Sarkozy attacking the corporation tax using the bailout

2manyconditions

Hi,

I read an rte.ie report today in which Sarkozy was giving out that if the Irish are to receive a huge bailout that the corporation tax cannot remain at the low level it is currently at.

I was very angry at this as this to me is the only reason we can attract the number of multinationals that we do. If that is taken away then the loss of jobs would mean we would not be able to pay back the debt and where would that leave us? Also, tho I haven't read it, wasn't it agreed under the amended Lisbon treaty that the corporation tax in Ireland could not be touched.

So will the corporation tax be increased? Does the EU have a say in this policy after all?

DarkJager

2manyconditions wrote: »

Hi,

I read an rte.ie report today in which Sarkozy was giving out that if the Irish are to receive a huge bailout that the corporation tax cannot remain at the low level it is currently at.

I was very angry at this as this to me is the only reason we can attract the number of multinationals that we do. If that is taken away then the loss of jobs would mean we would not be able to pay back the debt and where would that leave us? Also, tho I haven't read it, wasn't it agreed under the amended Lisbon treaty that the corporation tax in Ireland could not be touched.

So will the corporation tax be increased? Does the EU have a say in this policy after all?

Sarkozy doesn't seem to understand that nobody here gives a **** about what he says. He'd be better off shutting his mouth and concentrating on his own country instead of making demands of others. We have not, do not, and will never ever take demands or orders from France.

later12

2manyconditions wrote: »

So will the corporation tax be increased? Does the EU have a say in this policy after all?

The bottom line is no, and no.

The EU has scope for greater influence in this area pending greater European fiscal integration, but that isn't even on the horizon as yet and would almost undoubtedly require constitutional amendment (a referendum) in Ireland.

However, EU changes to taxation policy in March may have an effect on the attractiveness of Irish corp tax rates, though the rate itself will remain unchanged.

sligopark

France and Germany forced our coward pro EU government to bail out our banks so as to save theirs, no doubt corporation tax will be next.

later12

sligopark wrote: »

France and Germany forced our coward pro EU government to bail out our banks so as to save theirs, no doubt corporation tax will be next.

And yet it has been the Germans who have been most vocal about senior bondholder haircuts, and the French who are most widely perceived to be supportive of senior bondhodler haircuts, even more so than the Germans, while Lenihan and Cowen seem to have mini strokes every time such haircuts are mentioned. Bottom line: France and Germany did not force Ireland to do anything that it was not wilfully about to do itself. The Irish Government never had any serious intention to make senior bondholders take haircuts, despite what your cartoon might seem to suggest to you.

sligopark

later10 wrote: »

Bottom line: France and Germany did not force Ireland to do anything that it was not wilfully about to do itself.

Without being cheeky - this is your opinion, to which you are entitled. I believe differently and at the time of the EU/IMF bailout the talk amongst economists was the pressure from the big two, and having seen the list of those who benefitted from the irish government bailing out our banks this was made clear.

Scofflaw

sligopark wrote: »

Without being cheeky - this is your opinion, to which you are entitled. I believe differently and at the time of the EU/IMF bailout the talk amongst economists was the pressure from the big two, and having seen the list of those who benefitted from the irish government bailing out our banks this was made clear.

I have to say that I suspect you'd believe that whatever the evidence, since you've given every indication of having a completely fixed opinion with regard to the EU. The extent of Irish bank debt to German, French, and UK banks is highly exaggerated, according to the Germans and British. Have you a figure for how much you believe the Irish banks owed to foreign banks?

regards,
Scofflaw

sligopark

Scofflaw wrote: »

I have to say that I suspect you'd believe that whatever the evidence, since you've given every indication of having a completely fixed opinion with regard to the EU. The extent of Irish bank debt to German, French, and UK banks is highly exaggerated, according to the Germans and British. Have you a figure for how much you believe the Irish banks owed to foreign banks?

regards,
Scofflaw

again without being cheeky I could return the same opinion about many posters and so personalise a discussion Scofflaw - and no not off hand but I did get a look at David Norris's list. Have you evidence or numbers or did you see the same list?

Scofflaw

sligopark wrote: »

again without being cheeky I could return the same opinion about many posters and so personalise a discussion Scofflaw - and no not off hand but I did get a look at David Norris's list. Have you evidence or numbers or did you see the same list?

I wouldn't regard myself as having a fixed view on the EU, but I am usually positive about it.

I've seen a list purporting to be the institutions in Anglo's bailout list, but without figures beside them - and Anglo, if you're reading the news, looks increasingly like a domestic 'golden circle' decision (see tomorrow's Irish Times).

