Ireland and corporate tax avoidance

antoobrien

Worztron wrote: »

They are still immoral.

Please post the full figures for all your favorite tax dodging companies.

I've never bought the morality argument on paying taxes, it stinks of the attitude that "a fair tax is one that I don't have to pay".

Bill Gates recently gave an interview where he was asked about this, his response was interesting:

Gates added: “It is not incumbent on those companies to take shareholder money and pay huge amounts that are not required.”

On whether it is ethical to use schemes that may not align with the intent or spirit of local laws, Gates said he feels “in a system of laws it is very important that if you follow the laws you do not have some second standard”.

“This is not a morality thing, this is about the law,” he said. If nations set new tax levels “companies will be happy to comply”.

The highlighted comment is the core to this issue, there are a lot of people with axes to grind who are being plainly hypocritical (McCain pushed for tax breaks for oil companies when running for the white house).

Cody Pomeray

The Rooster wrote: »

We have a Special Assignee Relief Program

I know what it is alright, this is why I just raised it to begin with.

What I'm asking you is what you meant when you said "there's very little" and more specifically, I'd like to know which competitors we are well behind in the EU in this regard?

onerous conditions to be met.

Onerous? Are you kidding? You must think the only people who read this forum are people sitting at home feeding their gerbils.

Please tell me which of the six conditions set out in the revenue note are "onerous".

But if we did attract a foreign CEO over who was on €500,000, and who did meet all the conditions for the SARP, then he would "only" contrbute €180,000 to the Irish Exchequer. Which is €180,000 more than we'd get if he chose to move to Switzerland instead.

1. Doesn't have to be a CEO, this applies to other employees

2. There are inadequate provisions to ensure that the job was not coming here regardless of SARP

3. *especially* those who were coming here to operate companies solely for the purposes of transfer pricing and profit manipulation, whilst contributing little in the way of taxation.

Joe 90

Cody Pomeray wrote: »

I know what it is alright, this is why I just raised it to begin with.

What I'm asking you is what you meant when you said "there's very little" and more specifically, I'd like to know which competitors we are well behind in the EU in this regard?

Onerous? Are you kidding? You must think the only people who read this forum are people sitting at home feeding their gerbils.

Please tell me which of the six conditions set out in the revenue note are "onerous".



1. Doesn't have to be a CEO, this applies to other employees

2. There are inadequate provisions to ensure that the job was not coming here regardless of SARP

3. *especially* those who were coming here to operate companies solely for the purposes of transfer pricing and profit manipulation, whilst contributing little in the way of taxation.

You don't reckon that someone who is grossing 500,000 and paying 180,000 in payroll taxes is paying enough tax in any case. That is 36%. It should not matter whether his job is relocated from abroad, it is a helluva lot in absolute terms.

Cody Pomeray

Joe 90 wrote: »

You don't reckon that someone who is grossing 500,000 and paying 180,000 in payroll taxes is paying enough tax in any case. That is 36%. It should not matter whether his job is relocated from abroad, it is a helluva lot in absolute terms.

Joe, there are not many idiots on €500k per year, and only a complete idiot would pay that 36% effective on a salary of €500,000. In reality, such an employee's salary would be structured to avoid as much tax as possible via pension incentives and other perfectly legitimate avoidance methods.

And no, I don't believe we should stop taxing employees' salaries once their tax contribution reaches "a helluva lot".

I don't believe in that level of entitlement for any citizen.

What I really have a problem with, however, is this notion that anything involving tax incentives of this order can be justified where it **might** bring employment, and where only very flimsy rules are applied,and no conditionality attached to new employment at all, apart from this well paid exec on €500k or whatever.

The Rooster

Cody Pomeray wrote: »

I'd like to know which competitors we are well behind in the EU in this regard?

Onerous? Are you kidding? You must think the only people who read this forum are people sitting at home feeding their gerbils.

