US firms warn Irish over corporation tax!

wiseguy · 21-11-2010 11:01am #1

The Irish government has been given a stark warning from some of the biggest American companies in Ireland on the risk of a mass exodus if the country's low corporation tax rate is raised.

The warning – from executives at Microsoft, Hewlett-Packard (HP), Bank of America Merrill Lynch and Intel – spoke of the "damaging impact" on Ireland's "ability to win and retain investment" should the country's corporation tax rate be increased from 12.5pc.

Separately, John Herlihy, head of Google's 2,000-strong European headquarters in Dublin, told The Belfast Telegraph that "anything that impinges on Ireland's competitiveness is going to be a big thing for Google".

telegraph

Looks like the big companies are getting jittery. Why would they invest here with such dark clouds hanging about. Well done the Soldiers of Destiny

wolfpawnat · 21-11-2010 11:17am

wiseguy wrote: »

telegraph

Looks like the big companies are getting jittery. Why would they invest here with such dark clouds hanging about. Well done the Soldiers of Destiny

It proves the point of all the people against the rise of Corp tax, and whats more, it will make Germany and France WANT it to be raised in hopes they get the companies instead!

We should keep on to as many foreign companies as possible. We need them at this time.

dlofnep · 21-11-2010 11:21am

Now we have to ask ourselves - What are the chances that it will raise?

mawk · 21-11-2010 11:22am

I always thought the corp tax should be removed altogether, the employment increase would make up the difference with income tax.
Income tax being our greatest revenue iirc.

wolfpawnat · 21-11-2010 11:23am

dlofnep wrote: »

Now we have to ask ourselves - What are the chances that it will raise?

What are the chances we will be forced to raise it by our neighbours on mainland Europe?:eek:

Princess Consuela Bananahammock · 21-11-2010 11:31am

mawk wrote: »

I always thought the corp tax should be removed altogether, the employment increase would make up the difference with income tax.
Income tax being our greatest revenue iirc.

Too much power is already in the hands of big gusiness, if you ask me.

Inquitus · 21-11-2010 11:31am

wolfpawnat wrote: »

What are the chances we will be forced to raise it by our neighbours on mainland Europe?:eek:

Chances of it being raised - Slim to none imo.

AntiRip · 21-11-2010 11:36am

What I can't understand is why they would want us to raise it. If they're giving us a loan and I'm sure they want us to pay it back and more, then surely there is a better chance of that if we recover and start growing. It doesn't make any sense :rolleyes:

dlofnep · 21-11-2010 11:37am

wolfpawnat wrote: »

What are the chances we will be forced to raise it by our neighbours on mainland Europe?:eek:

Can't be forced - But can be strongly influenced (aka forced).

Welease · 21-11-2010 11:39am

Sometimes I think it's a millstone around our next that gives us a false impression on how to business globally..

Yes we have low CT, but on how many of the other necessities of attracting FDI do we pay proper attention to? Ex-CEO Craig Barret himself said, Intel had 15 reason for initially coming to Ireland, only 1 (CT) is now left (and as a result, the Ireland site has been contracting)..

Google themselves funnel a lot of their advertising revenue through Ireland to take account of the low tax, which is great for our tax revenue, but the actual jobs for creating this revenue are located elsewhere which isn't a long term solution to our unemployment issue.

I don't believe we should raise it, but we need to understand it's only part of the picture for attracting FDI, and on the other parts we are failing (education, wages, infrastructure, costs etc). Hence why we are seeing minimal new investment into Ireland, even from those companies listed above who do use the lure of low CT.

ff_epicfail · 21-11-2010 12:05pm

wiseguy wrote: »

telegraph

Looks like the big companies are getting jittery. Why would they invest here with such dark clouds hanging about. Well done the Soldiers of Destiny

Does anyone honestly believe that HP, Intel and IBM would leave if the corporate tax was 15% instead of 12.5%? Moving from one country to another is not free for a big corporation...

gizmo555 · 21-11-2010 12:10pm

ff_epicfail wrote: »

Does anyone honestly believe that HP, Intel and IBM would leave if the corporate tax was 15% instead of 12.5%? Moving from one country to another is not free for a big corporation...

Not so easy for manufacturers like HP and Intel, although it could certainly influence their decisions on future investement.

However, it would be much, much easier for firms like Google and Microsoft, who employ thousands.

KyussBishop · 21-11-2010 12:11pm

This even got a mention on Slashdot apparently:
http://tech.slashdot.org/story/10/11/21/0157216/Google-Warns-Irish-Government-Against-Tax-Increase

The article could use some people demoting the idiotic comments though; that said, comments noting that one of the primary purposes of these companies is to use Ireland as a tax break, are spot on.

daddydick · 21-11-2010 12:16pm

Before any talks with IMF/EU etc about emergency funding, the current Government need to put it straight out on the table that any changes to our ability to set our own CT level will not be tolerable.

