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Harmonised Global corporate tax

  • #2
    Registered Users Posts: 2,183 ✭✭✭ completedit


    Does this signal the end of Ireland inc?

    If only Michael Martin had gone to the White House and offered up a bowl of shamrocks. We reap what we sow?

    But honestly, how do you expect this to play out? How footloose are the MNC's established here?

    I see a few issues with Ireland as a place to do business. One aspect is the growing backlash against air travel. I see France banned internal flights which could otherwise be reached by train. How long before a Europe wide ban comes into affect? Suddenly in the post covid world Ireland finds itself really cut adrift and isolated, exasperated by Brexit and the British acting as a stepping stone to the continent.


Comments

  • #2


    I'm not sure what the economics aspect of this question is.

    Economics is more concerned with how the corporate tax rate affects production levels and efficiency (ideally, it doesn't). Questions about tax policy as between competing economies is more of a political question.


  • #2


    Economics is more concerned with how the corporate tax rate affects production levels and efficiency (ideally, it doesn't). Questions about tax policy as between competing economies is more of a political question.

    Another failure of modern economics, neither economics nor politics can be or should be separated, they are one of the same thing


  • #2


    It’s economic and political. And, no it doesn’t. A global minimum would see these companies staying in Ireland because where else would they go. It’s possible that some may stay in the US but they won’t fing everything they need there.


  • #2


    It's not going to happen at a global level. There is no way the US or UK would ever sign up for something like this. Equally corporate tax systems around the world are very different and in many ways incompatible

    There remains a possibility of it happening at EU level, but even after Brexit that possibility remains very low. I would not see any real progress in the next decade (and they have already been talking about it for over half a decade - the French and Germans indicated some support but very quickly realised their systems were simply incompatible and it went on the back-burner)

    And then you need the buy in of Asian countries - China is going to go their own way regardless of everyone else. Latin American countries are again very different to the rest of the World.

    And all of that is before you consider those countries who would never sign up as the current system suits them too much

    I can recall the first online purchase I ever made - it was for the OECD's first ever transfer pricing guidelines in the late 90s. That was the first time there had been any concerted global effort to harmonise things. Nearly a quarter of a century later the US continues to go it's own way and there remain sometimes significant different transfer pricing rules across the World

    The OECD kicked off its BEPS process in 2013. That made significant progress in certain areas of reporting, but little in the way of standardising corporate tax rules. The BEPS process remains live and they continue trying to deal with complex issues surrounding things like the taxation of the digital economy. That has barely moved in the past 3 years

    Will it eventually happen? Probably not. Will it happen in my lifetime? Almost certainly not.

    Will it happen at an EU level? I suspect that if it does it will only be after a large number of existing members have left the EU, as unanimity is required (despite claims that may be circumvented)


  • #2


    I personally think we should move to 15% asap, that target on our backs is getting bigger, it surely must be becoming a problem at various different negotiations now


  • #2


    The headline rate is a bit of a red herring. Indeed there are two headline rates in Ireland, 12.5% and 25%

    The effective rate for Irish traders is pretty near the headline rate for traders of 12.5%. The French headline rate is in the high 20 percents, but most France based companies pay in the low teens, not far away from our own rate

    And if you think Monaco is a tax haven, their headline corporate rate is 33%. Multinationals, if they chose to operate in Monaco, would pay that rate. It's owner run businesses that get a break in Monaco, as they do not levy income tax. That only benefits Monaco residents though, and there are other costs for individuals to worry about there


  • #2


    Beasty wrote: »
    The headline rate is a bit of a red herring. Indeed there are two headline rates in Ireland, 12.5% and 25%

    The effective rate for Irish traders is pretty near the headline rate for traders of 12.5%. The French headline rate is in the high 20 percents, but most France based companies pay in the low teens, not far away from our own rate

    And if you think Monaco is a tax haven, their headline corporate rate is 33%. Multinationals, if they chose to operate in Monaco, would pay that rate. It's owner run businesses that get a break in Monaco, as they do not levy income tax. That only benefits Monaco residents though, and there are other costs for individuals to worry about there

    yea im aware, we re all bullsh1tting each other about our actual rates, im just glad we re starting to get real in regards this matter


  • #2


    Media all over this now, very hard for any country not to agree. Seems like there will be an agreement between the G7 countries on 15% minimum and then of to oecd, G20? Also what happens if biden can't agree it with republicans. Early days yet.


  • #2


    Media all over this now, very hard for any country not to agree. Seems like there will be an agreement between the G7 countries on 15% minimum and then of to oecd, G20? Also what happens if biden can't agree it with republicans. Early days yet.