Please tell me which of the six conditions set out in the revenue note are "onerous".

1. Doesn't have to be a CEO, this applies to other employees

2. There are inadequate provisions to ensure that the job was not coming here regardless of SARP

3. *especially* those who were coming here to operate companies solely for the purposes of transfer pricing and profit manipulation, whilst contributing little in the way of taxation.

"Onerous" can be debated but its certainly not automatic as you described, and a lot of people won't qualify.

It does not apply to the first €75,000 of earnings - the first €75k has to be taxed as per normal rules. Therefore, its going to be high level people it applies to. You need to have worked for the group for at least 12 months prior to coming to Ireland. The benefit only lasts for 5 years.

These conditions are certainly more onerous than, for example, the Netherlands. Netherlands has a 30% exemption for foreign employees. It has no 12 month rule, the salary limit is between €38k and €50k (depending on type of employee) and I beleive the exemption applies to all earnings. In NL the exemption lasts for 8 years.

So there's no doubt the Irish rules are more onerous than the Netherlands. Luxembourg and Switzerland also offer very good tax answers for foreign executives.

Ireland has a number of positive factors that attract foreign companies, but our tax policy is a big part of it, and we need to be competitive with NL, Lux, Switz in particular to keep and attract MNCs to this country. To think they'd all come anyway if our tax rates were higher is naive in the extreme.

What I really have a problem with, however, is this notion that anything involving tax incentives of this order can be justified where it **might** bring employment, and where only very flimsy rules are applied,and no conditionality attached to new employment at all, apart from this well paid exec on €500k or whatever.

How many well paid execs, having been with their company for more than 1 year, have travelled to Ireland to set up operations over here, committing to live here for a minimum of 12 months, are over here working on their own? Seriously?
The nature of it is that if a company sends a top exec over, he needs plenty of people around him. No other European country has conditions as part of their incentives. The IDA tries to create an environment that encourages companies to move here and then encourages them to grow.
And again with your lies about "flimsy rules". What has you so bitter to make all these false claims?

Cody Pomeray

The Rooster wrote: »

"Onerous" can be debated

Well if you want to persist in suggesting that the conditions are onerous, lets debate it then.

Show us how it is onerous beyond those unremarkable Revenue conditions i mention, where the conditions for eligibility revolve around the employee being well-paid and not having had worked in Ireland for a few years...

So, no conditions attached to what kind of industry he works in? no conditionality attached to how important his role is in the company? zero conditionality attached to bringing any extra employment?

Or am I missing something? I hope I am, it might mean you are not merely trying to exaggerate for effect again.

The benefit only lasts for 5 years.

Only five years? So what, someone on a massive salary can get, hmmm what, €250,000 written off in income tax, with no conditions about creating employment, even where he's only running a which exists for profit manipulation and may pay very little tax - and you're implying that it's not enough?

Netherlands has a 30% exemption for foreign employees.

No, the Dutch rule only applies to people in certain industries where there is a scarcity of Dutch workers. The Irish rule applies to all industries.

I beleive the exemption applies to all earnings.

No, the exemption does not apply to the first €35,000 of earnings, and in cases where the salary is less than €50,000, the fully 30% rate will not apply to employees who have won some exemptions

What you're neglecting to point out is far more important than these minor issues.

The Dutch higher rate of tax is 52%. Therefore, high earners can be taxed an effective marginal rate of 0.7 x 52% = 36%.

The Irish higher rate is 41%; this can give an effective higher rate of 28.7% at the income above €75,000.

All in all, taking into consideration the lax rules about industry eligibility and the overall income tax rates it is reasonable to say that the Irish and Dutch are only about similar in our incentives.

But you said something quite different. You said "we're well behind our competitiors".

Presumably you think Holland is not our only competitor. It's been established that we're not "well behind" Holland. How many of our neighbours are we actually "well behind"?

