Showing posts with label Irish tax haven. Show all posts
Showing posts with label Irish tax haven. Show all posts

Wednesday, May 6, 2020

6/5/20: Trump, Irish Pharma and Amazeballs Economics Stats


The Mondo Bizarro of Irish Economics:

Industrial production activity:


And yet, 
  • Irish Manufacturing PMI plummeted to 36.0 in April, from 45.1 in March, the lowest since March 2009
  • Irish Services PMI "continued its historic descent in April to 13.9, indicating the fastest decline in Irish service sector output in the 20-year survey history. The month-on-month decrease in the Index, at 18.6 points, was smaller than March’s 27.4-point plunge, but still far exceeded anything else in the series to date."


So actual industrial indices are showing booming Manufacturing across both turnover and volumes of production in March, yet PMI surveys showing collapsing activities. You really can't make this up. But, wait, worse: energy-generation is down, apparently, in volume by 0.2% y/y, yet 'modern sectors' activity is up 35.4%. Which points to the heroic efforts of the Irish economy to be the most energy-efficient in the Universe. 

Of course, the entire circus of Irish economic statistics is driven by the 'dotted-out' sectors in the industrial activity tables - the CSO's way of saying "you, peasants, don't need to know what multinationals are up to".

Amazeballs! Just in time for Mr President to muse about taking US pharma out of Ireland's tax [non] haven... https://www.rte.ie/news/business/2020/0504/1136374-pharma-trump-ireland-coronavirus-vaccine/

Tuesday, February 18, 2020

18/2/20: Irish Statistics: Fake News and Housing Markets


My latest column for The Currency covers the less-public stats behind the Irish housing markets: https://www.thecurrency.news/articles/9754/fake-news-you-cant-fool-all-of-the-people-all-of-the-time-on-property-statistics.

Key takeaways:
"Irish voters cast a protest vote against the parties that led the government over the last eight years – a vote that just might be divorced from ideological preferences for overarching policy philosophy."

"The drivers of this protest vote have been predominantly based on voters’ understanding of the socio-economic reality that is totally at odds with the official statistics. In a way, Irish voters have chosen not to trust the so-called fake data coming out of the mainstream, pro-government analysis and media. The fact that this has happened during the time when the Irish economy is commonly presented as being in rude health, with low unemployment, rapid headline growth figures and healthy demographics is not the bug, but a central feature of Ireland’s political system."

Stay tuned for subsequent analysis of other economic statistics for Ireland in the next article.

Wednesday, January 9, 2019

9/1/19: Corporate tax inversions and shareholder wealth


Our new paper "U.S. Tax Inversions and Shareholder Wealth" has been accepted for publication in the International Review of Financial Analysis:


The paper abstract:
"We examine a sample of corporate inversions from 1993-2015 by firms active in the U.S. markets and find that shareholders experience positive abnormal returns in the short-run. In the long-run, inversions have a deleterious effect on shareholder wealth. The form of the inversion and country-pair differences in geographic distance, economic development and corporate governance standards are determinants of shareholder wealth. Furthermore, we find evidence of a negative and non-linear relation between CEO total return and long-run shareholder returns."

Wednesday, September 21, 2016

21/9/16: Apple Tax Case: Not the Rate, the Loopholes


My column for the Village covering the Apple Tax fiasco: http://villagemagazine.ie/index.php/2016/09/not-the-rate-the-loopholes/


As it says on the 'tin' - the problem with Apple Tax is not the rate of corporate taxation set in law in Ireland (the 12.5% 'red line' rate), and not tax competition, nor the benign nature of tax exemptions that Ireland bestows on all companies, including the MNCs. The problem is that these competitive aspects of the Irish regime are simply not enough for the likes of Apple, which pursued and obtained access to exemptions that any ordinary company operating in Ireland cannot avail of.

Hence, the red herring of the arguments that the EU Competition ruling is an attack on Irish tax rate. It is, instead, a challenge to the asymmetric preferences granted in the past (and still in use during the ongoing phase-out period) to a handful of MNCs over and above domestic companies. Lest we forget, for decades, Irish State had no qualms operating an openly discriminatory taxation regime that treated foreign investment-backed companies differently from domestic companies. Lest we omit considering the present, Irish State still has no qualms taxing human capital of its residents at rates far in excess of those applying to physical and financial capital. Lest we fail to think about it, Irish State has no qualms asymmetrically allocating the burden of the crisis to Irish people over and above our banks, foreign investors, foreign bondholders and vulture funds.

I am one of the most vocal advocates of low (benign) taxation, flat tax, competitive regulatory regimes (coupled with robust enforcement) and other means for improving the functioning of the private markets. Always been one and remain. I support real investment in the economy, both foreign and domestic and believe in a level playing field for entrepreneurs and enterprises, alike. But, folks, the debate around Apple Tax is not about 12.5% tax rate and Ireland's tax autonomy, but about asymmetric nature of privilege.

