"Ireland cannot be part of current global tax reform deal" - Donohoe

Kermit.de.frog

https://twitter.com/IrishTimesBiz/status/1415602058607083524

I 100% agree. The way some go on about this deal you would think those promoting it are demonstrating some sort of moral imperative yet the big countries are securing opt outs to suit themselves. Look at Sunak and the City of London for example.

We need to protect our interests here just like they ganged up to protect their own selfish interests.

Good man Paschal 😎

I'm with Paschal on this one, one of the main reasons being my job depends on it.

I don't care how upset Sinn Fein or the Greens are about it. Every country looks out for their own best interests. Ireland needs to stand up for itself here.

Diarmuid

Will it matter if Ireland decides that it doesn't want to play ball. The larger nations, who provide the majority of the multinational profits, will just implement a mechanism for getting the profits out of the multinationals one way or another, in effect pushing up the effective corporate tax on Irish based multis?

WrenBoy

https://boards.ie/discussion/comment/117614606#Comment_117614606

Well, we cant control the actions of others so we can only do what we can on our end to ensure investment and retention of business here.

Yurt2

Ireland's corporation tax policy reminds me of Geronimo's last stand. The jig is up on our economic model no matter what Paschal says or thinks. People should not underestimate the amount of political capital we're p*ssing away in the halls of Brussels with stances like this. We've been practicing tax arbitrage and beggar thy neighbor economic policies for so long now that a lot of people have convinced themselves we've been fighting fair, and this should be defended at all costs when really we're more like a dodgy Caribbean island bolthole with sh*ttier weather.

Falthyron

I'm sure going from 12.5% to 15% will guarantee the likes of Facebook, Google, Amazon and Microsoft will start paying their full tax obligation to us going forward. Yep, absolutely, no doubt it my mind. And when that happens, it won't matter that our smaller and medium sized businesses are struggling because we will get all of that hard-earned tax money from the big companies. Yes, it's a no-brainer, really. 😏

Cordell

Actually those big ones pay us more than their full tax obligation to us - this is precisely the reason they transfer profits here rather than paying higher taxes in other places. Or, if you want, they artificially create more tax obligations here.

In any case, this move to a unitary tax system would have been considered price fixing if the MNC were to do it.

Yurt2

https://boards.ie/discussion/comment/117616147#Comment_117616147

Well the MNCs had a completely captured sovereign state in Ireland so why would they bother. The 12.5 became this bizarre economic sacred cow, and anyone who questioned the wisdom of picking the pockets of European partners on taxation was derided as a Bolshevik.

We could have played this smart a few years back when it was clear that the pressure would come on us from European partners and further afield (even OECD countries across the world like Japan and South Korea pay close attention to our setup and aren't exactly enamoured with it), and raised it by a percentage point or so and tightened some loopholes to make it look like we were playing ball without doing to much damage. But no, we dug in our heels and continue to do so, and countries with a lot more power are calling time on us.

y0ssar1an22

tax is used to raise revenue to run a country; social programmes, infrastructure, whatever.

maybe instead of trying to introduce a global tax rate how about stopping countries running at a deficit. if they have the power to do the former they certainly have the power to do the latter - and thats the reason these countries want a global tax rate. to fund their own excessive spending.

Yurt2

https://boards.ie/discussion/comment/117616218#Comment_117616218

All developed countries (with the exception of petrodollar states) run their economies on debt and have done so for a very long time. If you control your own interest rates and your own currency, you'd be a fool not to.* When you're creditworthy and interest rates are low it's madness not to issue debt to generate productivity. In fact, the world would grind to a halt economically by doing what you suggest. A country is not a household, debt is essential and in many cases desireable.

*Ireland being in a position where interest rates are not set in our favour or with thought to our economic needs.

Cordell

https://boards.ie/discussion/comment/117616179#Comment_117616179

Why pay us more than 12.5%? What is the reason, why would we ask for more? Why play ball on tax increases? Are we happy with what we get at 12.5? If so, why not dig in our heels?

It's not about sovereignty, it's about having a predictable business and finance environment. We attracted FDIs and MNCs with out corporate tax, let's not do a bait and switch now.

y0ssar1an22

https://boards.ie/discussion/comment/117616261#Comment_117616261

i'm far from an expert on this, in fact completely clueless. it seems every country is in a mountain of debt from excessive spending over years and years. maybe they just need to tighten the purse strings, rather than trying to introduce a global tax rate designed purely to allow them to continue the excessive expenditure.

as an aside, if every country does this, who are the ultimate debtors of all this debt? as i said, clueless on this but i dont like other countries trying to dictate our own tax policy.