Taking this away would lead to catastrophe. Tens of thousands are employed in highly skilled jobs here in hundreds of multinational companies on the back of this CT rate, and any change in this would lead to thousands of jobs being lost.

Not even up for negotiation.

cleremy jarkson · 21-11-2010 12:21pm

As some commentator pointed out (could have been on the late late!), these companies look very much at the long-term when planning their operations, and even a 2.5% rise in the corporation tax rate opens the doors for increases in the future. They need to know that 12.5% is the long term rate.
Of all the options for tax increases, this is the only one that really should remain untouched, in my opinion.

66o66o · 21-11-2010 12:24pm

wolfpawnat wrote: »

What are the chances we will be forced to raise it by our neighbours on mainland Europe?:eek:

but these same neighbours said it waas protected in the lisbon treaty..
surely not another lie by the Politicans?

Nodin · 21-11-2010 12:26pm

KyussBishop wrote: »

This even got a mention on Slashdot apparently:
http://tech.slashdot.org/story/10/11/21/0157216/Google-Warns-Irish-Government-Against-Tax-Increase

The article could use some people demoting the idiotic comments though; that said, comments noting that one of the primary purposes of these companies is to use Ireland as a tax break, are spot on.

...well they aren't here for the Weather. I'd say every now and again they run an exercise with regards to the cost of moving to a few different destinations vs the cost of staying. As soon as it changes, its 'Paddy, heres Lao Tse, he's here to learn the ropes'.

Welease · 21-11-2010 12:37pm

ff_epicfail wrote: »

Does anyone honestly believe that HP, Intel and IBM would leave if the corporate tax was 15% instead of 12.5%? Moving from one country to another is not free for a big corporation...

Immediately? No..

But, our CT is currently considered low at 12.5%, and Intel for example have pretty much stopped all investment in this country. It hasn't been upgraded to the latest processes, the Leixlip plant has reduced staff over the last few years, and recent announcements over the past few years have all been upgrades of existing US/Israel plants or new greenfield sites in Asia..

Didn't HP already shed a lot of its workforce in Ireland?

Low CT alone is not enough to guarantee business.. raising it without any other reasons to locate here is probably not a great idea either.

WIZE · 21-11-2010 12:47pm

Welease wrote: »

Didn't HP already shed a lot of its workforce in Ireland?

manufacturing will be moved . their I.T section is growing in ireland.

Amhran Nua · 21-11-2010 1:08pm

wolfpawnat wrote: »

it will make Germany and France WANT it to be raised in hopes they get the companies instead!

Germany and France don't want the jobs, they get practically no FDI anyway. They want the taxes.

Welease wrote: »

Google themselves funnel a lot of their advertising revenue through Ireland to take account of the low tax, which is great for our tax revenue, but the actual jobs for creating this revenue are located elsewhere which isn't a long term solution to our unemployment issue.

Google employs 1700 people in Ireland and pays tens of millions in taxes. I for one would not like to see them leaving.

Welease wrote: »

It hasn't been upgraded to the latest processes, the Leixlip plant has reduced staff over the last few years, and recent announcements over the past few years have all been upgrades of existing US/Israel plants or new greenfield sites in Asia..

Companies come and go, the medical corporations in the west have increased their investment. I do agree we need widespread reform and upgrades but the CT rate is our main and perhaps only competitive advantage right now. Its going nowhere.

Terrontress · 21-11-2010 1:16pm

The problem with the low corporation tax is not Microsoft, Google or Intel running factories and R&D.

It's the companies in the IFSC which employ three people and have the turnover of an African nation's GDP. These vehicles exist only to avoid tax and it is other developed nations which lose this tax directly.

There should have been some form of obligation to provide employment or put down roots but Ireland has been happy to sit back while the likes of Depfa, Parmalat, Experian, Volkswagen Bank sift billions through the IFSC with no connection to Ireland other than the desire to avoid tax.

It is this that is driving the corporation tax issue. Unfortunately in allowing ourselves to be complicit with this, we have annoyed those people who we now look to for help.

Sea Sharp · 21-11-2010 1:32pm

MNCs are responsible for something like 75% of GDP in Ireland.
If the corporation tax is in any way altered, at least half of this income will be exported to Poland, India or China.
If that happens the country will simply collapse. The majority of people with a mortgage will default and this will leave something close to a trillion euro in Irish personal debt being written off. This will collapse the euro.

And WTF are France and Germany thinking? The MNCs will go to somewhere like Poland, not to France or Germany, should Ireland raise their tax.