I'm not expecting that you're an expert on European taxation systems, so I wouldn't usually be expecting a detailed answer. Nevertheless, you've made a claim about "our competitors", presumably you didn't just invent it....

The Rooster

Cody Pomeray wrote: »

What you're neglecting to point out is far more important than these minor issues.

The Dutch higher rate of tax is 52%. Therefore, high earners can be taxed an effective marginal rate of 0.7 x 52% = 36%.

The Irish higher rate is 41%; this can give an effective higher rate of 28.7% at the income above €75,000.

Forgetting the USC in Ireland?
And what about PRSI?
Marginal rate in Ireland is higher than in NL and kicks in much earlier. Reliefs kick in later in Ireland.
The NL exemptions rules have been relaxed such that very few industries don't qualify now.
It would be a very rare case that someone would be better of in the Irish income tax system than in the Dutch one. And most of the time execs would be signficantly better off under the Dutch rules.

Marginal rate in Switzerland can be as low as 20%, and usually is around that for foreign execs.

Only five years? So what, someone on a massive salary can get, hmmm what, €250,000 written off in income tax, with no conditions about creating employment, even where he's only running a which exists for profit manipulation and may pay very little tax - and you're implying that it's not enough?

Its unbelieveable nonsense that you think a company sends over a top exec, having been with their company for more than 1 year, has travelled to Ireland to set up operations over here, committed to live here for a minimum of 12 months, and he'll be on his own in some back office!
Why all this bullshít scaremongering? Why so bitter about these incentives the IDA put in place to encourage foregin companies to set up and grow in Ireland? Why ignore all the corporate taxes, payroll taxes, VAT these companies give to the Irish exchequer?

Cody Pomeray

Before I start this point I still want to know what other conditions make the Irish requirements onerous?

You can't seriously be calling the requirement not to have worked in the State recently, or the requirement to be quite well paid "onerous", I don't believe that's credible, so if you wish to stand by your claim of onerous conditions, please tell us what extra conditions you are referring to.

If you want to drop that claim, simply say so.

The Rooster wrote: »

Forgetting the USC in Ireland?
And what about PRSI?
Marginal rate in Ireland is higher than in NL

Er, this is really clutching at straws. Come on, you're ignoring the higher rate of 52% that kicks in at €56,000 in the Netherlands.

Social security contributions can be significant in The Netherlands. Because of this, and because of the overall higher rate of tax in the Netherlands, and because of the restrictions on availability to avail of employment incentives for foreign workers, I think it is at generous or reasonable to compare them as equal or thereabouts.

You said "we're well behind our competitors". There are about 30 EEA member states, and so far you've established that our foreign employee incentives similar to the Dutch incentives. To my mind, this ranks our foreign employee incentives joint 1st.

Personally, I have no idea if there 28 other EEA members who offer better incentive packages for "special" employees to arrive on their shores. But you seem to know, you claim we're "well behind them".

For a country that is well behind, you seem to be having an awful lot of trouble establishing evidence. Why is it so hard for you to demonstrate your claim> is it because you made it up, assuming nobody would ask?

The Rooster

Cody Pomeray wrote: »

Er, this is really clutching at straws. Come on, you're ignoring the higher rate of 52% that kicks in at €56,000 in the Netherlands.

Social security contributions can be significant in The Netherlands. Because of this, and because of the overall higher rate of tax in the Netherlands, and because of the restrictions on availability to avail of employment incentives for foreign workers, I think it is at generous or reasonable to compare them as equal or thereabouts.

Clutching at straw? By stating facts you omitted?
Our higher rates kick in well before €56k.
There is no PRSI in NL when you hit the top rate of tax - 52% is the top marginal rate including everything.

As I've said already, Ireland's system is more onerous than the Netherlands, especially since they lifted most of their restrictions.
They can hire new employees rather than it being restricted to current employees, and the relief kicks in much earlier.

Switzerland and Lux both also offer materially better income tax answers than Ireland. Belgium a bit better too. Cyprus and Malta and other smallers states also.