I've also seen figures purporting to be the amount "owed" by Irish banks to German, French, British, and other European banks, but the German and British banks are on the record pointing out that those figures include (and are dominated by) the holdings of subsidiaries of European banks with shell operations in the IFSC and on loan mostly back to their parent countries. Since we're not bailing out any such subsidiaries, using those figures to press the case that the bailout is a case of Ireland being lent money to pay back foreign banks isn't supportable.

It interests me that, even though "Europe made us do it for their banks" is part of the spin put about by Fianna Fáil apologists, and although nobody gives any credibility to any other Fianna Fáil excuses, the narrative of the bailout being about saving foreign banks rather than Ireland's golden circle has been quite happily adopted by the eurosceptical as unchallenged dogma.

regards,
Scofflaw

hatrickpatrick

DarkJager wrote: »

We have not, do not, and will never ever take demands or orders from France.

No?

Sarkozy wrote:

The Irish must vote again.

Need I say more?

Scofflaw

hatrickpatrick wrote: »

No?

Need I say more?

A purist would point out that if France demands something that our government was going to do anyway, doing it is hardly acceding to French demands.

amused,
Scofflaw

censuspro

Some people might wonder what was all that talk about guarantees in the Lisbon Treaty? Europhiles will argue that this has nothing to do with the Lisbon treaty, the same way the EU/IMF stabilisation fund has nothing to do with the Lisbon Treaty or our CT rate so there is absolutely nothing France can do to make us raise our CT rate.

There is nothing to stop France or Germany from reducing their CT rates if they wanted. What Sarkozy is effectively saying is that we cannot compete with you so we want you to raise your prices. They argue that this is unfair competition but on the same basis can Ireland argue is it unfair competition that France and Germany have huge internal markets that they can sell in to, is it unfair competition that France and Germany are in continental Europe where they can export a lot easier into other markets.

Scofflaw

censuspro wrote: »

Some people might wonder what was all that talk about guarantees in the Lisbon Treaty? Europhiles will argue that this has nothing to do with the Lisbon treaty, the same way the EU/IMF stabilisation fund has nothing to do with the Lisbon Treaty or our CT rate

And they'd be right.

censuspro wrote: »

so there is absolutely nothing France can do to make us raise our CT rate.

But they wouldn't argue that bit - international pressure is international pressure, whether it comes from inside the EU or outside. The French can't make us change our tax rate - but they can apply pressure for us to do so.

censuspro wrote: »

There is nothing to stop France or Germany from reducing their CT rates if they wanted. What Sarkozy is effectively saying is that we cannot compete with you so we want you to raise your prices. They argue that this is unfair competition but on the same basis can Ireland argue is it unfair competition that France and Germany have huge internal markets that they can sell in to, is it unfair competition that France and Germany are in continental Europe where they can export a lot easier into other markets.

It's not about 'competition' in the usual sense - it's about Ireland's semi tax haven status. What we largely export is not made in Ireland - Ireland is just a friendly jurisdiction for holding intellectual property and charging royalties to where the sales are actually made. Google doesn't write its software here.

regards,
Scofflaw

censuspro

Scofflaw wrote: »

But they wouldn't argue that bit - international pressure is international pressure, whether it comes from inside the EU or outside. The French can't make us change our tax rate - but they can apply pressure for us to do so.

They can pressure all they want but unless they have something to pressure us with, like the EU/IMF stabilisation fund, then they have no leverage.

Scofflaw wrote: »

It's not about 'competition' in the usual sense - it's about Ireland's semi tax haven status. What we largely export is not made in Ireland - Ireland is just a friendly jurisdiction for holding intellectual property and charging royalties to where the sales are actually made. Google doesn't write its software here.

I doubt that they write their software in France or Germany either. This just highlights the market that we have to compete in, particularly at a time when more and more companies are moving their operations outside of the EU to places like India and China that no EU country can compete with and instead of lowering our costs to incentivise companies to invest in the EU, Germany and France want smaller nations to increase their taxes and make it even more expensive.

sligopark

Scofflaw wrote: »

I've seen a list purporting to be the institutions in Anglo's bailout list, but without figures beside them - and Anglo, if you're reading the news, looks increasingly like a domestic 'golden circle' decision (see tomorrow's Irish Times).

I've also seen figures purporting to be the amount "owed" by Irish banks to German, French, British, and other European banks, but the German and British banks are on the record pointing out that those figures include (and are dominated by) the holdings of subsidiaries of European banks with shell operations in the IFSC and on loan mostly back to their parent countries. Since we're not bailing out any such subsidiaries, using those figures to press the case that the bailout is a case of Ireland being lent money to pay back foreign banks isn't supportable.

