Corpo tax attack to begin days after the election

raymann

http://www.tribune.ie/business/news/article/2011/jan/23/irish-corporation-tax-faces-ec-attack-just-days-af/

if this goes to pass then logically the best place for companies to locate is ones with the biggest populations. ie the uk, germany and france.

can they do this?

gonedrinking

Its never going to happen. Ireland would either leave the EU or else default on its debts before accepting a corp tax increase.

digme

They can and they will and Ireland won't do nothing about it.

raymann

gonedrinking wrote: »

Its never going to happen. Ireland would either leave the EU or else default on its debts before accepting a corp tax increase.

its not a corpo tax increase. its changing the rules to say that the tax is paid where the revenue is generated rather than where the head office is located.

my big fear is right next door (or even over the border) we have a young, english speaking, well educated workforce, with lower wages, rents and operating costs. And i believe they have one of the lowest corpo rates of the major euro countries.

gonedrinking

raymann wrote: »

its not a corpo tax increase. its changing the rules to say that the tax is paid where the revenue is generated rather than where the head office is located.

Wouldn't that therefore be beneficial to Ireland, in that more operations/service companies will be moving to Ireland, and conducting more of their business here rather than just having a shell head office here?

raymann

gonedrinking wrote: »

Wouldn't that therefore be beneficial to Ireland, in that more operations/service companies will be moving to Ireland, and conducting more of their business here rather than just having a shell head office here?

its not referring to production costs, its talking about end user sales. im just trying to look into this now. it doesnt look good.

i live in france and people are very aware of our corpo tax/welfare/public service pay. expect zero sympathy from them.

edit: just checked it appears gemany is the cheapest of the three then the uk then france

Lurching

If Ireland ended up giving in to this, it would effectively be the last nail in the coffin for the country as a whole.
We would hold no benefit for foreign investment over any other European country.

It takes a lot of time and effort to get a country down to a corpo tax as low as Ireland, I think we deserve to keep it.

gonedrinking

If this is true then Ireland needs to hold back on using the NPRF as designated by the bailout plan, and instead use it to print our own currency again.

raymann

Lurching wrote: »

If Ireland ended up giving in to this, it would effectively be the last nail in the coffin for the country as a whole.
We would hold no benefit for foreign investment over any other European country.

It takes a lot of time and effort to get a country down to a corpo tax as low as Ireland, I think we deserve to keep it.

we can keep our corpo tax but only for money generated in ireland. this will make the 'double irish' that google use impossible.

im not sure other countries view our low tax rate in the context of the current system with much admiration. im fairly certain the citizens of the larger euro countries at least would rather this new system.

does anyone know if there is any pressure on the uk to join the euro? they have their own uncompetitive advantage at the moment with full euro access but their own currency. can we exploit that angle?

Lurching

raymann wrote: »

we can keep our corpo tax but only for money generated in ireland. this will make the 'double irish' that google use impossible.

im not sure other countries view our low tax rate in the context of the current system with much admiration. im fairly certain the citizens of the larger euro countries at least would rather this new system.

I understand the regulations, in that we will keep the rate for goods sold in Ireland, but that isnt much good for a huge number of the large multinationals. (i.e. Google, as you have stated)

I always saw the other countries in the EU as being somewhat jealous of our rate, and asking themselves, why should Ireland deserve it? How accurate I am in saying that, im not 100% sure.

CokaColumbo

I don't have much confidence in any Irish government to stand up against the wishes of the behemoths in the EU, especially if the country elects a left-wing coalition between Labour and SF which would favour, in broad principal, tax increases.

The idea that anybody outside of Ireland should feel entitled to dictate our economic priorities sickens me and shows just how far we have gone in sacrificing our autonomy as a country.

raymann

Lurching wrote: »

I understand the regulations, in that we will keep the rate for goods sold in Ireland, but that isnt much good for a huge number of the large multinationals. (i.e. Google, as you have stated)

I always saw the other countries in the EU as being somewhat jealous of our rate, and asking themselves, why should Ireland deserve it? How accurate I am in saying that, im not 100% sure.

i think the issue more is; why should ireland be able to have this competitive advantage whilst expecting bailout money to pay for a lavish public sector/welfare state that no one else in europe can afford.

RichardAnd

Regardless of the outcome of this, I think it really illustrates that the Euro-trash just aren't going to let Ireland's CT rate slide. I would also reject the idea that Ireland is being "bailed out" by europe as, to me, that was a deal made by the europeans to keep a basket case nation under control.