But its doesnt actually matter who's is better or worse. What matters is Ireland needs to be competivite. Our incentives are not unfair and go some way to encouraging companies to locate here. But we could improve it a lot by reducing the income levels to the Dutch levels and allowing new hires to qualify. I wouldnt agree with taking it to Swiss levels where they can get significant tax reductions by living in cantons like Zug. Thankfully the high cost of living there offsets some of their individual tax benefits.

The key point is Ireland offers a fair and transparent system, no special deals, all companies pay tax on their taxable profits at 12.5%, and we should be all the side of encouraging the IDA and Ireland Inc, rather than the begrudging nonsense you're repeating ad nauseaum

Cody Pomeray

The Rooster wrote: »

Switzerland and Lux both also offer materially better income tax answers than Ireland. Belgium a bit better too. Cyprus and Malta and other smallers states also.

Nope, this hasn't suddenly become a discussion about income tax, it's about income tax incentives for foreign employees; see the bottom of this page.

The distinction is particularly important because we don't distinguish between those employees who are locating to Ireland from another location as a consequence of SARP and those who would have had to come here anyway, not least to manipulate their balance sheets and avoid tax on corporate profits.

To remind you, this is the quote you made.

The Rooster wrote: »

There is very little in the way of income tax incentives for high paid foreign CEOs, we're well behind our competitiors in that regard. I wish we did have a "heap of goodies" that would attract high paid foreign CEOs

All I'm asking for is evidence?

All of the suggestions so far indicate we are around the top of the table in terms of incentives.

When you provide the evidence, maybe you can finally tell us how Ireland's SARP requirements are onerous.

The pattern here throughout your posting is that you are very loose on rhetoric and hyperbole, and very slow to back anything up with fact.

TheVman

Cant stay away from corpo tax subject
Any one know if they spoke about it yet or if it will be on the G8 agenda ?

Otherwise after reading the last few pages:
Still cant believe how blinded two or three boarders are by patriotism and the love of big charitable companies.

The message (just a general consensus) from two or three on this thread : Europe, thanks for the bailout and, i quote, "two fingers" to ye for the resht.

As for that bar chart on effective CP tax ratesa few pages back :
Was that bar chart for a secondary school economics project, did you get a good grade for it ?
Basically means nothing "effective rates", you can not interpret to anything this type of graph or analysis.
What algos, logic, methodology, formulas were used.. ? Was it based on earnings in the countries or moneys made out of the country, assumptions....

The whole point is that Eire is and has been money laundering for MNC's on money earned outside Eire and taking advantage of dodgy transfer pricing rules and the virtual inexistance of irish fiscal control measures.
Looking at it objectively, the issue is the fact that the 12.5% CP rate is (and has been) the cornerstone of irish industrial and high tech policies for nearly twenty years. Rather than concentrating on real industrial policy, creating intrinsic value in irish companies, promoting research and development, installing centres for competence... Irish guberments have been relying on this for their mickey mouse jobs announcements over the last years. It, i.e the guberment, has no other cards to play.
Now that the eu legislation on tax transparency is going to be passed it could be looking like an even "gloomier" future :
--Financial Times : http://www.ft.com/intl/cms/s/0/3ab900ac-c3c1-11e2-8c30-00144feab7de.html
-- Reuters : http://www.reuters.com/article/2013/05/26/ireland-tax-reform-idUSL5N0E70AB20130526


The original questions : "Ireland and corporate tax avoidance : Does anyone see problems ahead for Ireland ?"
YES - as Apples financial controller himself said, their strategy "IS THE WORST KEPT SECRET IN EUROPE"

and today lots of specialists are poking their noses into whats going on in good old EIRE and whats being routed through EIRE. And who wants to get their noses dirty ? Or put another way who wants a buggy router on their network ?


So its now turning into a bit of a shindig about individual salaries and PRSI... Wow.