It interests me that, even though "Europe made us do it for their banks" is part of the spin put about by Fianna Fáil apologists, and although nobody gives any credibility to any other Fianna Fáil excuses, the narrative of the bailout being about saving foreign banks rather than Ireland's golden circle has been quite happily adopted by the eurosceptical as unchallenged dogma.

regards,
Scofflaw

thanks Scofflaw - personally not a FFer - good answer and I ll get back to you with the relevant part of the lisbon treaty that if enacted would allow for the low corporation tax decision to be removed from any Irish member of the new federal superstate EU.

View

censuspro wrote: »

There is nothing to stop France or Germany from reducing their CT rates if they wanted.

Well, that is certainly true - of course, were they to do that then they probably wouldn't have the money to loan to us to allow us to go on undercutting their CT rates.

Scofflaw

censuspro wrote: »

They can pressure all they want but unless they have something to pressure us with, like the EU/IMF stabilisation fund, then they have no leverage.

If only we'd paid some attention to bank regulation and the narrowing of the tax base since 2002, so.

censuspro wrote: »

I doubt that they write their software in France or Germany either. This just highlights the market that we have to compete in, particularly at a time when more and more companies are moving their operations outside of the EU to places like India and China that no EU country can compete with and instead of lowering our costs to incentivise companies to invest in the EU, Germany and France want smaller nations to increase their taxes and make it even more expensive.

True, they don't write their software there, but they do make their sales there. The reason it's relevant in the case of Ireland is because while they don't write their software here, this is where it's licensed from, because we have very friendly IP laws on things like royalties. In Germany they make sales which would make a profit if the sales weren't subject to royalties on the use of IP which wasn't written here, but is officially the property of the Irish operation. The net result of that is that the profits earned in Germany (on sales) is transferred to Ireland, where the company made nothing at all.

That's not "competitiveness", except in the sense of being a better tax haven than Germany - a game Germany isn't in. Instead, Germany earns its money through being productive and competitive enough to be one of the world's biggest exporters. They earn the money through production of competitive goods for export, the US produces competitive software for them to spend some of that money on, and Ireland provides a convenient tax shelter in order to siphon money out of that transaction between two productive and competitive economies. Heck, if it comes to it, we're perfectly happy to host a German shell company that does nothing but own the IP and charge royalties on its product sales in Germany, because that way we can stick our snouts in Germany's domestic feedbag too.

The whole business about us being some kind of ultra-competitive wonder-economy, a Celtic Tiger? I'm afraid that was just Fianna Fáil spin, all that stuff Bertie said - we actually made a good bit of our money by sucking it out of other people's genuinely productive economies. Whether that's something one finds acceptable, or sensible, as a way for Ireland to make money is up to oneself, but it's hardly something other countries are going to like - and the idea that that's not what we were at is something we really ought to have cleaned out of our heads by now, because it was never anything more than Fianna Fáil smoke and mirrors.

Also, there's no Santa Claus.

regards,
Scofflaw

censuspro

Scofflaw wrote: »

If only we'd paid some attention to bank regulation and the narrowing of the tax base since 2002, so.

True, they don't write their software there, but they do make their sales there. The reason it's relevant in the case of Ireland is because while they don't write their software here, this is where it's licensed from, because we have very friendly IP laws on things like royalties. In Germany they make sales which would make a profit if the sales weren't subject to royalties on the use of IP which wasn't written here, but is officially the property of the Irish operation. The net result of that is that the profits earned in Germany (on sales) is transferred to Ireland, where the company made nothing at all.

That's not "competitiveness", except in the sense of being a better tax haven than Germany - a game Germany isn't in. Instead, Germany earns its money through being productive and competitive enough to be one of the world's biggest exporters. They earn the money through production of competitive goods for export, the US produces competitive software for them to spend some of that money on, and Ireland provides a convenient tax shelter in order to siphon money out of that transaction between two productive and competitive economies. Heck, if it comes to it, we're perfectly happy to host a German shell company that does nothing but own the IP and charge royalties on its product sales in Germany, because that way we can stick our snouts in Germany's domestic feedbag too.

The whole business about us being some kind of ultra-competitive wonder-economy, a Celtic Tiger? I'm afraid that was just Fianna Fáil spin, all that stuff Bertie said - we actually made a good bit of our money by sucking it out of other people's genuinely productive economies. Whether that's something one finds acceptable, or sensible, as a way for Ireland to make money is up to oneself, but it's hardly something other countries are going to like - and the idea that that's not what we were at is something we really ought to have cleaned out of our heads by now, because it was never anything more than Fianna Fáil smoke and mirrors.