I wouldn't pay too much heed to the little man at the top in France. The French have a history of throwing their weight around yet almost always, they end up worse off for the effort at the end of the day.

I guess this whole mess is another chapter in the history of the world's most dysfunctional family; the Europeans. We are almost utterly incapable of getting along with each other for an extended period and euro politics are mired with secret deal, one state climbing over another and such concomitant.

What I can say is that it is unlikely any Irish government will stand up to the europeans in any meaningful way. What I have seen with the Nice treaty and the Lisbon treaty is that the Irish government (and remember, FG and Labour supported both treaties) have always jumped to Brussels tune regardless of that the votes of the Irish people told them.

In the coming years, I think we will have to ask ourselves what the EU is all about. Is it europeans finally putting aside their differences or, as I beginning to suspect, is it simply the latest ploy in the capricious and deceitful game of Euro politics?

raymann

RichardAnd wrote: »

Regardless of the outcome of this, I think it really illustrates that the Euro-trash just aren't going to let Ireland's CT rate slide. I would also reject the idea that Ireland is being "bailed out" by europe as, to me, that was a deal made by the europeans to keep a basket case nation under control.

I wouldn't pay too much heed to the little man at the top in France. The French have a history of throwing their weight around yet almost always, they end up worse off for the effort at the end of the day.

I guess this whole mess is another chapter in the history of the world's most dysfunctional family; the Europeans. We are almost utterly incapable of getting along with each other for an extended period and euro politics are mired with secret deal, one state climbing over another and such concomitant.

What I can say is that it is unlikely any Irish government will stand up to the europeans in any meaningful way. What I have seen with the Nice treaty and the Lisbon treaty is that the Irish government (and remember, FG and Labour supported both treaties) have always jumped to Brussels tune regardless of that the votes of the Irish people told them.

In the coming years, I think we will have to ask ourselves what the EU is all about. Is it europeans finally putting aside their differences or, as I beginning to suspect, is it simply the latest ploy in the capricious and deceitful game of Euro politics?

im dont take such a hard line and dont think its all part of a sinister plan. i can see how our tax policy has no advantages for anyone other than us, a small nation of 4m odd. we are facilitating companies with a form of tax evasion.

the question has to be how do we move, what do we do. there must be options. the dutch have a low corpo rate as well. to be honest with only 15m people they will be disadvantaged as well.

our tax policy is protected by lisbon 2. does changing the overall rules concerning taxation not fall under the same protection?

Spudmonkey

TBH, if Europe want us to give it up, they can kiss their bailout and their euro project goodbye!!

KerranJast

Doesn't every Member State have a veto on EU tax changes? If so then they can go swing.

gbee

If the US Dollar loses it's reserve currency position, which it will, [possibly even this year] then the lower corporation tax in Ireland WILL be a HUGE attraction as US companies will need to adopt protection measures that transcends the cheapest labour force attraction [as of the last several years].

Our lower corporation tax is a vital cog and with Japan going into 2nd place on this tax, it shows the value of a lower tax in a changing market place.

All things being equal, corporation tax would not be attractive on it's own against a cheaper workforce and cheaper running costs that don't effect the reserve currency and in fact support it, but once the US$ is no longer this, we have a new market and great potential.

R P McMurphy

KerranJast wrote: »

Doesn't every Member State have a veto on EU tax changes? If so then they can go swing.

Did anyone read the introduction to the Lisbon treaty let alone the small print

KerranJast

R P McMurphy wrote: »

Did anyone read the introduction to the Lisbon treaty let alone the small print

In Lisbon 2 we were left keep our veto on taxation changes afai was aware.

Edit: found something

Article 113

The Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition.

Important part is bolded

gonedrinking

raymann wrote: »

i think the issue more is; why should ireland be able to have this competitive advantage whilst expecting bailout money to pay for a lavish public sector/welfare state that no one else in europe can afford.

europe is making a very nice profit on this so called "bailout"

raymann

KerranJast wrote: »

Doesn't every Member State have a veto on EU tax changes? If so then they can go swing.

this is what i want to know. are they doing it by the backdoor by changing the other rules? does this not contradict the promises made as part of lisbon 2?

Whiskeyjack

In a way I can see where they're coming from. Our corpo tax only benefits us, there aren't really any positive knock on effects for the rest of the EU, at least compared to what it would be in mainland Europe. Added on to that is the fact that the situation we got ourselves in is broadly of our own making. Even factoring in the worldwide crisis our economy was still grossly mismanaged and we only have ourselves to blame for continuing to elect FF and failing to keep an eye on our massively flawed political system.

