of-4-in-2011-1.1412331

An Irish holding company of US medical products group Boston Scientific paid $60 million (€40 million) in corporation tax on profits of $1.4 billion in 2011; an effective tax rate of 4 per cent, according to research carried out by The Irish Times.
A wide range of multinationals have Irish-incorporated subsidiaries that pay little or no tax on large sums going through their accounts because they are not resident here for tax purposes...

...An Irish holding company that heads a group of Boston Scientific operations around the globe, including in Ireland, notes that if Irish corporation tax of 12.5 per cent was levied on its profits, it would have to pay $177 million in Irish tax. However, the actual tax the group was legally obliged to pay was lower for a number of reasons, including “different tax rates on overseas earnings”, according to the accounts.

...Other multinationals
Similar structures are in place at other Irish-incorporated multinational subsidiaries, including a subsidiary of US software company Novell, which paid no tax on profits of $315.6 million in the 16 months to March 2012.
An Irish subsidiary of US software security company Symantec paid no tax on profits of $742 million in 2008, and $2.9 billion in 2007. An Irish subsidiary of French telecommuncation equipment firm Alcatel Lucent paid no tax on Irish profits of $313 million in 2008.

maninasia

antoobrien wrote: »

Let's get this blatant lie out of the way for once and for all.

Apple paid $8bn taxes on $156bn revenue for FY2012

Using the US tax model (sales-cost of sales) that is 18% tax on worldwide gross profits.

Yeah but the point is a large number of these companies goose 'cost of sales'. What they claim is 'cost of sales' is completely exaggerated. Or they artificially declare no profits in their subsidiaries , then wash it through ireland, meanwhile they pay the Virgin Islands nameplate company the 'licensing fee' for use of their IP and brand.

If we tried to do this kind of carry-on we'd be banged up in jail. It's not illegal right now, but it is a very unfair system. Workers everywhere are carrying the can for these corporations and their shareholders in terms of disproportionately supporting the tax net.

To find out that Ireland barely makes any tax revenue out of this scam is ironic indeed. Yes we get jobs, but we are still screwed on taxes.

maninasia

carpejugulum wrote: »

No, it wouldn't.

Well it is 50% less than a few very significant trading countries. It's also 15% less than a bunch of others.

I've a feeling the effective tax rate varies enormously as to how big and international your company is, I doubt small companies get such an effective rate so easily. Tax men are not known for their generosity.

However in Ireland all companies just need to pay 12.5%. The headline tax rate still matters a great deal. Obviously multinationals like it as adding in transfer pricing they can knock their taxes down to almost nothing!

Cody Pomeray

US Senators seem underwhelmed at the Irish Ambassador's insistence that there's nothing to see here....

http://www.irishtimes.com/news/politics/us-senators-reject-irish-claim-over-tax-haven-status-1.1413947

Two top Washington politicians have rejected the contention by the Irish Ambassador to the US that Ireland is not a “tax haven”.

Ambassador Michael Collins wrote to a Senate subcommittee in Washington on Wednesday saying Ireland did not fit any of the four key indicators of a tax haven as identified by the OECD.

Yesterday, the two senior members of the subcommittee, Democratic Senator Carl Levin and former presidential candidate Senator John McCain, responded by saying evidence it had heard recently about Ireland met a “common sense” definition of a tax haven.

Yesterday, Mr Levin and Mr McCain, issued a response in which they said the records obtained by the subcommittee clearly showed that, for years, Apple paid the Irish tax authorities a nominal rate of corporation tax, far below the Irish 12.5 per cent rate.

Duggys Housemate

Both McCain and Levin - a total idiot - have made their minds up.

maninasia

Actually, and it pains me to say it, they are correct. We are a massive tax haven.

Apple only paid 4% tax on profits as they used a special reciprocal tax agreement worked out between them and the Irish government in the 1980s.

It allows them to claim that their overseas subsidiary is a non tax resident anywhere...a peculiar idea indeed.

Duggys Housemate

maninasia wrote: »

Actually, and it pains me to say it, they are correct. We are a massive tax haven.

Apple only paid 4% tax on profits as they used a special reciprocal tax agreement worked out between them and the Irish government in the 1980s.

It allows them to claim that their overseas subsidiary is a non tax resident anywhere...a peculiar idea indeed.

Utter rubbish. No such deal was agreed. Apple are exploiting a loophole in both US and Irish law not an agreement.

maninasia

Well it seems Cook has some explaining to do for his massive f$%k-up during testimony.

http://www.independent.ie/business/irish/apple-chief-now-says-there-is-no-special-low-tax-deal-with-ireland-29307329.html

Cody Pomeray

Duggys Housemate wrote: »

Utter rubbish. No such deal was agreed. Apple are exploiting a loophole in both US and Irish law not an agreement.

