Ireland and corporate tax avoidance

Duggys Housemate · 22-05-2013 02:21PM

Fratton Fred wrote: »

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.

The problem is largely due to British dependancies.

There are no shell companies in Ireland. These legitimate companies have thousands of employees producing goods, support, or writing software. In Apple's case the factory has been there since before the Mac. Effectively it has been there as long as the PC age. I know because I have worked in some of them ( and any search on the type of jobs available would prove the point).

Wompa1 · 22-05-2013 02:38PM

Duggys Housemate wrote: »

The problem is largely due to British dependancies.

There are no shell companies in Ireland. These legitimate companies have thousands of employees producing goods, support, or writing software. In Apple's case the factory has been there since before the Mac. Effectively it has been there as long as the PC age. I know because I have worked in some of them ( and any search on the type of jobs available would prove the point).

I have worked in some of them too. The jobs are legit. I wouldn't argue that point. There's also a glass ceiling in the companies that I worked in. The Irish branches were not business critical and compared to the US and UK branches, the salaries were very low. Each and every one of them also started to shed the more technical jobs and then announce job creation in lowly paid multi-lingual support jobs.

But why not have legit jobs? It's not a question of tax avoidance just for the sake of it. Global Companies require an entity in the European Market, Asian Market etc. Why not set these up in the company that cuts the best deal.

What gets my goat is the transperity claim by our Tánaiste

antoobrien · 22-05-2013 02:51PM

Wompa1 wrote: »

What gets my goat is the transperity claim by our Tánaiste

It's not a claim, its a fact. CT is very transparent here, as is what it is legal to call expenses that reduce taxable profits.

The claims that we don't levy 12.5% are spurious based on either a misunderstanding of the Irish CT model or an intentional misrepresentation of how it is calculated - such as the 2% claim for apple which is either based on revenues or gross profits, but certainly not the net profit figure that is used to calculate CT in Ireland.

Fratton Fred · 22-05-2013 04:02PM

Duggys Housemate wrote: »

The problem is largely due to British dependancies.

There are no shell companies in Ireland. These legitimate companies have thousands of employees producing goods, support, or writing software. In Apple's case the factory has been there since before the Mac. Effectively it has been there as long as the PC age. I know because I have worked in some of them ( and any search on the type of jobs available would prove the point).

You've obviously never heard of Round Island One then, Ireland's largest company.

carpejugulum · 22-05-2013 06:11PM

Scofflaw wrote: »

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

But the vast majority of the money stays in the EU and is spent so generates taxes, employment and so on.

nice_guy80 · 22-05-2013 06:43PM

Duggys Housemate wrote: »

The problem is largely due to British dependancies.

There are no shell companies in Ireland. These legitimate companies have thousands of employees producing goods, support, or writing software. In Apple's case the factory has been there since before the Mac. Effectively it has been there as long as the PC age. I know because I have worked in some of them ( and any search on the type of jobs available would prove the point).

there's a building up in the IFSC full of them!!!

the companies only presence in Ireland is a mailbox.

Scofflaw · 22-05-2013 07:15PM

carpejugulum wrote: »

But the vast majority of the money stays in the EU and is spent so generates taxes, employment and so on.

Sure, but so? The question was whether potential taxes on profits were being lost outside Europe, which they are.

I see Barroso has weighed in following the Council meeting:

President Barroso's remarks on TAX EVASION AND FRAUD at this evening's press conference following the European Council in Brussels

Tackling tax evasion and fraud was the other issue on the meeting of European Council today. This is also about fairness, because we estimate €1 trillion lost each year to tax evasion and avoidance, the equivalent of a year's health spending across all member states.

This discussion didn't start today. In fact, as the President of the European Council said, some of these issues are already on that table. Five years ago the Commission has put forward proposals for instance in terms of saving, the Tax Savings Directive. The reality is that until now these discussions have been more or less blocked. We also discussed this in the European Council last June, and the Commission has presented an action plan and two specific recommendations on tax havens and aggressive tax planning last December.

But now we see there is a new momentum among our member states, and I think we should act based on this momentum.

