Ireland and corporate tax avoidance

Duggys Housemate

Fratton Fred wrote: »

If Ireland is irrelevant to all this, why are These companies here? The weather?

In part. See data centres.

We've developed a large skillset - not just Irish but foreign born and English is the language of IT. Fact is they didn't move to holland to avail of its tax treaties with British colonial outposts. So can't be just tax.

hmmm

We're front page of the Financial Times and Wall Street Journal, and senior US politicians are lumping us in with the Cayman islands as a tax haven. We find out that Apple have a "special tax agreement" with Ireland that means they only pay 2% corporate tax, while we have spent the past few years pretending to the world we have a 12.5% tax rate. I'm not saying that it was wrong what we did, we needed the employment, but let's not pretend that we haven't screwed over taxpayers in the rest of the world.

Duggys Housemate

That 2% is unverified. It's possible Apple got that in the 80's but we stopped special casing companies years ago.

Bullseye1

You would think they would at least give us cheaper iPhones

PeadarCo

Fratton Fred wrote: »

If Ireland is irrelevant to all this, why are These companies here? The weather?

Actually the weather is one of the reasons. Our temperate climate isn't subject to large variations in temperature. The computers in data centres generate a lot of heat. Our climate is more cost efficient when it comes to things like the cost of air conditioning given the relatively low swings in temperature.

antoobrien

hmmm wrote: »

We find out that Apple have a "special tax agreement" with Ireland that means they only pay 2% corporate tax, while we have spent the past few years pretending to the world we have a 12.5% tax rate.

If the apple accounts are published that will likely be proved wrong. They all pay 12.5% on the profit booked here, something the US senators studiously ignored. It's how the profit is reduced by transfer pricing, something that has to be agreed with the SEC up front (google's arrangement was registered in 2003) that they should be focusing.

And Tim Cook told them to change their taxation scheme if they want to get "their" cash "home".

Edit: I wrote a piece about this in a different thread before, which has a link to the 2009 google financial accounts.

They made a profit of €47,415,556, piad CT of €5,926,945. That works out at 12.5%. They also paid other taxes of approx €12m.

The problem is that some idiot read the revenue figure 7.868bn without looking at the cost of sales 2.355bn or the administrative costs of 5.46bn to decide that google paid (incl transfer pricing agreement) to come up with an overall figure of 0.14% tax paid.

Scofflaw

hmmm wrote: »

We're front page of the Financial Times and Wall Street Journal, and senior US politicians are lumping us in with the Cayman islands as a tax haven. We find out that Apple have a "special tax agreement" with Ireland that means they only pay 2% corporate tax, while we have spent the past few years pretending to the world we have a 12.5% tax rate. I'm not saying that it was wrong what we did, we needed the employment, but let's not pretend that we haven't screwed over taxpayers in the rest of the world.

You can't have a special tax rate for a company, because tax rates in Ireland are set by statute. As antoobrien says, what's important - and extremely badly reported - is the profit, which depend in turn on transfer pricing rules.

cordially,
Scofflaw

If Britain is concerned about Google profits ending up in an overseas tax haven (in this case Bermuda) maybe they could influence their own overseas territories (Bermuda, Bahamas, British Virgin Islands) to close off loopholes on their side?

Duggys Housemate

[Deleted User] wrote: »

If Britain is concerned about Google profits ending up in an overseas tax haven (in this case Bermuda) maybe they could influence their own overseas territories (Bermuda, Bahamas, British Virgin Islands) to close off loopholes on their side?

Excellent point. Well made.

Fratton Fred

Deleted User wrote: »

If Britain is concerned about Google profits ending up in an overseas tax haven (in this case Bermuda) maybe they could influence their own overseas territories (Bermuda, Bahamas, British Virgin Islands) to close off loopholes on their side?

http://www.guardian.co.uk/politics/2013/may/20/cameron-offshore-tax-havens-transparency

David Cameron has written to the leaders of Britain's offshore tax havens stressing the need to "get our own houses in order" as he pushes for international action to tackle avoidance schemes.

In a message to 10 crown dependencies and British overseas territories Cameron said he backed their right to be low tax jurisdictions but insisted that rules needed to be set and enforced fairly.