Putting it all together Ireland looks like a country that took all the benefits from EU membership, squandered them and all the while gave little back. I'm not defending their actions necessarily, but if we were in their shoes there would be a lot of support for a measure such as this.

Scofflaw

raymann wrote: »

this is what i want to know. are they doing it by the backdoor by changing the other rules? does this not contradict the promises made as part of lisbon 2?

No, it's completely in line with them. We have a veto on the introduction of CCCTB.

As it stands the most recent CCCTB proposal from the working group actually has a complex formula that depends on the relative amounts of revenues, labour, payroll, and fixed capital in each country. The scheme is, at the moment, voluntary.

For any company whose sole reason for being in Ireland is to funnel European profits through a low tax regime, it makes no sense to opt for a CCCTB return.

Spudmonkey wrote:

TBH, if Europe want us to give it up, they can kiss their bailout and their euro project goodbye!!

I don't think you understand the mechanisms by which Ireland threatens the euro project. If we refused the bailout, left the euro, and defaulted, there would be a temporary move against the sovereign debt of other eurozone countries, but one that would fade if none of them immediately fell over. We would no longer be part of Europe's problem. Any money we might be unable to pay back to European banks would not sink the euro, or even put it under real strain, and it would still come out of our pockets.

cordially,
Scofflaw

raymann

Whiskeyjack wrote: »

In a way I can see where they're coming from. Our corpo tax only benefits us, there aren't really any positive knock on effects for the rest of the EU, at least compared to what it would be in mainland Europe. Added on to that is the fact that the situation we got ourselves in is broadly of our own making. Even factoring in the worldwide crisis our economy was still grossly mismanaged and we only have ourselves to blame for continuing to elect FF and failing to keep an eye on our massively flawed political system.

Putting it all together Ireland looks like a country that took all the benefits from EU membership, squandered them and all the while gave little back. I'm not defending their actions necessarily, but if we were in their shoes there would be a lot of support for a measure such as this.

the scary thing is that everything you say is basically right, and thats coming from an irish perspective. i cant even imagine how a german or italian sees it.

how about the angle that we wont be able to pay anything back if they do this. they really will give us no choice but to default. whats the point in doing that.

the uk has its currency advantages, the french get the comon agricultural policy and the germans are doing very well out of having hyper competitive exports, why cant we work a way we can keep this?

raymann

Scofflaw wrote: »

No, it's completely in line with them. We have a veto on the introduction of CCCTB.

As it stands the most recent CCCTB proposal from the working group actually has a complex formula that depends on the relative amounts of revenues, labour, payroll, and fixed capital in each country. The scheme is, at the moment, voluntary.

For any company whose sole reason for being in Ireland is to funnel European profits through a low tax regime, it makes no sense to opt for a CCCTB return.

where do you think this is leading? do you think that we have many options to ensure we remain an attractive destination for FDI?

Scofflaw

raymann wrote: »

where do you think this is leading? do you think that we have many options to ensure we remain an attractive destination for FDI?

In certain senses, as long as we keep our rate, there are elements of this that could actually be beneficial to Ireland. Currently, one way multinationals have of benefiting from an Irish base (usually the 'European HQ') is by assigning the Irish operation the rights to the company's intellectual property. The Irish operation doesn't make many sales in Ireland, but when a sale is made by the German arm of the company, the Irish operation charges the German operation a licence fee for use of the intellectual property - which means that a good part of the revenue from the German sales gets transferred back to Ireland, where it is taxed as profit at Irish rates. So the German operation makes €1bn in sales in Germany, which would result in profits of, say, €100m - but the Irish operation charges €90m in licence fees, so the German operation makes €10m profit at German tax rates, and the other €90m is transferred to Ireland and taxed at Irish rates.

Now that I look at that, I'm not sure that that bit of it is particularly affected - after all, the Irish operation is, according to the internationally established rules on transfer pricing, making €90m in revenue in Ireland.

The difference is that the company will actually employ more people in Germany, and have more physical assets in Germany, than in Ireland - so if it opted for CCCTB, the share-out under the CCCTB formula would be affected by that. The question of whether making a single tax return under CCCTB was more or less costly than the additional tax the company would thereby pay would determine whether the company opted for it in the first place. A further round of thinking and analysis by the company would be necessary to work out whether under CCCTB it made sense to keep an Irish HQ, or whether it would make sense to move those functions to another reasonably lowish tax jurisdiction where it was also making sales or had a sizeable presence anyway.