Cordell

https://boards.ie/discussion/comment/117616218#Comment_117616218

There is at least at the EU level a cap on deficit. Not zero, but 4% of their GDP IIRC. This is where the greeks got creative with their accounts and hid a much bigger deficit, and we all know how that played out :)

Yurt2

https://boards.ie/discussion/comment/117616274#Comment_117616274

Because we've spent decades unapologetically practicing tax arbitrage and thumbing our nose at our neighbours. Not even playing ball on the matter to ameliorate a shock further down the road, which we're staring at right now.

in terms of predictability, well, we've screwed the pooch on that front because we're the poster boys for this behavior and our partners have called time on us.

We're like the drunk that thinks the hangover will never come. We've only ourselves to blame on this one, we've been running an economic policy first conceived in the 1970s and thought there was no expiry date on it. We were very good at the game, but the goalposts are being shifted, which could have been predicted, and could have been less painful if we weren't intransigent on the matter.

Cordell

The goalpost have not shifted, if anything they shifted more into favoring our position - it's either Ireland in the dead center of the world between US and Europe or some proper tax haven somewhere in the ocean.

What those neighbors and partners do is bullying us into changing our tax rates to suit them. Fk them.

Yurt2

https://boards.ie/discussion/comment/117616459#Comment_117616459

I admire your optimism on the first paragraph, I really do - don't think they aren't coming for the Cayman Islands of this world also.

I wouldn't characterize us as being bullied in the slightest. We've been playing a high-wire game on taxation for decades now. When taxable economic activity surfaces in Ireland by the sleight of hand of cynical accounting alchemy and manipulation of taxation code, it effectively skims billions of dollars from the exchequer of other countries. That's not an economic model I'm especially proud of. It's not like when the second wave of globalization killed off the great shipbuilding industries of Belfast and Glasgow and sent the activity to the Far East, where riveters are dockworkers could once look with pride on what they built. We were and are involved in self-dealing on a global scale that took hard cash out of the accounts of countries we have to look in the eye (and countries further afield) in Brussels and say with a straight face "we're good Europeans".

That party was always going to end.

Yurt2

https://boards.ie/discussion/comment/117616303#Comment_117616303

A good question and a complex one! Here is a snapshot from 2015. Every country has it's own story. Japan for instance has built up a huge amount of sovereign debt, but the good news is that it's overwhelmingly domestically held by and they are huge buyers of US debt (US T-Bills, T-Bonds, and T-Notes) which are incredibly safe debt instruments to hold as the danger of the US defaulting is close to nil.

y0ssar1an22

https://boards.ie/discussion/comment/117616593#Comment_117616593

do bonds account for the vast majority of a country's debt?

Cordell

Well both Greece and Portugal operate a higher tax rate, over 20%. How little did it help them.

Yurt2

https://boards.ie/discussion/comment/117616630#Comment_117616630

Yes, when we're speaking of sovereign debt (as above) we're almost always speaking of debt issued in the international bond market.

Kermit.de.frog

https://boards.ie/discussion/comment/117616508#Comment_117616508

You are assigning a moral stance that does not apply to any country in the world. Countries don't have morals. They have self interest. And that's it.

What you want this country to do is shoot itself in the head and return to poverty because you think it's "right".

As I said in the OP - the UK govt secured an opt out for financial services in the City of London.

Why should we do what you suggest? There is no benefit to us. None.

Yurt2

https://boards.ie/discussion/comment/117616752#Comment_117616752

Our interests would have been served heading this off at the pass years ago by making some move to adjust the rate upwards slightly and close off some of the more egregious loopholes. Instead, we kept our hand in the till like idiots and expected nothing to change when we were and are one of the worst offenders. A country like Germany or the US can afford to give others the middle finger every now and again with core national interests; Ireland? Not so much.

And on the poverty matter: If your health and wealth is based on one variable, a tax rate of 12.5 or nothing else, and any suggestion of any adjustment is met with Chicken Little cries of the sky is falling, don't get surprised when you do nothing, and countries you're depriving of tax take actually make the sky fall on you because of recalcitrance.

The needle has moved on this and it's not going back. The time to take action was years ago. Now we're a small country with our name in the bad books asking bigger countries to be nice with us. Not a good position.

y0ssar1an22

https://boards.ie/discussion/comment/117616662#Comment_117616662

korea for example. about 70% of their debt is to their own citizens?

does the IMF not come into this? are they featured in the data?

all these banks that are owed money, they also owe money up the chain. I want to know who the ultimate beneficiary of all this debt is. in that, if everyone owes money to everyone, there must be a mechanism to contra all that debt.

i think that would make a great economics paper.