Fratton Fred

Duggys Housemate wrote: »

In part. See data centres.

We've developed a large skillset - not just Irish but foreign born and English is the language of IT. Fact is they didn't move to holland to avail of its tax treaties with British colonial outposts. So can't be just tax.

the Bertie Ahern spin obviously worked on you.

They are here because of the slack tax regulations. some of the biggest companies employ less people than your local Centra and are here only as a means to channel money elsewhere.

https://en.wikipedia.org/wiki/Double_Irish_arrangement

antoobrien

Fratton Fred wrote: »

the Bertie Ahern spin obviously worked on you.

It's not Bertie spin that the tax arrangements are not possible without the very generous Dutch tax regulations.

TheVman

What a load of cobblers. How many ways can you avoid the subject. Ireland is definitely in no position to give lessons on respecting statute and good ethics. The bad weather, the skill set, lyons tea, the lovely irish, the tax take, the cost of getting money out... Wake up. There isnt one among ye who deep down knows its just tax avoidance and blatent social dumping. Ireland is the loser in the long run. Fortunately theres the financial crisis, property crash and high unemployment to get away with it for another while. And the rich get ireland. Why dont apple just buy ireland and employ all the highly skilled probably cheaper than tax.
Sincerely
TheVman

http://www.irishtimes.com/business/eu-common-tax-base-still-on-agenda-says-senior-commission-official-1.1330438
Equally if the UK was really keen on this presumably they could throw their weight behind the common consolidated corporate tax base proposals rather than opposing it along with Ireland and the Netherlands.

Broadly speaking this would judge profits to be in the country of the purchaser of the good or service.

Is it possible the UK benefits from the status quo and is being hypocritical demanding Google declare profits in the UK?

Wompa1

I have been saying for years. That line about highly skilled talent in Ireland is a farce, particularly in the technology sector. Have you looked at the IT courses across the country? They are 'trailing edge' to say the least.

I just read the article about this on RTE. I love how Gilmore made a statement claiming that the Irish tax system is transparent. Meanwhile Cook is claiming that Apple did in fact make a special arrangement in 1980. How transparent can it be, when there's obviously exceptions granted!?

Ireland is in serious trouble...

carpejugulum

squod wrote: »

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

Yes, lost because people just burn the money instead of giving them to politicians and bureaucrats, who use them ever so efficiently.

skafish

Fratton Fred wrote: »

Europe wide closing of these loop holes would mean U2 might again be an Irish company and we could all go back to loving Bono again.

AGAIN?

That love affair hasn't started for me yet:D

Scofflaw

carpejugulum wrote: »

Yes, lost because people just burn the money instead of giving them to politicians and bureaucrats, who use them ever so efficiently.

Well, lost because the money goes to places like Bermuda instead. Even if European governments were only 10% efficient (which, to be fair, they're not), we're still losing money.

cordially,
Scofflaw

spank_inferno

Apple CEO says they had a special arrangement with Irish Government.

- Our Tanaiste denied such.

So Gilmore is either a liar or mis-informed.

I wonder which?

TheVman

spank_inferno wrote: »

Apple CEO says they had a special arrangement with Irish Government.

- Our Tanaiste denied such.

So Gilmore is either a liar or mis-informed.

I wonder which?

Indeed a very very serious issue...
If it is proven there will be blood

Duggys Housemate

Fratton Fred wrote: »

the Bertie Ahern spin obviously worked on you.

They are here because of the slack tax regulations. some of the biggest companies employ less people than your local Centra and are here only as a means to channel money elsewhere.

https://en.wikipedia.org/wiki/Double_Irish_arrangement

TheVman wrote: »

What a load of cobblers. How many ways can you avoid the subject. Ireland is definitely in no position to give lessons on respecting statute and good ethics. The bad weather, the skill set, lyons tea, the lovely irish, the tax take, the cost of getting money out... Wake up. There isnt one among ye who deep down knows its just tax avoidance and blatent social dumping. Ireland is the loser in the long run. Fortunately theres the financial crisis, property crash and high unemployment to get away with it for another while. And the rich get ireland. Why dont apple just buy ireland and employ all the highly skilled probably cheaper than tax.
Sincerely
TheVman

Wompa1 wrote: »

I have been saying for years. That line about highly skilled talent in Ireland is a farce, particularly in the technology sector. Have you looked at the IT courses across the country? They are 'trailing edge' to say the least.