So I'm pleased that some decisions have been taken today. Indeed there was a reference to a principle that I believe it is critically important – the principle of automatic exchange of information at European Union level. Quite frankly, I would prefer this to be more precise in the conclusions, but I have to recognise that there was progress in that area. And now finally, it was about time we have this mandate, as Commission, to negotiate with Switzerland, Liechtenstein, Monaco, Andorra and San Marino, to do it as soon as possible.

And so there is also a commitment of the European Council, in the light of these negotiations, and also noting the consensus of the scope of the revised directive on the taxation of the savings income, to call for its adoption before the end of the year. So we are making some progress in this area and this is certainly a positive development.

The reality is that citizens have high expectations that we will deliver a fairer tax deal for everyone. Today's globalised world is also changing in a way that we have to look at these issues in a much more attentive way. Next week's Country Specific recommendations that the Commission will present will highlight the scope for member states to improve their own tax systems. But beyond this, beyond what can be done at national level or European level, there is also the global level where the European Union should promote a global standard, namely in the G8 - we are going to be there representing the European Union next month in Northern Ireland -, but also in the G20, OECD and in many other international fora.

"New momentum among our member states" as opposed to "until now these discussions have been more or less blocked" means the governments have decided they have to do something, and may well refer in particular to the UK, where the PAC findings are generating political pressure. I wonder if we're going to go along with the probable change in the UK position, given that a number of fingers in the UK are currently pointing out way - or whether we'll adapt in one of our standard cunning displays of apparent compliance?

cordially,
Scofflaw

coolshannagh28 · 22-05-2013 07:48PM

Whatever the rights or wrongs of corporate tax avoidance and personally I would rather see our strategy focus spent on indigenous manufacturing,this debate is another indicator of a major change in US attitudes toward Ireland .
Timothy Geithner the US treasury secretary ensured that no Bondholders were burnt prior to our bailout severely limiting our options at that time ,what stick did he use to beat us with then . Now US legislators are taking a serious look at our corporate tax structures right when we dont need it .
We are playing with the big boys now and the game seems to be getting pretty rough, we have never taken enough in corporate tax from the multinationals and this now looks like a mistake as our leniency has turned the spotlight right on us.

carpejugulum · 22-05-2013 09:31PM

Scofflaw wrote: »

Sure, but so? The question was whether potential taxes on profits were being lost outside Europe, which they are.

So how high is that number? It certainly isn't 1 trillion.
And even that is not all "lost" because EU exports a lot, receives a lot of FDI and attracts a huge number of tourists from outside the EU.

Scofflaw · 22-05-2013 10:07PM

carpejugulum wrote: »

So how high is that number? It certainly isn't 1 trillion.

I haven't checked how the Commission came by its figure, but ff you're certain €1tn is incorrect, presumably you have a figure?

carpejugulum wrote: »

And even that is not all "lost" because EU exports a lot, receives a lot of FDI and attracts a huge number of tourists from outside the EU.

It doesn't do those things by losing out on potential taxes, though, unless you mean that US companies come because of the tax they don't have to pay - although I'm not aware that that's overall the case for the EU as it is for Ireland specifically. As far as I know, they set up in the EU in order to avoid the tariff wall around the EU, although perhaps the EU-US free trade deal changes that.

cordially,
Scofflaw

jackpension · 22-05-2013 10:10PM

WE should be commending these companies, not vilifying them

It is a complete bunch of bull that Apple had to testify before that committee. Who doesn't try to minimize their tax bill.

And imagin the head of the IDA and coming out and saying we are not a tex haven. How naive?

oppenheimer1 · 22-05-2013 11:39PM

jmayo wrote: »

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.

It doesn't really matter what other countries think because the system as it is set up suits everyone and what we are hearing is actually bluster. If there was a real desire for change it would already have happened but there isn't. If governments were to change the rules regarding tax and sales (for example the banning of the sale of intellectual property to wholly owned entities or some regulation of its sales) it would automatically precipitate a stock market crash and a severe recession.

It also doesn't matter what other governments think only businesses. Business has an obligation to its shareholders and no one else. Business will pay tax only when they have to and will pay as little as possible because they are obliged to behave this way. In fact far from driving business from Ireland - the senate hearings could act as some sort of advertisement for our tax code and encourage investment here.

