Is a minimum international level of corporation tax a threat to Ireland?

is_that_so · 06-06-2021 5:17pm

Mullaghteelin wrote: »

It's been Ireland's main economic policy since the 70s and our gombeens are both very proud and protective of it. Any mention of the infamous words "Tax Haven" and our politicians get very defensive.
I remember learning about it for Junior Cert in the mid-nineties, and even then thinking there was something sleazy and risky about it. What was to stop companies from going somewhere else even cheaper? What if our own native companies were to do the same?
I equate gombeen politicians pulling strokes for their constituencies, at the expense of neighbouring counties, as the same mentality that celebrates bribing foreign companies here. There is no difference.
Our cousins in America have lost out on jobs that have ended up here instead, and then we tut-tut hypocritically when any US president hints at encouraging such companies back to the US.

They are really not looking at doing that but they do want the taxes paid. Our FDI model is solid and there's nothing any more nefarious about it than the ways other locations try to attract companies, even in the US. Over time it ceases to be solely about the inducements and the tax as the other benefits of locations evolve.

Chacha97 · 06-06-2021 5:22pm

is_that_so wrote: »

They are really not looking at doing that but they do want the taxes paid. Our FDI model is solid and there's nothing any more nefarious about it than the ways other locations try to attract companies, even in the US. Over time it ceases to be solely about the inducements and the tax as the other benefits of locations evolve.

The companies themselves force the countries to compete and offer the sweetheart deals. Even in US, for Amazon's 2nd headquarters there was a serious bidding war between states for it. They offered all they could tax incentives and even going as far as proposing to rename towns Amazon.

If we want them here we're gonna have to piss a few others off imo.

* not saying it's right by the way

hotmail.com · 06-06-2021 5:32pm

One doubts Biden will be getting a warm reception whenever he stops here following this news.

[Deleted User] · 06-06-2021 5:37pm

flexcon wrote: »

Surprised this hasn't been picked up on yet.

**The following take is a simplistic view. Pub talk alert so some details may be inaccurate**

Your example I think I is false. Let me explain roughly what I mean.

In short, Ireland chooses not to Tax profits made from other EU countries basically. We ignore them. So we already do what you suggested will become the norm.

So an iPhone sold in Germany via ADI(Apple distribution International) has its revenue and profits booked through the Irish company. Under EU law, to prevent double taxation, all profits from all of Apples European sales are booked under ADI. However, ADI owes licensing agreements back to ASI (Apple Sales international) so the revenue might be 200billion for Europe, but the profit is 10million since the iPhone was on licence from ASI. For example, ADI buys the rights of ASI for the iPhone at a rate of 500dollars per phone, and sells the phone for 501 dollars meaning the maximum potential profit per iPhone sold in EU is 1 dollar.( clever eh?)

So ADI makes a profit of 10million, and 12.5% of 10 million is 2.5million. Done.

It's that mad.

Other Notable points:
12.5% tax is applied in FULL on all Irish profits from Apple from IRISH sales only. This is how the Irish government is playing its cards with the EU commission. It's true, Ireland does not give preferential treatment to Apple. It taxes Apple 12.5% of Irish profits.

ASI is not tax resident in Ireland, so Ireland does not tax it. ASI is in Bermuda via a holding company in the Netherlands.
This is where the mad 0.02% comes up when officially we are taxing Apple 12.5%.

Source: In a previous life I worked in a partnership firm that helps with such matters and had this explained to me in the pub many times by the souls working in the deep end

How does the new law affect this? Is Bermuda forced (or is it expected to be forced) to tax at 15%. In which case transfer pricing disappears?

is_that_so · 06-06-2021 5:42pm

fvp4 wrote: »

How does the new law affect this? Is Bermuda forced (or is it expected to be forced) to tax at 15%. In which case transfer pricing disappears?

It now has to go to all of the OECD in the hope they'll sign up to it. Decisions on it will be by individual countries but there are no guarantees. OECD countries and partners represent about 80% of world trade and investment.

Chacha97 · 06-06-2021 5:43pm

[Deleted User] wrote: »

How does the new law affect this? Is Bermuda forced (or is it expected to be forced) to tax at 15%. In which case transfer pricing disappears?

Also thinking this. Is it irelands job to stop it getting to bermuda and redistribute it to all Eu states?

is_that_so · 06-06-2021 5:46pm

Chacha97 wrote: »

Also thinking this. Is it irelands job to stop it getting to bermuda and redistribute it to all Eu states?