Kermit.de.frog

https://boards.ie/discussion/comment/117616804#Comment_117616804

We are a small country with no natural resources worth mentioning. So we have to make our way the best we can. That is best done through tax competition and if other countries want to compete and beat us that way - no problem whatsoever.

Under no circumstances should this country sign up to this agreement as it stands.

We need a bone, and a fairly big one, and that's what the govt is negotiating just like the bone thrown to the Brits over the City of London.

Dyr

https://boards.ie/discussion/comment/117613692#Comment_117613692

When did an Irish Government last stand up for our best interests, Pascal will dance to whatever tune is playing in Brussels

Yurt2

https://boards.ie/discussion/comment/117616805#Comment_117616805

In Korea's case, and it is a su generis case, their large corporations like Samsung and Hyundai hold significant amounts of government debt.

That's the point, everybody does owe money to everybody else!

The IMF do issue bonds but that is a recent development. It is funded via quota arrangements from countries (the US being the largest contributor) and bilateral loan agreements.

y0ssar1an22

https://boards.ie/discussion/comment/117616893#Comment_117616893

just to focus on one point (cos as i said, i dont have a notion).

there is no way everyone can owe everyone! if world debt was frozen right now, and repaid, who gets what?

jackboy

https://boards.ie/discussion/comment/117616893#Comment_117616893

Almost all the debt isn’t actually borrowed from anyone. It’s not real. It’s just numbers created on computer. It’s a classic pyramid scheme but on a monstrous scale.

Markcheese

Why can't everyone owe everyone else ? It's fiat currencies - they exist because banks/governments say so - and everyone uses them -

A bank has a billion in deposits - so it's allowed lend 10 billion out - it lends billion to a big company ,who deposits it in a different bank - allowing them to now lend out 10 billion .

. The money doesn't exist till it's lent out ....more or less

Markcheese

joseywhales

In some ways it might be good to have a lot of debt(with hopefully low rates) as you will make a large enough disruption if you default that it is in other's interest that you don't.

poker--addict

Does any big foreign company pay 12.5% anyway in Ireland? Or are they not utilising all available means to reduced that further to in some cases low single digits?

surprised Ireland hasn’t signed up to 15 headline and continued to facilitate the old games of refunds and write offs.

astrofool

https://boards.ie/discussion/comment/117614905#Comment_117614905

There is no political capital being lost in this, every country shamelessly protects their own interests, whether it's France and their semi state and French company supports, German support for the auto industry or the UK (and colonies) trying to attract finance.

This will go round and around, countries will find ways to keep the status quo and other countries will find it impossible to force other countries to do their bidding on taxes.

J Mysterio

It's a funny one.

I understand the government argument that we have to be competitive and that the corporate tax rate is one reason we have so many tech corporations, but...

If we raised CT to 15% in line with everyone else, would these companies really leave Ireland at this point? There are lots of other advantages to Ireland, surely? E.g. Ideally placed between US and Europe, only English speaking country in EU, well educated population, etc. Just not sure I can imagine the corporates shutting up shop in Ireland in reaction to a near universally approved move.

Other thing is that I want these bastard corporations to pay their fair share of tax, and this is a progressive move in general terms. Sickening to see how many corporations profit went through the roof in lockdown, and to see the business practices of companies like Amazon and Facebook. Jeff Bezos could cure world hunger himself, and still have a good chunk of change.

OneEightSeven

https://boards.ie/discussion/comment/117617948#Comment_117617948

How much would it cost to cure world hunger?

J Mysterio

https://boards.ie/discussion/comment/117618079#Comment_117618079

Well, I just looked it up and it's apparently 30 billion USD p/a. Bezos has 88b USD+.

timmyntc

https://boards.ie/discussion/comment/117618492#Comment_117618492

In fairness, Jeff Bezos has 88b USD in Amazon stock and other illiquid assets.

There is no way he could liquidate even half of that - the value would tumble if he tried

Tony EH

https://boards.ie/discussion/comment/117617948#Comment_117617948

I'm kinda in this boat too. On one hand I can very much understand the fear that the govt. have about having to give up our 12.5% (MUCH lower in reality). But then again, making these corporations actually pay up would be nice to see too. They've been taking the piss for far too long.

As far as these companies upping and leaving, I don't know. These days, a company can lay off a ton of staff and jump ship quite easily and that kind of thing has been happening in Ireland since the mid 2000's. And the foreign companies are here because of the low taxes. We shouldn't kid ourselves on that. So, while they won't all be gone on the first morning after tax harmonisation, they could skip out within a few years of it.