Scofflaw · 22-05-2013 11:45PM

oppenheimer1 wrote: »

It doesn't really matter what other countries think because the system as it is set up suits everyone and what we are hearing is actually bluster. If there was a real desire for change it would already have happened but there isn't. If governments were to change the rules regarding tax and sales (for example the banning of the sale of intellectual property to wholly owned entities or some regulation of its sales) it would automatically precipitate a stock market crash and a severe recession.

Eh, good time to do it now, then.

cordially,
Scofflaw

maninasia · 23-05-2013 04:34AM

Here's a Reuters article specifically focusing on Ireland.

http://uk.finance.yahoo.com/news/irish-loophole-behind-apples-low-012233140.html

TheVman · 23-05-2013 06:24AM

antoobrien wrote: »

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.

Have no intention of making comparisons between France and Eire, nor the cayman islands, jersey, holland, switzerland, luxembourg, london... France is no model on lots of things i agree... and even channels moneys through Eire so...

The thing is this discussion was on Eire and C Tax avoidance, it seems to have spiralled off a bit. Companies will do whatever they want but if you can set up your EU headquarters in a country with a CT rate of 12.5% well then... I know very well its legal and Eire does not (because it cant) hide the fact that the CT rate is 12.5%

The issue of transfers and whether the money saved on EU activity stays in the country / EU is another "complicated subject" Someone mentioned Round Island One, that was a good one indeed. I myself have worked in California (San Fran, Stanford and San D) Scandinavia and a few other places.. I spent about ten years in R&D and have submitted 16 Patents so Round Island One made me laugh..

I might have given the impression I was kind of "anti Eire" its absolutely not the case...

maninasia · 23-05-2013 07:47AM

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 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.

If it is cosmetic how come these multinational IT companies employ tens of thousands of workers, plenty of them are well paid too. That's not cosmetic, that's significant, very significant in a small country like Ireland.

There are brass plate tax washing companies in Ireland with no employees, IFSC etc, but I don't think your point is correct here.

We generally prefer using the name Ireland not Eire in Ireland, just as a heads-up.

TheVman · 23-05-2013 08:22AM

maninasia wrote: »

If it is cosmetic how come these multinational IT companies employ tens of thousands of workers, plenty of them are well paid too. That's not cosmetic, that's significant, very significant in a small country like Ireland.

There are brass plate tax washing companies in Ireland with no employees, IFSC etc, but I don't think your point is correct here.

We generally prefer using the name Ireland not Eire in Ireland, just as a heads-up.

Once again nothing to do with issue. The fact is FDI in Eire was 100% CP motivated.

The jobs created by these companies in EIRE are jobs that MONKEYS could fill bar 5 to 10%

Can you honestly say you believe that Eire has in an any way more educated workforce than another EU country. And the fact the Irish speak english, oh man. Half the graduates in Europe speaks english.

You call EIRE what you like thats ok with me.

antoobrien · 23-05-2013 08:55AM

TheVman wrote: »

Once again nothing to do with issue. The fact is FDI in Eire was 100% CP motivated.

The jobs created by these companies in EIRE are jobs that MONKEYS could fill bar 5 to 10%

Can you honestly say you believe that Eire has in an any way more educated workforce than another EU country. And the fact the Irish speak english, oh man. Half the graduates in Europe speaks english.

You call EIRE what you like thats ok with me.

This is a great example of an academic opinion that has little to do with the real world.

Anybody that knows anything about the difficulty of working with people in a language that is not their primary language (try working with India) wold never make statements as ignorant as that.

I won't dignify the rest of it with a response.

seamus · 23-05-2013 09:10AM

TheVman wrote: »

The jobs created by these companies in EIRE are jobs that MONKEYS could fill bar 5 to 10%

You're fairly mistaken here. Job boards in Ireland are awash with high-skill positions, primarily technology positions, primarily from foreign companies who have located offices here.

There is of course a tax aspect to their reason for relocating, but only in a small number of cases are they locating shell companies here. In most cases they recognise that in Ireland they have access to a skilled EU workforce, so they use that to their advantage.

The figures really speak for themselves. Apple employ 4,000 people. Google nearly 2,000, Intel 4,500. In other countries these figures are typical of regional facilities. In Ireland these figures are enormous, putting these technology companies in the list of the biggest employers in the country.

TheVman · 23-05-2013 09:14AM

antoobrien wrote: »

This is a great example of an academic opinion that has little to do with the real world.

