Ireland and corporate tax avoidance

jmayo

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

Google Inc came under fire from British lawmakers investigating its tax affairs and whether it had misled parliament in testimony last year, adding fuel to a debate on taxation that has risen to the top of the UK political agenda.

Google's Northern Europe boss, Matt Brittin, was called back to testify to parliament's Public Accounts Committee (PAC) on Thursday after an investigation by the Reuters news agency showed the company employed staff in sales roles in London, even though he had told the committee in November its British staff were not "selling" to UK clients.

Reuters correspondent Tom Birgin said that his investigation showed that Google employed UK-based sales staff.

"Google told the public accounts committee in November that it did not have a taxable presence in the UK in respect of its main advertising business, because it did not actually have any sales people here in London. It did not sell from London, it actually conducted all its sales from Ireland," Birgin said.

"Our investigation showed that the company employed many sales people here, and indeed advertised for jobs for people to conduct high level negotiations to close deals," he said.

http://www.aljazeera.com/news/europe/2013/05/2013516173832119691.html

Amazon appears to be next for a grilling.

Does anyone see problems ahead for Ireland ?

A lot of other countries are getting more than a bit peeved at this stage.

And it is really not just our lower corporation tax rate that is brought into focus, but the so called "Double Irish" system whereby corporations just use us (and indeed the Netherlands) as a conduit to the likes of Bermuda to avoid taxes both in high tax countries they gain the revenue and indeed in Ireland.

halkar

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

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

antoobrien

jmayo wrote: »

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

It's funny watching them realise that the single market they wanted has consequences that they didn't consider. In this case it's that all sales are done out of Dublin and that the "sales teams" in the UK, France etc are really merely marketing teams that generate leads and hand it off to Dublin for the actual sale.

They can't change the corporate tax laws without changing the structure of the market, good odds that they'd end up in the ECJ if they did.

jmayo

halkar wrote: »

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

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

But in the grand scheme of things is the amount they cough up in taxes and contribute to the economy through their employment here not shag all in comparison to the amount they save in their corporation taxes ?

But as an MP said this morning that is fine for Ireland because at least they have the jobs whereas the UK, France, Germany, etc get shag all of out of it except revenue flowing out of their country.

antoobrien wrote: »

It's funny watching them realise that the single market they wanted has consequences that they didn't consider. In this case it's that all sales are done out of Dublin and that the "sales teams" in the UK, France etc are really merely marketing teams that generate leads and hand it off to Dublin for the actual sale.

Isn't that the google line

BTW it isn't just the single (EU/European) market, because this involves Bermuda where the real savings are made.
Also Britain, France, etc are struggling and they need revenue, they are beginning to realise just how much they are losing.

Also one other area that is defintely going to start getting tightened up is the issue of VAT on digital services where such things as music, book and movie downloads are billed as services (under EU VAT law AFAIK) rather than products.

ardmacha

But as an MP said this morning that is fine for Ireland because at least they have the jobs whereas the UK, France, Germany, etc get shag all of out of it except revenue flowing out of their country.

How many jobs are in Britain in Amazon, Sky etc for services delivered in Ireland?

How many jobs are in Britain for financial services delivered worldwide?

antoobrien

jmayo wrote: »

Isn't that the google line

It isn't just the google line, there are a lot of sales booked through Dublin

jmayo wrote: »

BTW it isn't just the single (EU/European) market, because this involves Bermuda where the real savings are made.

That's a related but different issue. They don't pay the taxes here (either) because the patents are owned by a co. in Bermuda that the have to pay license fees to.....

jmayo wrote: »

Also Britain, France, etc are struggling and they need revenue, they are beginning to realise just how much they are losing.

And we aren't? If google & microsoft had to pay 12.5% CT here it'd pretty much solve our budget deficit.

jmayo wrote: »

Also one other area that is defintely going to start getting tightened up is the issue of VAT on digital services where such things as music, book and movie downloads are billed as services (under EU VAT law AFAIK) rather than products.