Friday, July 15, 2016

15/7/16: A Booming Tax Haven? And Why Not?


Yes, we all know, Irish GDP in 2015 grew by an officially idiotic 26%. And yes, I am no longer gracing these illusionary / delusionary numbers with an attempt at any serious analysis. Doing so would be too big of an intellectual subsidy to the world of Irish officialdom. So here are two quite opposite (in their top-line accuracy) views of the same problem, that both, in the end, arrive at the same conclusion:

One view is from Fortune magazine http://fortune.com/2016/07/13/ireland-tax-haven-gdp-up/ where the headline says all you need to know

And another is from the Irish Times, that rows in with a more 'diplomatic' (aka - easier to chew by the Dons of the Irish Civil Service) discourse that is worth reading, despite it containing some pretty delusional (see my twitter stream from today on this) statements: http://www.irishtimes.com/business/economy/ireland-s-gdp-figures-why-26-economic-growth-is-a-problem-1.2722170#.V4i7kuyVTic.twitter.

In the nutshell, Fortune got it right at the top level, Irish Times got some beefier discussion of the details.

Friday, November 6, 2015

6/11/15: Allergan & Pfizer: More Happiness for OECD Tax Reformists


On foot of couple previous posts relating to Ireland-bound pharma inversions, here is an interesting link to the Bloomberg coverage of the Allergen shenanigans: http://www.bloomberg.com/news/articles/2015-11-02/a-pharmacist-s-dirty-socks-are-key-to-cutting-pfizer-tax-bill

With a nice chart to accompany:



Couple of links to my previous posts on the topic, covering


“We love your tax compliance theories, OECD!” Signed: Enda.



Thursday, November 5, 2015

5/11/15: Grifols: At Last in Irish Media Spotlight


Two weeks ago I wrote about the tax-linked Spanish pharma Grifols move to Ireland (see link here) at the time when all Irish media was gushing on about jobs and investment, forgetting - conveniently and patently - the pesky issue of Why did a Spanish company decided all of a sudden to relocate major operations and international billing into Ireland?

Well, good to know that with a good week-and-a-half delay, the Irish Times woke up to the problem, covering it (albeit with usual 'diplomatic' caveats) here: http://www.irishtimes.com/business/economy/grifols-move-to-ireland-hits-tax-and-political-buttons-1.2415243.

One important aspect indirectly highlighted by the Irish Times article on the matter is the problem we are having with 'Brand Ireland' - the brand that is now visible across Europe and the U.S., as well as Australia and Canada as being linked with 'beggar thy neighbour' economics.

This strategy for growth is behind our 'stellar out-performance' on fiscal side, as another Irish Times article highlighted here: http://www.irishtimes.com/business/economy/tax-surge-from-multinationals-not-a-one-off-1.2416002. Stay tuned, as I will be covering the matter of 'sustainability' of our revenue and growth side in light of tax inversions and tax-fuelled FDI inflows later this month.

Note: about that 'beggar thy neighbour' economic development model: here is a note highlighting effects of Irish tax policies on the UK current account: http://uk.mobile.reuters.com/article/idUKKCN0SS00320151103?irpc=932. I disagree with the view that the distortion of national accounts aggregates has little effect on the real economy in the UK. In my opinion, it erodes tax base in the UK and transfers the benefits of MNCs activity accruing to Ireland into cost to British taxpayers. Someone pays for our gains, because tax is a zero-sum, non-value-additive activity.

Wednesday, October 7, 2015

7/10/15: Two Reports, One Ireland, Hundreds of Billions in MNCs' Profits


Two interesting headlines in recent days brought back the memories of recent hot-flash splashes of news regarding Ireland's position as a corporate tax haven. These are:

  1. Irish response to the completion of the OECD review of the options for addressing the imbalances in the global corporate taxation systems: http://www.independent.ie/business/world/new-oecd-global-tax-proposals-target-corporation-tax-avoidance-31583371.html, and
  2. A less publicised in Ireland study from the U.S. estimating to volumes of corporate tax optimisation/avoidance with honourable place reserved for Ireland in it: http://www.reuters.com/article/2015/10/06/us-usa-tax-offshore-idUSKCN0S008U20151006
Have fun tying them together... but here are some choice quotes from the Citizens for tax Justice study referenced in the Reuters article:

"The Congressional Research Service found that in 2008, American multinational companies collectively reported 43 percent of their foreign earnings in five small tax haven countries: Bermuda, Ireland, Luxembourg, the Netherlands, and Switzerland. Yet these countries accounted for only 4 percent of the companies’ foreign workforces and just 7 percent of their foreign investments."

"For example, a 2013 Senate investigation of Apple found that the tech giant primarily uses two Irish subsidiaries — which own the rights to some of Apple’s intellectual property — to hold $102 billion in offshore cash. Manipulating tax loopholes in the U.S. and other countries, Apple has structured these subsidiaries so that they are not tax residents of either the U.S. or Ireland, ensuring that they pay no taxes to any government on the lion’s share of the money. One of the subsidiaries has no employees."