Also, there's no Santa Claus.

regards,
Scofflaw

Ireland does not give residency to "shell" companies. The requirement is that the company's central management and control is exercised in the State. The central management and control is determined by: where the majority of directors reside, where the company's policies are determined, where the head office is located and where the negotiation of major contracts is undertaken.

The reason more sales are made in those countries is because they have much larger populations and internal markets to sell into. Based on Sarkozy's argument Ireland could cry that France has an unfair competition because they have a much larger population. Also, what is the definition of a "genuinely productive economy" and who determines whether one economy is genuinely productive or not. Bear in mind that even German manufacturers are moving their plants to Eastern Europe where labour costs are a lot loss than they are in Germany, is this also considered unfair competition?

There' nothing to stop Germany changing their IP laws and CT rates if they wanted to.

jc84

it's not the other countries fault that ireland doesn't have anything else to offer, ireland got itself into huge financial debt and needs other EU countries to bail them out, ireland is not playing fair by having such a low corporation tax, they have no problem taxing the f**k out of small business and hard working citizens though, everyone needs to contribute to get the country back on its feet, including corporations, there should to be an EU wide standard tax rate

later12

Scofflaw wrote: »

we actually made a good bit of our money by sucking it out of other people's genuinely productive economies. Whether that's something one finds acceptable, or sensible, as a way for Ireland to make money is up to oneself

Why not/ One could probably say the same thing about the Swiss, who are getting less and less competitive by the hour these days because of the popularity of their ability to suck capital from the genuinely productive economies. We;re not the Swiss, we never will be, but maybe I'm just one of those crazy ammoral posters who don't really see a problem with this policy in itself, certainly not an economic one.

but it's hardly something other countries are going to like

The opinion of our European neighbours on our capital hungry 'haven' status is almost totally irrelevant on this issue. They don't appear to have a problem with it, in general, apart from the CT issue which is another issue. What we ought to be interested in is what business thinks of this policy, and to be honest they really don't seem to be objecting. Good for us.

wolfpawnat

Raise corporate tax, scare off new foreign investment and cause the US to pull out much of its business here, losing us tax revenue and in turn meaning we cannot pay back the ECB and IMF which in turn means losing his country money. Ya that makes sense(!)

If the Irish Gov had any balls they'd tell him to go back to worrying about Roma gypsies and Muslim head wear and to take his ugly nose out of our business!

censuspro

View wrote: »

Well, that is certainly true - of course, were they to do that then they probably wouldn't have the money to loan to us to allow us to go on undercutting their CT rates.

I don't see how that's a relevant argument, the EU/IMF stabilisation fund has nothing to do with our CT rate, the same way the Lisbon Treaty has nothing to do with our CT rate. Also, how do the loans we receive from the EU/IMF allow Ireland to go on "undercutting" tax rates?

You also seem to assume that a reduction in tax rates automatically equates to a reduction in tax revenues. When Ireland reduced it's CGT rate to 20% tax revenues from CGT increased.

Scofflaw

later10 wrote: »

Why not/ One could probably say the same thing about the Swiss, who are getting less and less competitive by the hour these days because of the popularity of their ability to suck capital from the genuinely productive economies. We;re not the Swiss, we never will be, but maybe I'm just one of those crazy ammoral posters who don't really see a problem with this policy in itself, certainly not an economic one.

The opinion of our European neighbours on our capital hungry 'haven' status is almost totally irrelevant on this issue. They don't appear to have a problem with it, in general, apart from the CT issue which is another issue. What we ought to be interested in is what business thinks of this policy, and to be honest they really don't seem to be objecting. Good for us.

My problems with the policy are two-fold. First, it results in the government continuing to concentrate on FDI rather than indigenous business - and if you've run a business here, you'll have felt the effects of that. Second, the Irish policy is unpopular with enough of our trading partners that the setup of something like CCCTB is only a matter of time.

While it's perfectly possible for us to go on indefinitely resisting CCCTB at the pan-EU level, we cannot prevent it going ahead on an enhanced cooperation basis, we cannot prevent it going ahead at a pan-European level outside the EU, and there are costs involved in indefinitely resisting what other countries want.

For those reasons, rather than any question of the morality of the system, I think one has to question whether the policy of being a semi tax haven is sustainable in the long term.

cordially,
Scofflaw

TalkToEU: John

2manyconditions wrote: »

Hi,

I read an rte.ie report today in which Sarkozy was giving out that if the Irish are to receive a huge bailout that the corporation tax cannot remain at the low level it is currently at.