That was a major issue with amazon a few years back where companies would not sell to Ireland due to VAT and rules around electronics. It was sorted (don't know how).

Fratton Fred

ardmacha wrote: »

How many jobs are in Britain in Amazon, Sky etc for services delivered in Ireland?

How many jobs are in Britain for financial services delivered worldwide?

It's not about jobs, it's about aggressive tax avoidance.

Google's pays £6m in UK tax on sales of £3bn. Does that sound fair?

antoobrien

Fratton Fred wrote: »

It's not about jobs, it's about aggressive tax avoidance.

Google's pays £6m in UK tax on sales of £3bn. Does that sound fair?

Yes because the sales are not British sales they are EU sales made to British customers, as are the sales made to customers in France, Germany, The Netherlands etc.

So why should they be taxed as British sales, when we are supposedly all in an EU market?

edit - VAT is paid on sales, corporation tax is paid on profits.

jmayo

antoobrien wrote: »

It isn't just the google line, there are a lot of sales booked through Dublin

Ehh it is the google line that they do not sell to UK from within UK.
Using the line that it is only marketing and no sales are closed is pushing the definition to it's limits.
Watch out for possibility of whistleblowers appearing claiming otherwise.

antoobrien wrote: »

That's a related but different issue. They don't pay the taxes here (either) because the patents are owned by a co. in Bermuda that the have to pay license fees to.....

I know they don't pay much if any corpo tax here thanks to the Double Irish technique and through the help of moving fuds through The Netherlands.
I already alluded to that in earlier post.

BTW is that Bermuda company not registered here, but it's management is based in Bermuda ?

antoobrien wrote: »

And we aren't? If google & microsoft had to pay 12.5% CT here it'd pretty much solve our budget deficit.

But we would probably lose their jobs since they would move to some other low tax, weird double taxation scheme country.

antoobrien wrote: »

That was a major issue with amazon a few years back where companies would not sell to Ireland due to VAT and rules around electronics. It was sorted (don't know how).

Ehhh I thought the Amazon issue was only on electrical goods since WEEE was applied here, but not in the UK ?

antoobrien

jmayo wrote: »

Ehh it is the google line that they do not sell to UK from within UK.
Using the line that it is only marketing and no sales are closed is pushing the definition to it's limits.
Watch out for possibility of whistleblowers appearing claiming otherwise.

I work with a multinational that has the same sales practices as google. The UK gov don't really have a leg to stand on because most of the companies doing this use EMEA operations based in Dublin to do the actual sale. Everything else is lead generation not sales.

jmayo wrote: »

I know they don't pay much if any corpo tax here thanks to the Double Irish technique and through the help of moving fuds through The Netherlands.
I already alluded to that in earlier post.

BTW is that Bermuda company not registered here, but it's management is based in Bermuda ?

Yeah that's transfer pricing, a separate issue to the UK problem. The UK are whining that the sales made to British customers should be taxed in Britain where the customer resides, not the country that actually books the sale - Ireland.

The co. in bermuda will own the technology rights or patents or something that requires it to be paid royalties.

jmayo wrote: »

But we would probably lose their jobs since they would move to some other low tax, weird double taxation scheme country.

Possibly. Or they could just do a paddypower on it because it will take years to actually move the sales processing etc to each individual country.

jmayo wrote: »

Ehhh I thought the Amazon issue was only on electrical goods since WEEE was applied here, but not in the UK ?

There was a VAT issue as well for a while. The smaller sellers wouldn't sell to Ireland because the vat rates made it a bit too much hassle.

Fratton Fred

antoobrien wrote: »

Yes because the sales are not British sales they are EU sales made to British customers, as are the sales made to customers in France, Germany, The Netherlands etc.

So why should they be taxed as British sales, when we are supposedly all in an EU market?

edit - VAT is paid on sales, corporation tax is paid on profits.