Awareness of a loophole in tax law whereby firms can arrive and enjoy an internationally anomalous benefit, and failing to act to remedy it, is a de facto tax policy.

No serious or classy crook would ever get his hands dirty by openly involving himself in transactions.

Ireland is coming off with all the dignity of a sleazy Torremolinos bar owner in this affair. it's not even so much the reputational damage I mind, but the expectation that households and small firms should carry the can for major corporations, and that a foreign Government has to be the one to tell us about that.

ardmacha

Apple pay tax in Ireland in proportion to their real activity in Ireland. They have a huge R&D activity in the US that ends up in the Bahamas or wherever. It is the business of the US to tax that activity that is taking place in the US.

mathepac

jmayo wrote: »

Is anyone around here keeping an eye on UK's Public Accounts Committee (PAC) investigations into Google ? ...

As was pointed out in some of last week-end's papers, most of the commentators including Mr Google, the UK PAC, the UK press :rolleyes: and our own poor saps know sweet FA about the topic they have chosen to comment on. If they all manage to get up to speed it might be possible to have a meaningful conversation.

In the meantime ZZZzzzzz ...

EIRE has a Corporate tax-rate of 12.5%, Macaroon / Cameroon / Cameron / whoever just proposed / announced a UK Corporate tax-rate of 10%. The US wants US corporations to pay tax in the US, change your tax laws then., and so on .... spare me. It has feck-all to do with the EU or Ireland.

Everyone plays with the numbers. I once worked for a company who shipped product to the Netherlands at month-end / quarter-end to meet targets. Once the "export sales" numbers were posted it was all shipped back again ... and so on.

Worztron

Apple Sales International: Profits = €17 billion; Taxes = €8 million; equals a rate of 0.05%

Google Ireland Limited: Profits = €9 billion; Taxes = €22.2 million; equals a rate of 0.25%

Facebook Ireland: Profits = €1 billion; Tax = €3.2 million; equals a rate of 0.3%

maninasia

I don't know about the actual figures pertaining to the final rate of tax, but it is clear we are a big peg in the global tax avoidance structure, and our days in this game are numbered.
They are numbered either by a leavening of the tax playing field in Europe (competition among nations) or by tightening up due to pressure from large countries such as US and Germany and even UK (which itself is also a major player in tax avoidance).

srsly78

Worztron wrote: »

Apple Sales International: Profits = €17 billion; Taxes = €8 million; equals a rate of 0.05%

Google Ireland Limited: Profits = €9 billion; Taxes = €22.2 million; equals a rate of 0.25%

Facebook Ireland: Profits = €1 billion; Tax = €3.2 million; equals a rate of 0.3%

Learn to read the accounts properly.

(www.duedil.com - free reg, you can get any companies accounts from here)


Google Ireland Limited 2011:

Turnover 12,457,352,000 EUR
Cost Of Sales 3,382,094,000 EUR
Gross Profit 9,075,258,000 EUR
Operating Profit 20,852,000 EUR
Pre-Tax Profit 24,369,000 EUR
Post-Tax Profit 2,153,000 EUR

As you can see, "profit" can refer to lots of different stuff. That 9 billion gross profit is not what is taxable. You have made the same mistake with the other companies too.

The discrepancy is caused by transfer pricing rules, as allowed by the USA via tax treaties with various countries.

Duggys Housemate

Cody Pomeray wrote: »

Awareness of a loophole in tax law whereby firms can arrive and enjoy an internationally anomalous benefit, and failing to act to remedy it, is a de facto tax policy.

No serious or classy crook would ever get his hands dirty by openly involving himself in transactions.

Ireland is coming off with all the dignity of a sleazy Torremolinos bar owner in this affair. it's not even so much the reputational damage I mind, but the expectation that households and small firms should carry the can for major corporations, and that a foreign Government has to be the one to tell us about that.

The tax law exploited by Apple is a problem of the laws of two countries. The US doesn't tax the companies registered in the US , we don't tax companies not registered for tax here.

Look. Ireland will get a bad press because that is how dominant powers work. The UK is being exploited by Starbucks use of tranfer pricing , Ireland is exploiting Google ( who do the same to Ireland via the British dependency of Bermuda). Nobody talks of transfer pricing to Britain.

mathepac

srsly78 wrote: »

Learn to read the accounts properly. ...
The discrepancy is caused by transfer pricing rules, as allowed by the USA via tax treaties with various countries.

Correct. To plug the so-called loopholes, the tax laws in two countries must change.

Duggys Housemate wrote: »

The tax law exploited by Apple is a problem of the laws of two countries. The US doesn't tax the companies registered in the US , we don't tax companies not registered for tax here. ...

I agree with the first sentence. I think what you mean is that the US doesn't tax companies registered in Ireland; we don't tax companies operated / run from the US. This is a reciprocal agreement.