    Don't we secure a concession from the EU on corporate tax as a bribe to getting Lisbon 2 over the line?

    As you say, early days.


  • #2


    Pascal says Ireland will lose 2Bn a year in corporate tax.
    Why would the G7 and the rest of the OECD bother for a measly 2Bn.
    This is a Finance Minister whistling past the Graveyard.
    Revenue for every future product line for the Multi-nationals will not automatically be routed through Ireland anymore.

    https://www.irishtimes.com/business/global-tax-rate-ireland-could-lose-2bn-a-year-under-proposed-reforms-says-donohoe-1.4585661


  • #2


    I'm a bit simple when it comes to global politics but how exactly does a meeting between 7 countries create binding global policy over any country's or federation's own sovereignty?


  • #2


    I'm a bit simple when it comes to global politics but how exactly does a meeting between 7 countries create binding global policy over any country's or federation's own sovereignty?

    It doesn't, but there will be a lot more than 7 countries supporting this. They will put pressure on the rest. That's exactly how the Global changes that we've seen over the past few years were initiated in 2013. The OECD led all of that, and all major trading nations are signed up to the tax principles set out by the OECD

    Having said all that my earlier comments remain appropriate. The headline rate is a red herring. It's the underlying system that matters, and Ireland's remains very competitive. Many other countries try and have a global reach with their international tax rules (the US being a prime example, but the UK also has tax rules that extend way beyond it's physical boundaries)


  • #2


    There are tax havens within the USA. Maybe we can designate one county as tax haven and all multinationals can do business as usual in say Donegal or Mayo. It will take the heat off Dublin.


  • #2


    I'm a bit simple when it comes to global politics but how exactly does a meeting between 7 countries create binding global policy over any country's or federation's own sovereignty?

    It doesn't in itself - but they're the big 7 - so that's a lot of clout right there- , and if the G20 follow suit as is likely then that's an awful lot of the world economy right there- but there's an awful lot of give and take ahead - what happens with the likes of jersey / the isle of man / Bahamas / camans, /Gibraltar ..
    Ireland as an eu country may conceivably do better out of all this than previously (especially with brexit ) , while shaking off a tax Haven label ... But you can bet the big boys will try stitch it up to suit themselves


  • #2
    Maybe this is a really stupid question, but if corporation tax was raised to 15%, wouldnt the government be actually getting a higher tax take ?


  • #2


    patnor1011 wrote: »
    There are tax havens within the USA. Maybe we can designate one county as tax haven and all multinationals can do business as usual in say Donegal or Mayo. It will take the heat off Dublin.

    Under certain definitions Delaware is considered a tax haven, but that's because it charges no State taxes on companies. Companies still pay full federal tax at 21% though


  • #2


    Maybe this is a really stupid question, but if corporation tax was raised to 15%, wouldnt the government be actually getting a higher tax take ?

    The concern is companies decide to relocate. That is not easy nowadays though. It also though ay discourage further FDI in Ireland

    Personally I think a 15% rate would remain very attractive particularly in light of some of the earlier comments I've made about the actual corporate tax rules in Ireland


  • #2


    patnor1011 wrote: »
    Maybe we can designate one county as tax haven and all multinationals can do business as usual in say Donegal or Mayo. .
    That is against EU State Aid rules


  • #2


    Beasty wrote: »
    The concern is companies decide to relocate. That is not easy nowadays though. It also though ay discourage further FDI in Ireland

    Personally I think a 15% rate would remain very attractive particularly in light of some of the earlier comments I've made about the actual corporate tax rules in Ireland

    The 15% may still be attractive but if the companies need to pay the tax where they do the profit, it would become 15% on profit made in Ireland only, instead of profit made in Europe. The profit made in Germany would be taxed in Germany.
    Is my understanding correct?


  • #2


    Deub wrote: »
    The 15% may still be attractive but if the companies need to pay the tax where they do the profit, it would become 15% on profit made in Ireland only, instead of profit made in Europe. The profit made in Germany would be taxes in Germany.
    Is my understanding correct?

    That was my understanding too. That there was two aspects to this.
    Great timing for this to be happening too, with Brexit and Covid.