I just read the article about this on RTE. I love how Gilmore made a statement claiming that the Irish tax system is transparent. Meanwhile Cook is claiming that Apple did in fact make a special arrangement in 1980. How transparent can it be, when there's obviously exceptions granted!?

Ireland is in serious trouble...

Mostly ill informed rants, again. I didn't suggest that it was only the Irish education system, but they fact that we have a very hugh skilled installed base from around the world. The same is true of Silicon Valley, where engineers are not necessarily from America, and almost never from California. I've worked in both. And FF - the companies we are talking about employ thousands. This isn't Bermuda, or other British dependancies.

If it was just a tax arrangement the companies could move to Holland and avail of British corruption by transferring to Bermuda ( escaping the "double" in "double dutch"), or just move to Bermuda. ( If the employees didn't matter, that would be easy). Or they could just move to London and avail of British tax dodging via Jersey etc, like the banks in the City. Something for PAC to investigate?

TheVman wrote: »

Indeed a very very serious issue...
If it is proven there will be blood

Its not likely true. Apple didn't pay 2% on worldwide taxes declared in Ireland, they paid less. Possibly that was the original rate agreed in 1980, however when the European Union forced small countries not called France or Germany to standardise the rate we made all companies pay 12.5% by statue.

And France has plenty of special deals with it's companies - as has the UK and America. GM and Vodafone, and Goldman Sachs. We are transparent on the 12.5% rate, but the companies are generally transferring to British dependencies as far as I can see.

EDIT:
Its not impossible that the (original) 2% deal for Apple survived, but very unlikely. Unless that was grandfathered in.

antoobrien

spank_inferno wrote: »

Apple CEO says they had a special arrangement with Irish Government.

As usual what was said was seriously misreported.

http://www.youtube.com/watch?v=hRmLm6tYNhQ - go to 00:32 on this video. In response to the 2% rate question the response is

The Irish government did give us a tax incentive agreement to enter there

That is not a CT agreement, that's the usual tax break that international companies get when they are locating factories/offices here.

In his written submission to the committee, the he further states

Apple has an agreement with two of its Irish subsidiaries to share the costs and risks of this R&D. The agreement, first established in 1980, is authorized by US law and complies with all US tax regulations. Under the current agreement, the Irish subsidiaries have rights to distribute Apple products in territories outside the Americas in exchange for contributing to jointly-financed R&D efforts in the US. Thus, the agreement supports the funding of the Company’s high-paying R&D jobs in the US, promoting domestic job growth and generating significant tax revenue for federal and state governments.

theUbiq

Duggys Housemate wrote: »

The Dept. of Finance said that was incorrect. There are no negotiations with separate companies here. They pay 12.5% on what they declare.

And where do you think these companies owe taxes?

1) Here?
2) The UK where they have the audacity to sell stuff?
3) The US?

If you believe 3) then you can't believe 1).

( 2 is just rubbish).

Hold on a second, are you saying that Apple CEO Tim Cook is lying about the deal Apple did for a 2% tax rate? Or is it a case of the Dept. lying to us?

http://www.guardian.co.uk/technology/2013/may/21/apple-wants-single-digit-corporate-tax

edit: just seen the response above, so who knows whats really happening...

seamus

spank_inferno wrote: »

Apple CEO says they had a special arrangement with Irish Government.

- Our Tanaiste denied such.

So Gilmore is either a liar or mis-informed.

I wonder which?

The devil is in the details. Here's the actual quote from Gilmore;

“Ireland does not negotiate special tax rate deals with any company. We do not have any special low corporation tax rate for multinational companies. Our tax system is statute- based, based on Irish law, and there is no provision for special tax deals for individual companies.”

Note that he talks about tax rates. He's not lying in the slightest, no company gets special individual tax rates.

Where the 2% comes from is most likely down to various incentive schemes where Apple can claim rebates or temporary exemptions, or any one of hundreds of possible schemes which on the balance sheet of Apple make up an effective tax rate of 2%, but at no time mean that Apple's corporate tax rate is less than 12.5%.