I was very angry at this as this to me is the only reason we can attract the number of multinationals that we do. If that is taken away then the loss of jobs would mean we would not be able to pay back the debt and where would that leave us? Also, tho I haven't read it, wasn't it agreed under the amended Lisbon treaty that the corporation tax in Ireland could not be touched.

So will the corporation tax be increased? Does the EU have a say in this policy after all?

From an earlier thread on corporation tax.

Under the EU treaties, tax matters can only be decided unanimously by governments in the European Council. This means if even one country disagrees, no change will take place. While some politicians (Sarkozy in this case) in other Member States may express their views on this from time to time, there is no power to change Ireland's corporation tax. That rate is now stands at 12.5%, the third lowest in the EU and much lower than the EU average of approx. 22%. There are huge differentials in corporation tax rates in the the EU. Here are some examples: Malta 35%; Belgium 34%; Italy 31.4%; Poland 19%; Romania 16%; Latvia 15%; Cyprus;10%.

walrusgumble

DarkJager wrote: »

Sarkozy doesn't seem to understand that nobody here gives a **** about what he says. He'd be better off shutting his mouth and concentrating on his own country instead of making demands of others. We have not, do not, and will never ever take demands or orders from France.

We might not care for what he says, but he is a powerful figure in European affairs, and he has many people in other countries who agree. Imagine, we will be needing old Blighty, ran by the Conversatives to fight our corner.

wolfpawnat

walrusgumble wrote: »

We might not care for what he says, but he is a powerful figure in European affairs, and he has many people in other countries who agree. Imagine, we will be needing old Blighty, ran by the Conversatives to fight our corner.

Something I thought I would never see, but they do seem to want us to be able to hold our own, mainly because it profits them as we export a lot of goods to them and a good percentage of their exports come to us!

eamo12

Nonsense. The 'Yes to Lisbon' crowd assured us that under no circumstances this would ever happen and to suggest otherwise would be racist and a sop of the BNP and all those evil right-wingers. .

censuspro

eamo12 wrote: »

Nonsense. The 'Yes to Lisbon' crowd assured us that under no circumstances this would ever happen....

and they were right, there was nothing in the Lisbon Treaty that would have any impact on our CT rate. However, people were led to believe that the guarantees on taxation meant the the debate was completely off the table. Even if we voted No we would still be having this debate.

Scofflaw

walrusgumble wrote: »

We might not care for what he says, but he is a powerful figure in European affairs, and he has many people in other countries who agree. Imagine, we will be needing old Blighty, ran by the Conversatives to fight our corner.

Something I thought I would never see, but they do seem to want us to be able to hold our own, mainly because it profits them as we export a lot of goods to them and a good percentage of their exports come to us!

The UK is not necessarily any happier with our tax approach than France:

GOOGLE, the internet giant with the motto “don’t be evil”, avoids paying more than £100m a year in UK tax despite pulling in annual revenues of more than £1.25 billion.

Even though the web search engine operates as Google UK Ltd in London, British firms which advertise with it pay their subscriptions to a subsidiary based in Ireland, where corporation tax is far lower than in the UK.

This structure, condemned this weekend as “unfair” and “unacceptable”, allowed Google legally to avoid paying £110m of UK tax in 2007, according to research by an expert on corporate tax avoidance.

Google’s massive advertising revenues have already been blamed for ravaging the finances of newspapers, broad-casters and other creative industries. It is in dispute with musicians and songwriters, including Abba’s Bjorn Ulvaeus, Jools Holland and the singer Alison Clarkson, known as Betty Boo, for the royalties it pays for videos on its YouTube site.

Google’s accounts show that the highly profitable search engine paid just £600,000 of UK corporation tax in 2007, despite generating revenues of more than £1.25 billion in this country. More than 90% of Google’s UK revenues are channelled through Ireland, where corporation tax is levied at 12.5%, compared with 28% in Britain.

Richard Murphy, the accountant who investigated Google’s UK, Irish and American accounts for The Sunday Times, also found: Google avoided a further €135m (now £119m) in tax from Ireland during 2007. The search engine’s Irish subsidiary is owned by one of two companies Google has set up in the tax haven of Bermuda. Several sets of Google’s UK accounts were filed late, with one set of accounts outstanding by more than five months.

Vince Cable, the deputy leader of the Liberal Democrats, said: “Google is another in a long line of companies who seems to think that paying British taxes should be optional.