The_Thing · 21-11-2010 1:58pm

Slashdot has a thread on this too with lots of valid points both for and against a rise in corporate tax.

RichardAnd · 21-11-2010 2:17pm

Inquitus wrote: »

Chances of it being raised - Slim to none imo.

I agree. The Europeans may not like us but they're not stupid. It makes no sense to loan a country billions of euros and then make it more difficult for them to pay it back.

the lapsed accountant · 21-11-2010 2:46pm

The battle appears to have been fought and won last week and the media are at least 72 hours behind. Even German have now come out now and said that it is not a precondition. Swedes have weighted in. EVEN Sarkozy has said we have the choice (although he thinks Ireland will raise it).

Fat chance ! Economist have a good balanced series of articles this weekend (a lot of it is our own fault but madness to raise CT)

http://www.economist.com/node/17525741?story_id=17525741&CFID=148841649&CFTOKEN=18791554

maxxie · 21-11-2010 2:55pm

When the yes vote was passed in the lisbon treaty, was our corporation tax not guaranteed in the european constitution?

the lapsed accountant · 21-11-2010 2:57pm

maxxie wrote: »

When the yes vote was passed in the lisbon treaty, was our corporation tax not guaranteed in the european constitution?

It is - to the extent that Europe can not unilaterally force us to change it. However the fear here is that they would say "We'll give you a loan if you unilaterally decide to change your rate". In other words we'd be doing it ourselves

iPlop · 21-11-2010 5:55pm

Welease wrote: »

Immediately? No..

But, our CT is currently considered low at 12.5%, and Intel for example have pretty much stopped all investment in this country. It hasn't been upgraded to the latest processes, the Leixlip plant has reduced staff over the last few years, and recent announcements over the past few years have all been upgrades of existing US/Israel plants or new greenfield sites in Asia..

Didn't HP already shed a lot of its workforce in Ireland?

Low CT alone is not enough to guarantee business.. raising it without any other reasons to locate here is probably not a great idea either.

Yes they did using the "transfer of undertakings" legislation ,thats why it didn't appear in the media.The only reason HP are still here is because whats left of the manufacturing is under the umbrella of R&D so the grants keep coming ,also the "smart" part of their product is taxable if flown back to the EU

Theboinkmaster · 21-11-2010 6:03pm

RichardAnd wrote: »

I agree. The Europeans may not like us but they're not stupid. It makes no sense to loan a country billions of euros and then make it more difficult for them to pay it back.

I agree - i really don't understand why there are so many threads on here and the coverage it's getting in the media.

It won't happen.

PeakOutput · 21-11-2010 6:08pm

they are dead right and if we do increase our corporation tax we are done for a long long time

PeakOutput · 21-11-2010 6:11pm

Terrontress wrote: »

It's the companies in the IFSC which employ three people and have the turnover of an African nation's GDP. These vehicles exist only to avoid tax and it is other developed nations which lose this tax directly.

got any links to articles on the excistence of these companies?

Terrontress · 21-11-2010 6:14pm

PeakOutput wrote: »

got any links to articles on the excistence of these companies?

Edit: take a look at this link

www.guardian.co.uk/commentisfree/2009/feb/27/liechenstein-liffey-tax-avoidance-dublin

If you were a foreign government minister would you attempt to pull Ireland's tax affairs back in to line at the time when you are most likely to have a say? Of course you would.

www.irishtimes.com/newspaper/opinion/2010/0906/1224278288259.html

49 companies, median assets of €650m, median number of employees zero.

I'm sure France, Germany, UK, US and a plethora of other companies are not too unhappy about HP or Intel with big bases, providing employment and local prosperity. But companies with large turnover which exist for the simple reason to prevent paying their taxes to those states will be viewed dimly. And in an attempt to stop that kind of shady operation, it might end up killing the decent Intel, HP, Microsoft et al.

PeakOutput · 21-11-2010 6:34pm

BrickLayer wrote: »

The US can warn us all the ****ing bloody well like!What are they going to do?Drop the atom bomb on us!Our countrys finances are worse than afghanistan at the minute..Maybe the can do some refurbishing here too!!

I think we should focus more on GRASS ROOTS BUSINESSES ,instead of bending our ARSE OVER BACKWARDS for these multi national rapists,being honest..

Thats our problem to begin with,i can take a walk down grafton street,dublin,multi nationals everywhere ,no grass roots businesses are anywhere to be seen in ireland.
What good is having a multi national shop,with 3 shop window workers and all the warehousing IMPORTED?!

We need to raise the taxes through the roof,maybe just a little ,i can guarantee,if we still keep the taxes low enough,they will still set up their firms here!