That is what the committee is trying to ascertain. From the sounds of things, it is more than lead generation, Google are using UK based sales people to close the sale from the sound of things.

jmayo

antoobrien wrote: »

I work with a multinational that has the same sales practices as google. The UK gov don't really have a leg to stand on because most of the companies doing this use EMEA operations based in Dublin to do the actual sale. Everything else is lead generation not sales.

Except the thing is the UK government have now much in common with the French, German, Swedish, Finnish, Italian, etc governments when it comes to losing revenue.
Hell even many in the US are concerned about their corporations US tax avoidance measures and the fact they are shipping jobs overseas.

antoobrien wrote: »

Yeah that's transfer pricing, a separate issue to the UK problem. The UK are whining that the sales made to British customers should be taxed in Britain where the customer resides, not the country that actually books the sale - Ireland.

I know it is separate, but it has been very much highlighted by these investigations.
The laugh here is that our corpo tax, as low as it is, is also sidestepped in the process.
Ireland comes out of it looking like a shady place to channel money through.
We already know how the IFSC is viewed.

antoobrien wrote: »

The co. in bermuda will own the technology rights or patents or something that requires it to be paid royalties.

That is the way it usually works, one is a holding company and owes money to another.

The funny thing is companies have been setting up in the likes of Isle of Man, Channel Islands, etc and selling into the UK proper for years.
Except those companies were usually involved in financial products often not available to the normal consumer and thus did not appear as visible on the radar.

AlmightyCushion

halkar wrote: »

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

I'd disagree with that. Big companies already have a huge advantage over SMEs with regards avoiding corporation tax. I would be open to it being abolished for all companies because then it puts all companies on an even playing field. That small, local coffee shop who can't use creative accounting to move it's profits overseas is better able to compete with the likes of a big company like Starbucks who currently pay very little corporation tax. We'd have the make up the few billion euro it brings in elsewhere though.

Cookie_Monster

Fratton Fred wrote: »

Google's pays £6m in UK tax on sales of £3bn. Does that sound fair?

CT and sales have little to do with each other to be fair. CT is a tax on profits, not sales.

Rightwing

We need to educate the people and then get very tough on these companies.

We provide jobs, we can do as we like sort of b/****.

20Cent

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

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

hmmm

Our low corporation tax is a timebomb that will blow up sometime in the future when other nations become sick of us. We know this yet we continue to build our economic policy around attracting foreign multinationals. It's crazy, but it's typical for us that we take a short term approach.

Attracting the skills and experience of multinationals is ok, but let's try and use them to build a domestic industry.

AlmightyCushion

hmmm wrote: »

Our low corporation tax is a timebomb that will blow up sometime in the future when other nations become sick of us. We know this yet we continue to build our economic policy around attracting foreign multinationals. It's crazy, but it's typical for us that we take a short term approach.

Attracting the skills and experience of multinationals is ok, but let's try and use them to build a domestic industry.

How will it blow up on us? The only way I can see it blowing up is if other countries lower theirs to compete with us. I can see the double Irish, Dutch sandwich potentially being gotten rid of. Whether the Dutch fix the loophole from their end or we do.

barneystinson

Rightwing wrote: »

We need to educate the people and then get very tough on these companies.

We provide jobs, we can do as we like sort of b/****.

That's the least Rightwing thing I've ever seen you post - are you feeling alright?!

hfallada

The reason the EU isnt really putting proper pressure on Ireland to change its corporation tax. Is the a lot of the companies will leave and go to low tax countries like Singapore, Switzerland.

The US government is starting to put pressure on US firms who use proper tax havens like Bermuda and British Virgin Islands. Where the companies are a tiny office and not a physical presence like in Ireland

Rightwing

barneystinson wrote: »

That's the least Rightwing thing I've ever seen you post - are you feeling alright?!

Contrary to my name, I'm not rightwing at all, some folk may think so just because I think there is massive waste in places like councils etc.

barneystinson

Rightwing wrote: »

Contrary to my name, I'm not rightwing at all, some folk may think so just because I think there is massive waste in places like councils etc.