“The reality is, the more tax that companies like Google avoid, the more the tax burden falls on the rest of the public. It is clear that while Labour and the Tories have been embracing Google as the paragon of a 21st-century company, it has been running away from the taxman.”

Austin Mitchell, the Labour MP who has campaigned against corporate tax avoidance, described diverting UK revenues through Ireland as “unfair”.

“You only have to look at the falling earnings of newspapers and television companies to see what damage Google is having,” he said. “To hear that Google is not producing any real content, while siphoning out all this money from the UK and then not paying tax is just not on.”

...

Although Google’s avoidance of UK tax is legal, Murphy’s report suggests HM Revenue & Customs (HMRC) could challenge its tax planning.

“HMRC could say Google is operating a branch in the UK and tax it on its UK turnover here,” Murphy writes. “I think this is viable.”

Google has seven subsidiaries in the UK, including Google UK Ltd, which employs more than 500 people. In 2007, they were paid on average almost £100,000.

Murphy said yesterday: “Is it morally right that a company can hoover up £1.25 billion of revenues from the UK in a single year and pay back just £600,000 of tax?”

The difference is, I suppose, that rather than fulminating about it like Sarkozy, they're doing something about it:

THE UNITED Kingdom plans to sharply reduce the amount of corporation tax charged to multi-nationals on profits made by operations outside of the UK in a bid to stop the drift of such companies to bases in other countries.

It will also introduce a 10 per cent rate on profits from newly commercialised patents, chancellor of the exchequer George Osborne has said.

Some of Britain’s biggest companies, including global advertising group WPP and Shire, the pharmaceuticals company, recently moved their headquarters to Ireland, claiming the complicated and uncertain nature of company tax law in the UK made it unviable to retain their tax base there.

Though Mr Osborne was careful not to mention Ireland in the House of Commons – alluding instead to Belgium and the Netherlands as countries which have become more attractive for UK-based multinationals – Treasury sources later briefed journalists that the changes would encourage some of the British companies who moved to Ireland in recent years to move their tax-base back to Britain in a move which could cost the Irish exchequer tens of millions in lost revenue.

“These tax measures will make us the most competitive place in the world,” Mr Osborne told MPs.

A Treasury document published yesterday said: “In recent years too many businesses have left the UK amid concerns over tax competitiveness. It’s time to reverse this trend. Our tax system was once viewed as an asset. And it needs to be an asset again.”

In the recent UK budget, Mr Osborne announced the top rate of corporation tax would drop by a percentage point every year over the next four years to 24 per cent, its lowest-ever rate. In 1997, the UK had the 10th lowest rate in the EU, but it had dropped to 20th place this year.

The Treasury said the administration of taxes – and not just the rate – is equally important to companies: “Particular concerns have been raised about a lack of clear direction, the frequency of change and, on some occasions, the lack of attention paid to the real impacts on business.”

Under one of the changes planned to come into force in 2012, multinationals would be offered the opportunity to “opt in” to an exemption for profits earned in foreign branches of UK companies in 2011, using “a more territorial” approach to the collection of corporation tax. This would mean they would no longer be subject to UK corporation tax on foreign profits. The Treasury has to achieve a difficult balance, as this could cost it significant revenues.

The introduction of a new 10 per cent tax rate from 2013 on newly commercialised patents has already seen its first gain, with GlaxoSmithKline’s decision to build a £500 million (€593 million) plant in Hertfordshire.

Still, if they copy our structure, that may put them more firmly in our corner.

cordially,
Scofflaw

RichieC

*here's your bailout*


now, make your country uncompetitive so you won't be able to pay it back!!!


yea, I see the logic.

wolfpawnat

RichieC wrote: »

*here's your bailout*


now, make your country uncompetitive so you won't be able to pay it back!!!


yea, I see the logic.

What I was trying to say, but it far fewer words!!!

later12

Scofflaw wrote: »

it results in the government continuing to concentrate on FDI rather than indigenous business - and if you've run a business here, you'll have felt the effects of that.

I don't see why that would be the case. When you say 'concentrate on FDI', how do you mean, exactly? In terms of the 'shell companies' as they have been referred to, it's pretty much an open and shut DIY case. There is nobody in Government nor any mandarins of the state concentrating on such companies, as far as I can see. There is no reason why they could not dedicate their efforts to indigenous business if they so wished, simply because of the fact that some companies seek to be domiciled here for tax purposes.

Second, the Irish policy is unpopular with enough of our trading partners that the setup of something like CCCTB is only a matter of time.

Firstly I don't believe that's the reason for the proposed CCCTB, as the vast majority of the jurisdictions in question, including Germany, would be net losers because of this proposed scheme. And Ireland (like other countries) can and will resist that.