We need more focus on irish sourced,produced and based business,THESE MULTI NATIONALS WILL **** OFF TO CHINA WHEN THINGS GET HOT ANYWAY!

We need to protect our own NATIONAL interests,something we have not been doing very well..

yet more absolutely rubbish economics from someone who dosnt know any better

grass roots business? what is that exactly? the corner shop? supervalu? sole traders?

what we need are export based business's of all sizes. this includes the large multinationals who come here employ tens of thousands of people, export their product from ireland and pay tax on their profits to ireland.

the local electrician setting up on his own is not going to solve anything. we are in the process of creating massive amounts of money that in theory will be available to people to create new export businesses which IMPORT money into this country what is the point of doing all that while letting the the already massive export business's that are here leave. not only letting them leave but forcing them to do it by making ourselves uncompetitive, the idea is ridicolous.

PeakOutput · 21-11-2010 6:37pm

Terrontress wrote: »

Edit: take a look at this link

www.guardian.co.uk/commentisfree/2009/feb/27/liechenstein-liffey-tax-avoidance-dublin

If you were a foreign government minister would you attempt to pull Ireland's tax affairs back in to line at the time when you are most likely to have a say? Of course you would.

www.irishtimes.com/newspaper/opinion/2010/0906/1224278288259.html

49 companies, median assets of €650m, median number of employees zero.

I'm sure France, Germany, UK, US and a plethora of other companies are not too unhappy about HP or Intel with big bases, providing employment and local prosperity. But companies with large turnover which exist for the simple reason to prevent paying their taxes to those states will be viewed dimly. And in an attempt to stop that kind of shady operation, it might end up killing the decent Intel, HP, Microsoft et al.

i thought you were talking about something else, the corporation tax and tax avoidance are two unrelated things

these companies are using our tax laws(not the corporation tax) to avoid paying any tax in ireland or the uk and are therefore no benefit to us so if they do change the law in that regard im sure id support it, it sounds like a totally different issue to our corporation tax though

edit; in fact from very quickly reading your link it sounds as if that might be a good trade off. we agree to close up all these loopholes in exchange for not being 'forced' to change our corporation tax

Terrontress · 21-11-2010 7:15pm

PeakOutput wrote: »

i thought you were talking about something else, the corporation tax and tax avoidance are two unrelated things

these companies are using our tax laws(not the corporation tax) to avoid paying any tax in ireland or the uk and are therefore no benefit to us so if they do change the law in that regard im sure id support it, it sounds like a totally different issue to our corporation tax though

edit; in fact from very quickly reading your link it sounds as if that might be a good trade off. we agree to close up all these loopholes in exchange for not being 'forced' to change our corporation tax

Nope, there are countries with absolutely no activity here channeling their profits through the IFSC to pay our low rate of corporation tax. Obviously there is something in it for Ireland and a magic 10% or 12.5% for absolutely no effort whatsoever was seen as easy money. The tax avoidance is linked to the low corporation tax.

opinion guy · 21-11-2010 7:30pm

So on the one hand the IMF/EU trying to push us into increasing our corporate tax rate. On the other Google, intel and the likes telling us not to do it.

I reckon we want to make it cheaper to do business here. We need the googles and intels and their competitors of the world to come here and stay here.
I say we decrease the corporation tax to 9%. I also say we decrease employers PRSI and reform whatever other obstacles are in the way of businesses doing business.
We need to provide these companies new reasons to be here and make it easier on our small and medium size businesses.

And at the same time yes increase income tax until things recover. Make the budget cuts. Reform the bejeesus out of the banks - hell they are pracitcally nationalised anyway - just take em all over and cut the bejeesus out of them and have one national bank. Charge 1% tax on every transaction for the nations coppers.

I know not exactly in depth analysis here but I'm sick of here the same **** over and over. Can't someone think of some innovative ideas

Son Of A Vidic · 21-11-2010 7:37pm

Unfortunately we have now gone from being a state controlling banks, to a state being controlled by banks. The cap is as of now, officially in the hand. Brian has asked his IMF and ECB overlords for a bailout - the fcuking traitor!

PeakOutput · 21-11-2010 9:27pm

Terrontress wrote: »

Nope, there are countries with absolutely no activity here channeling their profits through the IFSC to pay our low rate of corporation tax. Obviously there is something in it for Ireland and a magic 10% or 12.5% for absolutely no effort whatsoever was seen as easy money. The tax avoidance is linked to the low corporation tax.

not according to the first article you linked which says

A firm can move its headquarters to Dublin and then, because of the extreme laxity of regulation, reincorporate itself in, say, Jersey or Liechtenstein. They thus escape not just from UK company law and taxes, but from Irish law and taxes as well.

US firms warn Irish over corporation tax!

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