One of the other problems that CCCTB poses for Ireland is that tax opacity is to our advantage, because our CT rate isn't really 12.5% any more than anyone else's rate is really what it says on the tin either. These are the statutory (the official rate) and effective (what actually gets paid) tax rates from 2006/2007:

Country|Companies|ETR 2006|ETR 2007|STR 2006|STR/Ireland|ETR/Ireland
Romania|1|10.24|10.24|16|1.28|0.66
Hungary, Republic of|14|12.59|11.12|16|1.28|0.71
Cyprus, Republic of|2|11.48|11.48|10|0.8|0.74
Ireland|61|15.43|15.58|12.5|1|1
Estonia|2|16.82|16.82|22|1.76|1.08
Slovenia|5|16.01|17.61|22|1.76|1.13
Poland, Republic of|21|18.79|19.43|19|1.52|1.25
Portugal (Portuguese Republic)|31|17.41|19.69|25|2|1.26
Slovakia|1|20.17|20.17|19|1.52|1.29
United Kingdom|1457|21.13|24.5|30|2.4|1.57
Netherlands, Kingdom of|137|23.23|24.69|27.55|2.2|1.58
Denmark, Kingdom of|132|22.54|24.87|26.5|2.12|1.6
Finland, Republic of|145|24.13|25.89|26|2.08|1.66
Belgium, Kingdom of|77|24.67|26.17|33|2.64|1.68
Czech, Republic of|6|28.92|26.29|24|1.92|1.69
Spain (Spanish State)|162|23.98|26.63|33.75|2.7|1.71
Sweden, Kingdom of|261|23.48|27.07|28|2.24|1.74
Greece (Hellenic Republic)|84|27.6|28.14|27|2.16|1.81
Germany, Federal Republic of|470|27.3|29.52|25|2|1.89
France (French Republic)|471|29.42|31.79|34.43|2.75|2.04
Italy (Italian Republic)|213|39.86|39.25|33|2.64|2.52

The last two columns there are the ratio of the country's Statutory Tax Rate to Ireland's STR, and the ratio of their Effective Tax Rate to Ireland's. As you can see, Ireland still has a comparative tax advantage once you strip away the opacity surrounding effective tax rates, but it's not as marked as before. Source is here.

It's hard to find an analysis of CCCTB's impact on Ireland that isn't either too summary, based on outdated information, or extremely partisan.

If CCCTB turned out to be popular with companies - and all the indications say it is (70% support from the business community has been cited) - then it will definitely cause all the FDI multinationals in Ireland to rethink their position. It may not cause them to leave, and it may cause some to rejig their operations in a way that actually results in greater employment in Ireland - but one thing it certainly does is change the landscape.

Another thing it would do is reduce employment for the major business consultancy firms within Europe, because a fair amount of what they do is only necessary because you're dealing with 27 different tax regimes.

cordially,
Scofflaw

ednwireland

a couple of weeks ago on on of the sunday politics show somone said that a study had found french companies, in france have an effective corporate tax rate of 8%. now i cant find said study but if true this should be used at every opportunity and sarkozy should be told to f*** off.

Scofflaw

ednwireland wrote: »

a couple of weeks ago on on of the sunday politics show somone said that a study had found french companies, in france have an effective corporate tax rate of 8%. now i cant find said study but if true this should be used at every opportunity and sarkozy should be told to f*** off.

I doubt that, given the tax study of effective rates above - France's effective rate is lower than its headline rate, but only by 4-5%. On the other hand, there is an 8% reduced rate available in France, which applies to long-term capital gains, except for certain capital gains of a financial nature. Neither have any relevance whatsoever to CCCTB, because CCCTB is not about the rate.

There is really really really no point in all this "tell the frog to hop it" jingoistic belligerence without any analysis of what the CCCTB actually means to Ireland's version of 'competition'.

IBEC remain firmly opposed:

IBEC, in conjunction with other stakeholders, has commissioned a report from international tax consultants to assess the impact of the proposals on both the effective tax rates and compliance costs for European business. The consultants reported in August and their conclusions indicate that on average both effective tax rates and compliance costs would be higher under a CCCTB. IBEC sees no benefit in the proposals from either an Irish or European business perspective and will remain strongly opposed to the proposals.