Really - not right wing at all..?! Or maybe you have schizophrenia:

Rightwing wrote: »

We need a little shift to the right in this country.

Rightwing wrote: »

the facts are , smaller government, smaller services, we should be looking for a lean government with most things privatised.

So, considering you want small lean government, who exactly is going to

Rightwing wrote: »

educate the people and then get very tough on these companies.

??

Rightwing

barneystinson wrote: »

Really - not right wing at all..?! Or maybe you have schizophrenia:





So, considering you want small lean government, who exactly is going to
??

I'm probably right wing in this country, but would be considered a lefty in America, that's the scale of the problem we have here. No wonder we're badly bust and in a bailout program.

Fratton Fred

Cookie_Monster wrote: »

CT and sales have little to do with each other to be fair. CT is a tax on profits, not sales.

I know, but I doubt that Google's profit on a €3bn turnover is a mere €30m.

maninasia

hfallada wrote: »

The reason the EU isnt really putting proper pressure on Ireland to change its corporation tax. Is the a lot of the companies will leave and go to low tax countries like Singapore, Switzerland.

The US government is starting to put pressure on US firms who use proper tax havens like Bermuda and British Virgin Islands. Where the companies are a tiny office and not a physical presence like in Ireland

The UK is in a bit of a bind because the City of London runs the biggest tax avoidance scam in the world.

http://www.vanityfair.com/society/2013/04/mysterious-residents-one-hyde-park-london

antoobrien

Fratton Fred wrote: »

I know, but I doubt that Google's profit on a €3bn turnover is a mere €30m.

You'd be surprised how high costs can be. The 2009 accounts have been linked before in an article that shows how much money is pushed through Ireland (will post if I can find it again).

squod

Mr Van Rompuy said last month that about one trillion euro is lost in EU member states because of tax evasion and tax avoidance each year

http://www.irishtimes.com/news/politics/tax-avoidance-inching-up-eu-agenda-as-trillion-euro-may-be-slipping-though-net-1.1390646?page=2

http://www.boards.ie/vbulletin/showpost.php?p=84409433&postcount=69

antoobrien

jmayo wrote: »

Except the thing is the UK government have now much in common with the French, German, Swedish, Finnish, Italian, etc governments when it comes to losing revenue.
Hell even many in the US are concerned about their corporations US tax avoidance measures and the fact they are shipping jobs overseas.

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

Dante

What ever happened to the Common Consolidated Corporate Tax Base bill proposed by the EU a while back to harmonise international tax laws? No doubt if this was introduced, the large majority of MNCs based in Dublin would simply pack up and leave without a second glance once the scope for profit shifting and transfer pricing through Ireland's dubious tax jurisdiction was eliminated. Like hmmm said, its a timebomb waiting to explode.

maninasia

Fratton Fred wrote: »

I know, but I doubt that Google's profit on a €3bn turnover is a mere €30m.

Most of these companies use a system whereby they give the license to their IP and work processes to an entity in Dublin and then their subsidiaries in other European countries pay the 'license fee' (read profits) from their subsidiaries to the licensed office, the license fee is conveniently calculated so they do not have any profits in their subsidiary countries.

Then they pump the profits through other tax avoidance/reduction schemes (double Irish (Ireland/Netherlands) and often end up sticking it in the Cayman Islands or BVI for safe keeping. Very little goes back to Uncle Sam.

If you were an individual you'd have a real nice life sitting on the back of these schemes.

creeper1

The fact of the matter is that being tax efficient is not only legal but corporations have a moral duty to their share holders to be exactly minimize tax paid.

IF I was a share holder I'd be wanting those dividends and I'd be wanting them high.

I think I remember Sarkozy making negative comments about Ireland's corporate tax rate. The message from boards.ie users to him was a strong "go to hell" That message should be even louder to the Brits trying to interfere.

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

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