It's more of a case of countries being able to tax MNCs in country at a rate at least 15% on earnings in that country and no, we'll have nothing to do with what Bermuda do.

shockframe · 06-06-2021 5:50pm

Chacha97 wrote: »

I am a bit conscious of intel. They seem to be falling behind quite a bit in the semi conductor race. AMD seems to be flying it, nvidia doing OK but intel seems to be lagging a bit.

I read a while ago a decent size investor in them was lobbying to outsource their chip manufacturing!

People talk about Intel as if it were still 2004-05. They have fallen behind in a big way to their rivals.

The talk of Tax Harmony can't be good from our point of view.

2.2 Billion could be optimistic from Paschal given how many other of our services are linked to the MNCs. We could lose out signigicantly for years and years if it comes to pass.

FWIW I reckon the MNC's will still find a way of avoiding tax. We could be looking at reports of it happening elsewhere whilst we have a mass exodus of work and a vicious return of emigration.

fly_agaric · 06-06-2021 5:50pm

NIMAN wrote: »

I appreciate we have iffy infrastructure and issues with getting people housed or places to rent, but it has had no effect on these MNCs locating here so far, why would they suddenly decide that Irelands infrastructure or housing situation is now an issue simply cos they are being taxed slightly more?

I would question this. It's not been enough to make them leave or even to make them stop growing their workforces here but it must cost them money and it definitely makes Dublin (as our only 'real' city and main place in Ireland these companies are located) less attractive for people that work in them. Not that our politicians seem to have cared much though. I suppose only thing that would have cut through as regards poor state of Dublin in particular compared to competitors is some of the companies reducing head count or pulling out. A reduction in Ireland's tax advantages will be another negative mark against Dublin vs other cities around Europe.
Politicians and the public here have been pretty shortsighted about the tax planning by these MNCs and seemed to think it could just go on forever with Ireland being a key component & benefitting from it.
Though the politicians here have always said they were fully behind the OECD /international process while being against any unilateral EU measures. I just don't think they ever expected much to come out of of it...!

Dempo1 · 06-06-2021 5:53pm

ancapailldorcha wrote: »

https://www.bbc.co.uk/news/politics

I think it's fantastic that some progress has been achieved. These companies have, in my opinion, been dodging their fair share of tax for far too long now. The covid-19 pandemic only threatens to worsen inequality so hopefully, raising more money from these corporations will yield long term benefits.

I'm hoping that Ireland signs up to this agreement as well. Ireland's corporation tax rate is not far below the 15% rate at 12.5%. I don't think there's likely to be any damage to Ireland should it sign up as the country is a well established base of services, high quality agriculture and manufacturing in both engineering and pharmaceuticals. I think the country has much more to offer than simply a mere tax haven.

From the article:

Hopefully, this will offset or help to mitigate some of the financial damage caused by the pandemic and lead to a new source of sustainable income for governments.

I think it won't make a jot of a difference, as it is most multi nationals paying nowhere near the current rate as it is. Pascal's kite flying regarding loosing €2 billion in yearly corporation tax is just farcical. If he spent as much time chasing the tax actually owed than he does kite flying the state coffers would look a lot healthier. Kind of Ironic this news comes on the same week news broke Microsoft paid little or no tax on 100"s of Billions in profit.

RandomViewer · 06-06-2021 5:56pm

[Deleted User] wrote: »

You’re confusing corporate tax with VAT or sales tax.

The distribution business will be registered here and will be paying 12.5% corporation tax on any profits, each dealership will be doing the same, VW don't own any assets in Ireland as far as I know

Kermit.de.frog · 06-06-2021 6:01pm

Dempo1 wrote: »

I think it won't make a jot of a difference, as it is most multi nationals paying nowhere near the current rate as it is. Pascal's kite flying regarding loosing €2 billion in yearly corporation tax is just farcical. If he spent as much time chasing the tax actually owed than he does kite flying the state coffers would look a lot healthier. Kind of Ironic this news comes on the same week news broke Microsoft paid little or no tax on 100"s of Billions in profit.

But how much income and other taxes did these companies pay given they employ so many people?

It's not correct that they pay no tax here. They are paying more corporation tax as well than ever actually.

RandomViewer · 06-06-2021 6:06pm

Chacha97 wrote: »

I believe that there is a big need for Ireland to produce their own technology companies. We can't simply rely on these large foreign tech companies imo.
A lot of the work done here is quite administrative I feel, I could be totally wrong.
I've seen in my own work, granted nothing to the size of these hundreds of billions market capped companies but none the less they are outsourcing the software jobs to Eastern Europe and paying them for specific tasks rather than being tied for a salary.