  • #2


    It's a step in the right direction, we can't keep playing this game of tax avoidance, we re all starting to struggle to run our countries, while large corporations accumulate more and more, leaving the citizens to pick up the pieces. I still think we should radically change the way we accept even a small percentage of revenue though, and utilise sovereign wealth funds in the process


  • #2


    Wanderer78 wrote: »
    It's a step in the right direction, we can't keep playing this game of tax avoidance, we re all starting to struggle to run our countries, while large corporations accumulate more and more, leaving the citizens to pick up the pieces. I still think we should radically change the way we accept even a small percentage of revenue though, and utilise sovereign wealth funds in the process

    Did you miss the bit where it says we stand to lose 2bn? Will that lose ease the struggle to run our country? Tell me how, step by step, in your head how these loses makes it better for Ireland?


  • #2


    salonfire wrote: »
    Did you miss the bit where it says we stand to lose 2bn? Will that lose ease the struggle to run our country? Tell me how, step by step, in your head how these loses makes it better for Ireland?

    I think you missed the essence of what he is saying. Multinationals are avoiding tax on a massive scale. If we captured a reasonable portion of this tax in return for remaining, we would have been better off. But we don’t and neither do other jurisdictions and this is the result. It costs taxes to run a country and costs are increasing. If we want to give out “forever“ homes, they cost taxes. If companies are avoiding these taxes then the middle class in ireland have to pick up the tab. It’s a question of fairness, and what multinationals were doing was grossly unfair.


  • #2


    They are definitely using other methods to avoid tax these days:
    https://www.irishtimes.com/business/economy/cost-of-sarp-tax-reliefs-for-overseas-executives-rises-sharply-1.4557700
    Those Directors would not be here if not for the favourable treatment of Intellectual Property Rights.
    I'd be happy to take a postion as a Director for one of the multi-nationals and vote which ever way I'm told to vote\manage for a half-million euro salary.


  • #2


    salonfire wrote:
    Did you miss the bit where it says we stand to lose 2bn? Will that lose ease the struggle to run our country? Tell me how, step by step, in your head how these loses makes it better for Ireland?

    I certainly didn't, yes we might lose a few quid, but my suspicions are, after this process, we mightnt lose much, if anything at all. we don't exactly have much of a history of success of change from such processes, so let's see what happens, corporations are slippery ould feckers.

    Yes, we re all starting to struggle to run our countries now, and it's clearly obvious, tax avoidance is playing a significant role in it, this could very well be the beginning of the end, but only the beginning, this will more than likely be a long twisty road

    The only way forward for humanity is global cooperation on virtually everything, if we continue on our current path, it will more than likely lead to the end of the human race, this is becoming more evident now, this also includes cooperation on taxation

    Damien360 wrote:
    I think you missed the essence of what he is saying. Multinationals are avoiding tax on a massive scale. If we captured a reasonable portion of this tax in return for remaining, we would have been better off. But we don’t and neither do other jurisdictions and this is the result. It costs taxes to run a country and costs are increasing. If we want to give out “forever“ homes, they cost taxes. If companies are avoiding these taxes then the middle class in ireland have to pick up the tab. It’s a question of fairness, and what multinationals were doing was grossly unfair.

    Largely agree, this age of taxation of primarily labour and consumption must end, it's slowly destroying our societies, economies, our democracies, and our planet, hopefully this is another major turning point.

    But I think the dig at certain classes is uncalled for, the use of the term 'forever homes', is just an attempt to deride, theres clearly serious fundamental flaws in our approach to property, and tax avoidance again is also playing its part in this failure

    haphaphap wrote:
    Those Directors would not be here if not for the favourable treatment of Intellectual Property Rights. I'd be happy to take a postion as a Director for one of the multi-nationals and vote which ever way I'm told to vote\manage for a half-million euro salary.

    ... In many cases, stock options are the primary source of income, generally undisclosed to the public, quoted salary is chicken feed to actual income via such options


  • #2


    Wanderer78 wrote: »
    ... In many cases, stock options are the primary source of income, generally undisclosed to the public, quoted salary is chicken feed to actual income via such options
    If 100 million of income tax is being avoided and it only applies to 30% of income above €75k then it is anything but Chicken feed.
    Huge numbers of Multinationals have moved the residence of Directors to Ireland to avail of intellectual property rights tax treatment arrangements.


  • #2


    haphaphap wrote: »
    If 100 million of income tax is being avoided and it only applies to 30% of income above €75k then it is anything but Chicken feed.
    Huge numbers of Multinationals have moved the residence of Directors to Ireland to avail of intellectual property rights tax treatment arrangements.

    we wont refuse it, but it is chicken feed in regards the billions more we do need to run our economy and state, income tax alone wont resolve this one. yup, at some stage we will have to accept, we re a tax haven for ip


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