The simplest analogy is the income tax rate. A person on €25k is subject to income tax of 20%, but through tax credits, etc etc, they will pay an effective tax rate of 6.8%.

Given the above I wouldn't be surprised if it was a combination of R&D tax credits (which Apple could probably claim on US R&D expenditures if Apple Ireland was funding it and taking part of the risk) http://www.revenue.ie/en/tax/ct/research-development.html and maybe royalties paid to group companies. Nothing unique to Apple as far as I know and fully above board.

IRLConor

TheVman wrote: »

There isnt one among ye who deep down knows its just tax avoidance and blatent social dumping.

If it was just that, Google, Amazon, Apple, Facebook et al. would simply be brass plate companies here. If they're just here for the taxation, why would they bother employing anyone?

I think a lot of the countries cribbing about Ireland's tax laws don't realise that they're essentially competing vendors in a marketplace. To me, it looks like Spar and Centra complaining that people shop in Lidl.

antoobrien

Deleted User wrote: »

Given the above I wouldn't be surprised if it was a combination of R&D tax credits (which Apple could probably claim on US R&D expenditures if Apple Ireland was funding it and taking part of the risk)

This is certainly part of it as one of the holding companies uses money raised outside the US to fund the US based R&D

Fratton Fred

Duggys Housemate wrote: »

Mostly ill informed rants, again. I didn't suggest that it was only the Irish education system, but they fact that we have a very hugh skilled installed base from around the world. The same is true of Silicon Valley, where engineers are not necessarily from America, and almost never from California. I've worked in both. And FF - the companies we are talking about employ thousands. This isn't Bermuda, or other British dependancies.

If it was just a tax arrangement the companies could move to Holland and avail of British corruption by transferring to Bermuda ( escaping the "double" in "double dutch"), or just move to Bermuda. ( If the employees didn't matter, that would be easy). Or they could just move to London and avail of British tax dodging via Jersey etc, like the banks in the City. Something for PAC to investigate?



Its not likely true. Apple didn't pay 2% on worldwide taxes declared in Ireland, they paid less. Possibly that was the original rate agreed in 1980, however when the European Union forced small countries not called France or Germany to standardise the rate we made all companies pay 12.5% by statue.

And France has plenty of special deals with it's companies - as has the UK and America. GM and Vodafone, and Goldman Sachs. We are transparent on the 12.5% rate, but the companies are generally transferring to British dependencies as far as I can see.

EDIT:
Its not impossible that the (original) 2% deal for Apple survived, but very unlikely. Unless that was grandfathered in.

Ireland is an important part of the sandwich. Which is why they also have shell companies here. Without the ability to transfer the ip easily they would pay more tax.

10/10 for your effort to drag Britain and France in though.

TheVman

Oh ireland is the gateway to Europe, Ireland has this, Ireland has that... Ireland has an "official" corporate tax rate of 12.5% !

The fact is they are in Eire for tax avoidance plain and simple, like it or lump it. And why not i mean if any of us were on their boards of administration we would also like to be presenting these savings to our majority share holders...

That incerdibly universal and skilled population are there for answering telephones, customer service, aftersales, assembly, etc...
Its purely cosmetic, in fairness it would be bad form to fcuk the country over even more...

In any case these companies will not be beaten, they will have such an army of lawyers, juristes... that it will be 10 to 15 years before they will have to pay up... And above all the fact of the matter is its very complicated with "internet" based companies as its relatively recent and still in some sense in the rationalisation stages.

antoobrien

TheVman wrote: »

Oh ireland is the gateway to Europe, Ireland has this, Ireland has that... Ireland has an "official" corporate tax rate of 12.5% !

The effective french rate isn't the official rate either, so it's not like the most protectionist state in Europe can give us lessons in not charging the headline rate in tax.

I have a few friends working in various multinationals that have bought companies that have subsidiaries in France. It takes about 6 months longer to integrate the French companies than it does to integrate the Irish entities due to the employment laws. Perhaps the French government should start considering this while wondering why companies are basing their French language sales and support teams in Dublin.