In the point of English speaking, when I was Germany on exchange (secondary) it was quite telling that all of them could speak good English. Even the less bright in the classes could speak english to a quite good standard.

Likely they'd get no support from government , they'd rather doff the cap to anyone from somewhere else than give their own a hand up

listermint · 06-06-2021 6:07pm

Kermit.de.frog wrote: »

People also tend to overlook that Ireland is in a continuous tug of war with Israel over new Intel investments in their fab facilities. Safe to say looks like one bow is going from our arrow.

The other concern is you could have longer term wind downs and exits. In other words they keep what they have but let operations naturally diminish through no new significant investments. A kinder way possibly but same result.

I struggle to see, given the many problems the country has, our infrastructure deficits and quality of life issues how we are going to compete if forced to on a level playing field with well run and better cities in Europe on a like for like basis.

How many times do you have to be pulled up on your quality of life nonsense. On all indicators internationally Ireland performs hugely positively on quality of life. Your consistent baseless negativety that completely contracts the numerous international studies on this subject is astounding.

FreshCoffee · 06-06-2021 7:10pm

listermint wrote: »

How many times do you have to be pulled up on your quality of life nonsense. On all indicators internationally Ireland performs hugely positively on quality of life. Your consistent baseless negativety that completely contracts the numerous international studies on this subject is astounding.

On the annual German InterNations Expat survey for 2021, Ireland is in the bottom 10 for the cost of living (56th) and the quality of life (50th). It's based on 12,000 respondents from 59 destinations.

https://cms-internationsgmbh.netdna-ssl.com/cdn/file/cms-media/public/2021-05/2021-05-18_Press_Release_Expat_Insider_2021_Ireland.pdf

Dempo1 · 06-06-2021 7:24pm

Kermit.de.frog wrote: »

But how much income and other taxes did these companies pay given they employ so many people?

It's not correct that they pay no tax here. They are paying more corporation tax as well than ever actually.

I'm certainly not doubting these companies offer amazing employment but I have to wonder what motivates their presence here and I fear its that they pay little corporation taxes, I know the double irish loop hole also gone but with years offered to these companies to conjure up other schemes. I guess the proof will be in the pudding if these companies start pulling out.

Kermit.de.frog · 06-06-2021 7:40pm

Dempo1 wrote: »

I'm certainly not doubting these companies offer amazing employment but I have to wonder what motivates their presence here and I fear its that they pay little corporation taxes, I know the double irish loop hole also gone but with years offered to these companies to conjure up other schemes. I guess the proof will be in the pudding if these companies start pulling out.

The question is, is that the hill of moral righteousness you'd like the country to die on because if they pack their bags there is nothing here and many people will have to emigrate.

I can guarantee other countries will eat our lunch when given the chance. They'll have no such qualms.

fash · 06-06-2021 7:45pm

[Deleted User] wrote: »

So one then, and none in Europe yet.

I don’t think beaches nearby is a big reason for IT companies to move somewhere, on the hope that it would attract workers.

There is more than 1 city in California; there are more continents than Europe and the US, you asked and focused on beaches (for whatever reason) - and now say it is unimportant.
All Ireland/Dublin will have is a certain amount of "clustering" effect hanging over. Quality of life (e.g. walkability of city), bang for your tax buck, cost of living, infrastructure, cost of accommodation are all relatively poor at best.

fash · 06-06-2021 8:19pm

correct horse battery staple wrote: »

I highly doubt, I work in software engineering for an mnc, we literally can’t find people in those locations, there is a very real lack of talent in Europe, ironically enough most have relocated here over years

Not that it matters anymore we switched to recruiting remote with option come office, only criteria is that they in Ireland and an Eu citizen (or have stamp 4)

I will certainly bow to your knowledge then- thanks.

jcon1913 · 06-06-2021 8:33pm

[Deleted User] wrote: »

You haven’t travelled much in Germany. Holland is fairly English speaking alright. To live in either long term you need Dutch or German.

Random question- if you move with your family to either The Netherlands or Germany will your kids be able to go to “English” school and learn in English- like in Irish schools? I think that’s a factor for execs who have to decide where to locate European headquarters and obviously Ireland has an edge in that respect

Christy42 · 06-06-2021 8:40pm

jcon1913 wrote: »

Random question- if you move with your family to either The Netherlands or Germany will your kids be able to go to “English” school and learn in English- like in Irish schools? I think that’s a factor for execs who have to decide where to locate European headquarters and obviously Ireland has an edge in that respect

Not sure how common they are but I went to an international school for 2 years as a kid. Primary language was English. I remember we split off for extra English/ Danish as required.