A report prepared for the DoF is somewhat more nuanced, but still negative at the European level: http://www.finance.gov.ie/documents/publications/reports/2011/CCCTBrepjan2011.pdf

regards,
Scofflaw

mickoneill30

In the article it says

"But, crucially, the tax would be raised on the basis of where companies generated their sales and less on the national location of their EU head offices. "

Would that mean if the sale was generated on a web site hosted in Ireland that the company just pays the tax in Ireland?
That would be a benefit for us, any companies with an online presence could just put their web infrastructure in Ireland or in any country with low tax.

Or am I totally wrong there.

Scofflaw

mickoneill30 wrote: »

In the article it says

"But, crucially, the tax would be raised on the basis of where companies generated their sales and less on the national location of their EU head offices. "

Would that mean if the sale was generated on a web site hosted in Ireland that the company just pays the tax in Ireland?
That would be a benefit for us, any companies with an online presence could just put their web infrastructure in Ireland or in any country with low tax.

Or am I totally wrong there.

Just in case, let's dispose of the idea that CCCTB has any relevance to small companies - it doesn't. Of 4 million companies looked at in the DoF report, only 200,000 could really expect any impact from CCCTB.

Second, sales via a website in Ireland aren't necessarily sales in Ireland from a tax point of view.

Third, the basis of apportionment under CCCTB isn't sales-only - it includes payroll, employment, and capital.

So, yes, sorry, more or less entirely wrong.

cordially,
Scofflaw

censuspro

Whiskeyjack wrote: »

In a way I can see where they're coming from. Our corpo tax only benefits us, there aren't really any positive knock on effects for the rest of the EU, at least compared to what it would be in mainland Europe. Added on to that is the fact that the situation we got ourselves in is broadly of our own making. Even factoring in the worldwide crisis our economy was still grossly mismanaged and we only have ourselves to blame for continuing to elect FF and failing to keep an eye on our massively flawed political system.

Our corporation tax revenues’ benefits the EU by virtue of Ireland being a member of the EU. If multinationals decided not to locate in Ireland, it's highly unlikely that they would relocate in another EU country. The problem with Sarkozy statements is that what he is effectively saying is: we cannot compete with you so we want you to become more expensive. At a time when multinationals are moving their operations outside the EU to place like India and China, Sarkozy is wants to make it more expensive for countries to do business in Europe which is of no benefit to anyone in the EU.

Tea drinker

censuspro wrote: »

Our corporation tax revenues’ benefits the EU by virtue of Ireland being a member of the EU. If multinationals decided not to locate in Ireland, it's highly unlikely that they would relocate in another EU country. The problem with Sarkozy statements is that what he is effectively saying is: we cannot compete with you so we want you to become more expensive. At a time when multinationals are moving their operations outside the EU to place like India and China, Sarkozy is wants to make it more expensive for countries to do business in Europe which is of no benefit to anyone in the EU.

And obviously the EU economy is decimated because of our Tax rates. There is literally no money or jobs outside Ireland. :rolleyes:
We need some advantages to keep competing with central Europe. That's not a distortion of competition, but a restoration of it.
Being a small country in the hinterlands of Europe has it's disadvantages.

Scofflaw

Enough off-topic Frog-bashing. The thread is about CCCTB, not how much you personally detest Sarkozy and Thierry Henry. This isn't the Daily Mail.

Posts deleted.

moderately,
Scofflaw

hatrickpatrick

^^^ I would have said attacks on Sarkozy are perfectly justified here. The man is a f***ing crackpot who seems to have aspirations to become the emperor of Europe. He thinks he can rule the entire EU.

Anyway, Sarkozy aside, I will be asking every politician who comes canvassing to my door whether or not they will use Ireland's veto if it comes to that, and anyone who will not give me that assurance will not be getting a number from me on polling day.

Scofflaw

^^^ I would have said attacks on Sarkozy are perfectly justified here. The man is a f***ing crackpot who seems to have aspirations to become the emperor of Europe. He thinks he can rule the entire EU.

Eh, people's personal dislike for the man isn't politics, except in France. People think he shouldn't lecture us, or comment on us, but he does, and no amount of people here calling him a jumped little whatever will change that.

cordially,
Scofflaw

RichardAnd

hatrickpatrick wrote: »

^^^ I would have said attacks on Sarkozy are perfectly justified here. The man is a f***ing crackpot who seems to have aspirations to become the emperor of Europe. He thinks he can rule the entire EU.

Anyway, Sarkozy aside, I will be asking every politician who comes canvassing to my door whether or not they will use Ireland's veto if it comes to that, and anyone who will not give me that assurance will not be getting a number from me on polling day.

You're right, he is a loose cannon. But I'd wonder just how much heed people in europe give him.

femur61

Very successful for a loose canon.