Anybody that knows anything about the difficulty of working with people in a language that is not their primary language (try working with India) wold never make statements as ignorant as that.

I won't dignify the rest of it with a response.

I have full support teams in India, in fact i was there last month.
Im in no way an academic and very used to the "real" world.

The truth is indeed hard to stomach

Throw a dog a bone !

antoobrien · 23-05-2013 09:17AM

TheVman wrote: »

Have no intention of making comparisons between France and Eire, nor the cayman islands, jersey, holland, switzerland, luxembourg, london... France is no model on lots of things i agree... and even channels moneys through Eire so...

Ah so we're not actually the worst them.

TheVman wrote: »

The thing is this discussion was on Eire and C Tax avoidance, it seems to have spiralled off a bit. Companies will do whatever they want but if you can set up your EU headquarters in a country with a CT rate of 12.5% well then... I know very well its legal and Eire does not (because it cant) hide the fact that the CT rate is 12.5%

So, we don't hide the fact that we charge 12.5%. We do actually charge it unlike certain other hypocrites in Europe (France). Perhaps if those hypocrites sorted out their CT systems we'd see if the rest of the theory you have about Ireland is true.

TheVman wrote: »

The issue of transfers and whether the money saved on EU activity stays in the country / EU is another "complicated subject" Someone mentioned Round Island One, that was a good one indeed. I myself have worked in California (San Fran, Stanford and San D) Scandinavia and a few other places.. I spent about ten years in R&D and have submitted 16 Patents so Round Island One made me laugh..

Submitting 16 patents to the US patent office, what a laugh. Did you submit the one for the rectangle?

TheVman wrote: »

I might have given the impression I was kind of "anti Eire" its absolutely not the case...

And that made me laugh because you are virulently anti Irish as your next post proves.

The fact is FDI in Eire was 100% CP motivated.

The jobs created by these companies in EIRE are jobs that MONKEYS could fill bar 5 to 10%

Unless you like refrigeration units, chips, ventilators and stents being made by animals I suggest you tempter your remarks. Apple, Intel, HP, DEC, Boston Scientific, Medtronic, Thermo King, Crown, Covidien (formerly Tyco Healthcare) all came to Ireland before the current CT system was introduced.

You see up until 1997 we had two rates of CT: the current rate (of 12.5%) and a much higher rate of 30%+ (I can't remember exactly what rate it was). I seem to recall that it was at the insistence of the EU that a uniform rate was adopted, so in retaliation for messing with our tax system we showed the EU two fingers and cut out the higher rate.

antoobrien · 23-05-2013 09:20AM

TheVman wrote: »

I have full support teams in India, in fact i was there last month.
Im in no way an academic and very used to the "real" world.

Have you come to fear the "Bangalore special" yet? If you haven't come back to me when you do and we can continue this discussion.

Fratton Fred · 23-05-2013 09:45AM

seamus wrote: »

You're fairly mistaken here. Job boards in Ireland are awash with high-skill positions, primarily technology positions, primarily from foreign companies who have located offices here.

There is of course a tax aspect to their reason for relocating, but only in a small number of cases are they locating shell companies here. In most cases they recognise that in Ireland they have access to a skilled EU workforce, so they use that to their advantage.

The figures really speak for themselves. Apple employ 4,000 people. Google nearly 2,000, Intel 4,500. In other countries these figures are typical of regional facilities. In Ireland these figures are enormous, putting these technology companies in the list of the biggest employers in the country.

awash because they have trouble filling them.

I wouldn't suggest Ireland doesn't have a skilled workforce, it does, but it isn't silicon valley.

The number of employees these companies has is staggering, but it also demonstrates why these companies can be so aggressive here. No Irish politician is going to risk pissing them off.

Britain, Germany and the eu in general can, because the MNCs need access to those markets.