Random mix of kids there from a load of different countries.

jcon1913 · 06-06-2021 8:50pm

[Deleted User] wrote: »

Ask anybody from most of India living in Ireland about the weather. They love it.

Anyone from countries where air con can be life saving love Irish weather

Likewise anyone that endures months of snow in their home country

ArmaniJeanss · 06-06-2021 9:34pm

Chacha97 wrote: »

In the point of English speaking, when I was Germany on exchange (secondary) it was quite telling that all of them could speak good English. Even the less bright in the classes could speak english to a quite good standard.

I work with loads of Europeans (Central, South and East, all over) and would agree that they all speak excellent English, so in theory us being primary speakers doesn't give us an advantage.

However where I believe we have an advantage is that their English tends to be very formal and often limited to business - they can discuss spreadsheets, GL Entries, bonded warehouses, leasing terms etc all day.

But tell a joke that relies on double entendres or word confusion, put them in a social setting, use some (transatlantic) slang, throw in a few cultural references about TV & films, gossip a bit about office events in couched terms - suddenly they are understandably completely lost.
I think our ability to do all these things with US clients gives us a decent advantage over those for whom English is a second or third language.

[Deleted User] · 06-06-2021 9:38pm

ArmaniJeanss wrote: »

But tell a joke that relies on double entendres or word confusion, put them in a social setting, use some (transatlantic) slang, throw in a few cultural references about TV & films, gossip a bit about office events in couched terms - suddenly they are understandably completely lost.

A person who speaks English as a foreign language will be understood more readily by a room full of people who speak English as a foreign language while the English native speaker addressing the meeting will leave the call or room thinking everyone in the call understood them perfectly.

Geuze · 06-06-2021 11:34pm

FreshCoffee wrote: »

So for example if Apple (based in Ireland) makes profits on sales to Germany, today Apple pays corporate tax to Ireland on the profits from those sales and those taxes are returned to the Irish Exchequer. In the future we will hand over those corporate taxes to the German Exchequer (at the German corporate tax rate). We will only keep the corporate tax on Apple profits from their sales within Ireland which for these large companies is tiny compared to their overall sales.

This explains the Apple structure in Ireland until 2014:

http://economic-incentives.blogspot.com/2016/03/apple-sales-internationalby-numbers.html

This explains the structure after 2015:

http://economic-incentives.blogspot.com/2018/01/what-apple-did-next.html

enricoh · 06-06-2021 11:43pm

hotmail.com wrote: »

America has screwed Ireland over with this policy.

Bring back Donald, all is forgiven!

Geuze · 06-06-2021 11:43pm

listermint wrote: »

No offence meant but you have been peddling this nonsense for years in various threads. It's rubbish, it's waffle opinion based on nothing more than your distaste for the country you live in.

We do have an educated workforce.
We do have an English speaking workforce
We have consistently made it into top places to live in the world based on various metrics.
We consistently measure as a productive place based on workforce.
Ireland is actually a good place to do business and we have skills sets that support international business making connections.

You have no basis in making your claims and you have to be called out on it . It's not on.

I agree, more or less, with most of this, BUT, the rents / property costs in cities has got too high.

Geuze · 06-06-2021 11:45pm

Dempo1 wrote: »

Kind of Ironic this news comes on the same week news broke Microsoft paid little or no tax on 100"s of Billions in profit.

That article referred to a company in Bermuda.

Also, that article referred to more profits than Microsoft actual earn in a year.

Poor reporting.

ineedeuro · 06-06-2021 11:55pm

This is a disaster for ireland, not just the thousands working in these companies but the farmers supplying the canteen, the catering companies, security etc

The UK said right after Brexit they wanted to rival ireland with their own low corporate tax rate. Imagine us Paddy’s having a Worldwide centre of IT excellence. Can’t be having that

This was always going to come around and Irish people really need to look at themselves if they are celebrating this as a win. Do people just want to see ireland back in the 80s with a huge amount of the population on social welfare? People leaving home as soon as finished school to get jobs in Uk/US etc? Is that really what people want in ireland?

Ireland should tell the G7 to go......themselves. This is just a money grab, they don’t care about right or wrong. As soon as ireland say they agree to this the UK, France etc etc will all approach these companies direct and offer better terms to get them to bring the employment to their country. Imagine Boris going into next election saying he had got 20,000 IT jobs out of ireland?

How does anyone see this as a win?

y0ssar1an22 · 07-06-2021 12:17am

our CT is our CT rate. if other counties have a problem with that, thats fine. lower yours.

and i hope ta **** pascal et al dont bend over and take this.

Is a minimum international level of corporation tax a threat to Ireland?

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