Being an economy that sucks wealth out of the more productive economies, as someone put it, is not a bad thing at all. In fact if you want to see one benefit of our status as a semi haven state (as fully endorsed by the EU by the way) then just take a look at the amount of hedge funds locating here.

http://www.ft.com/cms/s/0/931390fa-2012-11e0-a6fb-00144feab49a.html

I couldn't help notice that you gave an example of google in one post. Google, of course, is a huge employer in Dublin, employing around 2,000 people. It's not particularly likely that the company would have been attracted to work here if not for the foreign rate differential that Ireland offered.

swampgas

"THE UNITED Kingdom plans to sharply reduce the amount of corporation tax charged to multi-nationals on profits made by operations outside of the UK in a bid to stop the drift of such companies to bases in other countries."

This just goes to show that Ireland does not operate in a vacuum. Other countries will find ways to counter-act our policies if we are putting them at too much of a disadvantage.

While France & Germany may be pushing for Ireland to raise its CT rate, the UK may decide just to compete head on.

censuspro wrote:

There' nothing to stop Germany changing their IP laws and CT rates if they wanted to.

Exactly. There's nothing to stop any country changing their IP laws and tax rates if they want to. I suspect Ireland's low CT rate advantage will be eroded a lot quicker than people expect.

*Edit* I don't mean that Germany or others will just drop their CT rate to match ours. They may well find some other mechanism to achieve the same goal.

conorhal

The incoming government need to go on a charm offensive and recruit the support of the other low tax economies in Europe to stand together against these proposals.

Sarko should be told in no uncertian terms to back off. He's an utter hypocrite anyway, companies with over two thousand employees in France (of which there are many, look at the Forbes to 100 companies, a hell of a lot of them are located in France and Germany.) pay a tax rate of 13%, a mere half a percent above our own rate.

Ireland doesn't even have the lowest corporation tax rate in Europe, so I find Sarko's obsession with our CT odd to say the least.

jmayo

Scofflaw wrote: »

My problems with the policy are two-fold. First, it results in the government continuing to concentrate on FDI rather than indigenous business - and if you've run a business here, you'll have felt the effects of that. Second, the Irish policy is unpopular with enough of our trading partners that the setup of something like CCCTB is only a matter of time.

While it's perfectly possible for us to go on indefinitely resisting CCCTB at the pan-EU level, we cannot prevent it going ahead on an enhanced cooperation basis, we cannot prevent it going ahead at a pan-European level outside the EU, and there are costs involved in indefinitely resisting what other countries want.

For those reasons, rather than any question of the morality of the system, I think one has to question whether the policy of being a semi tax haven is sustainable in the long term.

cordially,
Scofflaw

So you reckon we should up our corpo tax rates to force us to rely less on FDI.
While I agree we should endeavour to be more like Finland with our own home grown multinationals I don't it is good idea to up tax rates at the moment.

Our corpo tax rate may be unpopular with the French and Germans but what about other lesser countries within the EU who happen to have low tx regimes themselves ?

As regards morality of the system ?
Why not go talk to Isle of Man or Jersey about sustainability of semi tax haven ?

conorhal wrote: »

The incoming government need to go on a charm offensive and recruit the support of the other low tax economies in Europe to stand together against these proposals.

Sarko should be told in no uncertian terms to back off. He's an utter hypocrite anyway, companies with over two thousand employees in France (of which there are many, look at the Forbes to 100 companies, a hell of a lot of them are located in France and Germany.) pay a tax rate of 13%, a mere half a percent above our own rate.

Ireland doesn't even have the lowest corporation tax rate in Europe, so I find Sarko's obsession with our CT odd to say the least.

If the little emperor wants to harmonise things let's see him sell harmonised retirement ages throughout the eurozone ?

We will harmonise our corpo taxes with his when he harmonises his retirement age with ours.
Now any bets on how long before France would be crippled by strikes.

Perhaps a few little quotes from Irish politican on a French news channel might teach the little pr*** that he can't pretend to be Napolean.

Scofflaw

Cross-posted from "Sarkozy hates the Irish", and relevant here:

Came across an interesting piece of French commentary on the low CT rate enjoyed by some French companies, and a possible hint as to Sarkozy's ulterior motives:

The largest French companies are not necessarily those that relate most to the state coffers. According to a survey published this weekend in the Journal du Dimanche, a CAC 40 company in four would not pay tax (CIT) last year. Danone, Suez Environment, Total, Saint Gobain, Schneider or completely escape such levy. Half of the CAC 40 companies chose not to respond to questions from the newspaper, but "if they say nothing is that they do not pay much," says in his columns a tax lawyer. As already noted a report by the mandatory withdrawals last October, the CAC 40 companies are taxed at an average height of 8% of their profits, against 33% normally. SMEs, less able to exploit various tax loopholes, by transferring an average of 22%.