If it's 15% here and 15% in a country that has cheaper labour. They'll jet there to make the savings.

Cordell

It's not out of fear that they would be leaving, but it's a change that is not needed. We don't need to increase our corporate tax, others need us to do so. Something like this should not be done just because we can. Corporations are partners, not enemies, and they should be treated fairly.

J Mysterio

https://boards.ie/discussion/comment/117618570#Comment_117618570

Yeah, that's probably fair enough. Even so though, mad to think of the reality of those figures, and how rich the bastard is.

Always find this twitter account amusing.

https://twitter.com/HasBezosDecided/status/1415672258903740417?s=20

He tweets the same thing every day 😂

J Mysterio

https://boards.ie/discussion/comment/117618792#Comment_117618792

Ah here, corporations are partners and they should be treated fairly!

Partners is a very benign term for them. They will abuse every loophole in the Irish/ global system to avoid paying their fair share.

Look how Amazon treats its employees.

Tony EH

https://boards.ie/discussion/comment/117618792#Comment_117618792

I think they've been treated VERY fairly.

Cordell

Yes, and let's continue to do so.

Yurt2

https://boards.ie/discussion/comment/117617938#Comment_117617938

I think you're displaying naivety with what's going on at the moment. When the US Treasury secretary is doing a tour of Europe and Ireland is the first country on the tip of her tounge and the Chief European Commissioner is agreeing with her, you've found yourself in a sh*tty negotiating position.

I'm not arguing against Ireland batting for its own interests, I'm arguing that Ireland clinging on to 12.5 percent when the writing was on the wall for about a decade wasn't very smart. We became the problem child and policy makers and media let 12.5 become this stone tablet that must not be questioned.

Anyone questioning the 12.5 were widely mocked and it became this weird article of faith. Well, now we're in a particularly poor negotiating position of our own making facing a sharp shock with only 3 countries of 131 on our side of the table. Not very smart I'd submit.

And on a minor optics point, people are bristling at being outboxed and told what's what by larger countries , the IDA and our Finance Ministry been dancing to the tune of Silicon Valley dweeb billionaires for decades. I know which I think is more unhealthy and degrading of the state. Our European partners have actually been quite patient with our economic model despite it enfeebling their own exchequers, their patience has ran out and I'm not surprised.

stoneill

I wish I was paying just 15% tax.

ELM327

Good on him.

joseywhales

https://boards.ie/discussion/comment/117618986#Comment_117618986

This is all fine but in a negotiation you are trying to get something in exchange for giving something, so what is it that we want? The status quo is 12.5% currently. Calling the corporations "dweebs" doesn't change the fact that they have a lot of power, more than some countries I would postulate. Even if we change the 12.5%->15%, we will work with those corporations to reduce their effective tax to whatever we can negotiate with them to stay competitive and on the game will go. We do this and so does every other country with various forms of state aid, that of course is supposed to be outlawed within the eu but happens anyway. To me this is just a political headline stunt, to make domestic voters feel like "we are going after the big corporations" but I dont think it will be effective because all countries are fundamentally selfish.

Cordell

https://boards.ie/discussion/comment/117619020#Comment_117619020

Yea, me too, and only on what remains as disposable income.

But make no mistake, there will be no decrease in personal tax if the corporate tax increases.

astrofool

https://boards.ie/discussion/comment/117618986#Comment_117618986

There has not been an iota of political capital lost due to our current position which seems to be what you're implying, as long as other governments are effectively doing the same thing anyway, this will remain to be the case.

You're also missing the wider picture that it's not the % that matters, but that Ireland won't be dictated to by other countries on the corporation tax rate, this makes it more likely that Ireland has future investment vs. if we just rolled over on the issue. It's not that we couldn't do with the extra 2.5% taxes, but that if this is implemented as they want, our corporate tax take would go down even as the % went up as other countries try and extract the revenue themselves.

awec

Are the French, the Brits, the US etc going to shut down their offshore tax havens as part of this? Answers on a postcard. 😉

Maybe it's time we just adopt the same model as them, stick a big headline rate and make the Aran Islands a proper tax haven.

Yurt2

https://boards.ie/discussion/comment/117619236#Comment_117619236

Not one iota of political capital? Do you have an idea of the hundreds of thousands of man hours state agencies, diplomats and hired gun lawyers have spent in defence of this? For the net effect of the entire OECD rounding on us for the permissiveness of our tax code? For Ireland to be namechecked in US Presidential debates as a tax abyss?

When the Troika swept into town the compromises we had to make on our bailout at the expense of many facets of our economy and social fabric to defend the 12.5?

Denial. Not just a river in Egypt.