TheVman · 23-05-2013 09:53AM

" You're fairly mistaken here. Job boards in Ireland are awash with high-skill positions, primarily technology positions, primarily from foreign companies who have located offices here. "

Have you ever seen a job description "Monkey needed to open box and put it on assembly line" or "Monkey to answer phone and speak another language"

Mr O'Brien is'nt it great to get the blood warmed up in the morning

antoobrien · 23-05-2013 10:05AM

TheVman wrote: »

" You're fairly mistaken here. Job boards in Ireland are awash with high-skill positions, primarily technology positions, primarily from foreign companies who have located offices here. "

Have you ever seen a job description "Monkey needed to open box and put it on assembly line" or "Monkey to answer phone and speak another language"

Mr O'Brien is'nt it great to get the blood warmed up in the morning

Yes, I've seen patent trolls looking for people to submit requests to the US patent office.

seamus · 23-05-2013 10:06AM

TheVman wrote: »

Have you ever seen a job description "Monkey needed to open box and put it on assembly line" or "Monkey to answer phone and speak another language"

Well yes

We all know what the job descriptions are which equate to monkey work.

Fratton Fred actually backs up my point somewhat - the job boards are awash with jobs that can't be filled. If the companies were only really providing monkey work, we have 400,000 unemployed people who'd be well able to fill these positions.

I'm actually not arguing that Ireland specifically is a high-skilled workforce. Those who are skilled are fairly highly skilled, but the boom also left us with a huge legacy of low-skilled construction workers.
However, as an EU member Ireland has access to a huge workforce and despite what some peoples' sentiment is, Ireland appears to be a very popular destination for high-skilled EU workers.

Ultimately this posturing from the other EU members states is just hot air. Unless they disband the EU there's basically nothing they can do to prevent Apple and Google from doing what they do in Ireland.

Or they could, you know compete; lower their tax rates, encourage inward investment. Competing is a strange concept for the UK and the US who have preferred to stamp their feet and bully smaller countries since WW1, but you know it might just work.

halkar · 23-05-2013 10:19AM

Jobs are jobs and this is what Ireland needs now. CT takes are around 3 billion annually and going down. We don't need more taxes. We need to get people working. Remove CT and provide more incentives for companies that locate outside of big 3 cities. If we can get 100k back into workforce this will provide more than 3billion to the economy and will create more jobs.

Fratton Fred · 23-05-2013 10:22AM

seamus wrote: »

Well yes
We all know what the job descriptions are which equate to monkey work.

Fratton Fred actually backs up my point somewhat - the job boards are awash with jobs that can't be filled. If the companies were only really providing monkey work, we have 400,000 unemployed people who'd be well able to fill these positions.

I'm actually not arguing that Ireland specifically is a high-skilled workforce. Those who are skilled are fairly highly skilled, but the boom also left us with a huge legacy of low-skilled construction workers.
However, as an EU member Ireland has access to a huge workforce and despite what some peoples' sentiment is, Ireland appears to be a very popular destination for high-skilled EU workers.

Ultimately this posturing from the other EU members states is just hot air. Unless they disband the EU there's basically nothing they can do to prevent Apple and Google from doing what they do in Ireland.

Or they could, you know compete; lower their tax rates, encourage inward investment. Competing is a strange concept for the UK and the US who have preferred to stamp their feet and bully smaller countries since WW1, but you know it might just work.

The tax rate is irrelevant. It is the Bermuda/Ireland/Netherlands loop hole that companies exploit.

Offering low tax rates is fine, if you can afford it, but the somewhat sizeable hole in Irish finances would suggest otherwise. A hole which, incidentally, would be significantly smaller if Ireland helped close these loopholes so the likes of Google, Apple and Microsoft were actually paying 12% tax and not 2.

antoobrien · 23-05-2013 10:35AM

Fratton Fred wrote: »

Offering low tax rates is fine, if you can afford it, but the somewhat sizeable hole in Irish finances would suggest otherwise. A hole which, incidentally, would be significantly smaller if Ireland helped close these loopholes so the likes of Google, Apple and Microsoft were actually paying 12% tax and not 2.

But the do pay 12.5% corporation tax on their profits - which is the important word here.

The 2% (or in google's case 0.14%) figures relate to turnover, not profit - gross or net.

The Apple argument is extremely disingenuous as the company in question is an investment vehicles that takes after tax proceeds from other countries and are used to manage Apple's after tax cash pile, which counts as foreign income for tax purposes in the US.

Scofflaw · 23-05-2013 11:02AM

antoobrien/TheVMan discussion probably getting a little too personal. Less heat, more light, thanks.

moderately,
Scofflaw

Ireland and corporate tax avoidance

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