Because it is under the tax code that the contribution of big business reached a level so low. Despite the high rate of corporation tax in France, many tax provisions, such as unlimited carryover of losses, the research tax credit or the deductibility of loan interest, they can indeed reduce their payments. According to the Council of compulsory levies, the cost to the state of the various loopholes in the tax and social benefit to companies reached 172 billion euros in 2010 no fax cash advance. Danone, for example, taxes deducted from the borrowing for the acquisition of Numico in 2007, says the JDD. And if other businesses, such Total or PSA, revertants do anything this year for being in the red, they may also limit their payments in subsequent years, with unlimited carry-over losses deplored during the crisis.

Finally, as a result of these multiple devices, the product of the corporate tax is reduced gradually. Hence the idea, supported by the Elysée, an overhaul of the device for more convergence with other European states, particularly Germany. Pressure without success on Ireland to raise its IS – the lowest in Europe at 12.5% – said the crucial for France and Germany at the tax variable. If the establishment of a single rate for all European countries seems unlikely, France and Germany would lead, at least, to fix a similar attitude. The European Commission should make proposals in March.

Couple of interesting points in there. First, the much quoted "French 8% minimum rate" isn't anything of the kind. It's the same as pointing at Google and claiming Ireland's CT rate is 2.4% - some large French companies are able to exploit the tax rules in France in order to pay very low rates.

And that raises an interesting possibility for Sarkozy's actual motivation here. I find it unlikely, despite the theme of this thread, that Sarkozy cares much about Ireland and Ireland's CT rate one way or the other - the Irish aren't French voters, and there's absolutely no guarantee (or even any strong likelihood) that US multinationals will relocate to France if we raise our CT rate a bit.

Looking at this phrase in particular:

Finally, as a result of these multiple devices, the product of the corporate tax is reduced gradually. Hence the idea, supported by the Elysée, an overhaul of the device for more convergence with other European states, particularly Germany.

"The Elysée" here is the President, and what is being suggested is that rather than take on some of the most powerful French companies head to head by eliminating the loopholes described above, Sarkozy is instead aiming to use Europe to do the hard work for him. The Irish are a convenient rallying call and whipping boy, as well as a stumbling block, but it's quite possibly not really our CT he's after, it's the French CT - in particular, he's aiming to eliminate the current loopholes through 'convergence' with other EU countries. That would also be why he's not particularly interested in creating an 'enhanced cooperation' group for tax harmonisation - that can't be presented as "oh, we should do this, it is European".

As they say, all politics is local. French politics is about France, not Ireland. We may just be a stalking horse.

cordially,
Scofflaw

Scofflaw

jmayo wrote: »

So you reckon we should up our corpo tax rates to force us to rely less on FDI.
While I agree we should endeavour to be more like Finland with our own home grown multinationals I don't it is good idea to up tax rates at the moment.

Our corpo tax rate may be unpopular with the French and Germans but what about other lesser countries within the EU who happen to have low tx regimes themselves ?

As regards morality of the system ?
Why not go talk to Isle of Man or Jersey about sustainability of semi tax haven ?

You don't seem to have actually read the post you quoted. I didn't suggest that we should raise tax rates in order to force us to rely less on FDI - if anything, I'd say the opposite, that we should rely less than FDI in order to be able to raise tax rates (or close loopholes, or whatever, I'm not particularly bothered). And I specifically discounted any moral argument - my problems with a strategy reliant on a low tax rate and semi tax haven status is that it's not fully under our control.

We do have some world class Irish companies - but mysteriously, I don't think any of them post-date the decision to become an FDI hub.

jmayo wrote: »

If the little emperor wants to harmonise things let's see him sell harmonised retirement ages throughout the eurozone ?

We will harmonise our corpo taxes with his when he harmonises his retirement age with ours.
Now any bets on how long before France would be crippled by strikes.

Perhaps a few little quotes from Irish politican on a French news channel might teach the little pr*** that he can't pretend to be Napolean.

Funny you should say that, really:

Although the summit was due to discuss measures to expand the scope and scale of the euro zone bailout fund, it was dominated by the Franco-German proposal. In addition to business tax measures, the plan would set constitutional debt limits throughout the euro area, harmonise the pension age and ban index-linked wage settlements.

cordially,
Scofflaw