"Google uses accounting techniques nicknamed the “double Irish” and the “Dutch sandwich,” according to a Bloomberg investigation. Using two Irish subsidiaries, one of which is headquartered in Bermuda, Google shifts profits through Ireland and the Netherlands to Bermuda, shrinking its tax bill by approximately $2 billion a year"

A handy graph:
And another one:

Do note that per above table, Ireland is a conduit for the U.S. corporates' tax activities that amount to 42% of our GDP, while Switzerland (the country we so keenly like to tell the world is a 'real' tax haven) facilitates activities amounting to 'only' 9% of its GDP. 

You can read the entire report and see associated data here: http://ctj.org/pdf/offshoreshell2015.pdf

And while you are at it, here is a little Bloomberg piece from back 2014 on another whirlwind of activities: corporate inversions. http://www.bloomberg.com/news/articles/2014-05-04/u-s-firms-with-irish-addresses-criticized-for-the-moves What is notable in this article is that we are now having inversions of inverted companies, whereby new re-domiciling firms buy into previously re-domiciled companies to land themselves a PO Box presence in Ireland.

So back to that OECD reform proposal, therefore, that involves addressing the issue of the Base Erosion and Profit Shifting (BEPS) and is apparently of no threat to us in Ireland... You can try reading all the legalese here http://www.oecd.org/tax/beps-2015-final-reports.htm, or just give it a thought - tax optimisation by U.S. (only U.S.) MNCs via Ireland amounts to up to 42% of our GDP and likely less than 1-2% of the companies workforce is present here. How much of that 42% booked via Ireland is 'base erosion & profit shifting'? Ah, yes... let's not ask questions we don't want answered. Let's just have a breakfast at Tiffany's while repeating that "Ireland has a low rate transparent system and IDA insist on substance for any companies that it supports and I think those are the three pillars that supports our offering and I think Beps is about moving all international systems to a more transparent, clear system."

Don't laugh...


Wednesday, September 17, 2014

17/9/2014: Letting Go Ireland's Tax Arbitrage Model Will be a Painful Process

OECD has put forward their proposals for new international tax rules that, in theory, could eliminate tax-optimisation structures that have allowed many multinational companies (such as Google, Apple, Pfizer, Amazon, Yahoo and numerous others) to cut billions of dollars off their tax bills. The proposals were prompted by the G20 request issued last year and the measures announced this week have already been agreed with the OECD’s Committee on Fiscal Affairs (44 countries).

The proposals form just a part of the overall international tax reforms package called “Action Plan on Base Erosion and Profit Shifting” that will be unveiled in 2015 and is commonly known as BEPS.

There are two pillars in the current announcement.

The first pillar addresses only some of the abuses of dual-taxation treaties that generally aim to prevent double taxation of companies trading across the borders. The OECD is proposing to make amendments to its model treaty package that would prevent cross-border transactions from availing of tax treaty reliefs whenever the principal reason for the transaction is to avoid tax liability. This is a principles-based change, recognising the spirit or the principle of the dual-taxation treaties. De facto, the aim is to prevent the situation where preventing dual taxation leads to the scenario of dual non-taxation.

As with all principles-based reforms, the devil will be in the fine print of the actual regulations and economist's mind is not the best guide for sorting through these. From the top, were the measures to succeed, profits shifting via the likes of Ireland to tax havens will be if not fully stopped, at least significantly impaired. The result will be putting at risk tens of billions of economic activity booked via Ireland. In some cases, practically, this will mean that activity will be re-domiciled to other jurisdictions, where it really does take place. In other, however, it will become subject to tax in the country that stands just ahead of the tax haven in the pecking order of revenues flows. Ireland might actually benefit here, since our tax regime is still more benign than that offered in other countries.

To support the first pillar, however, the OECD also wants to restrict the amount of profits that a company can report in its intra-company accounts when these are based offshore. In effect this will put a cap on how much of their activity companies can attribute to the intra-company transactions or to force companies to redistribute profits generated by intra-company divisions across the entire group.

This is likely to undermine our ability to gain from re-allocation of revenues mentioned above. For example, suppose a company has a division based in Ireland that holds the company IP. The division is highly profitable, despite being very small: revenues it earns from other parts of the company operating around the world are covering the alleged cost of IP. If these profits were capped and/or required to be redistributed around the world to other divisions of the same company, the incentive for the company to retain its IP in tax optimising location, such as Ireland, will be gone no matter what our tax rate is.


The second pillar relates to the rules on tax residency. In particular, the OECD said that the existent rules that allow companies to operate facilities in a country without registering tax residency there should be abolished. The result, if adopted, will be to force companies like Google, Apple and Amazon to pay taxes on activities carried out in larger European states in these states by removing the channel for profit shifting to Ireland and other countries. The OECD is explicit about this by insisting that companies with 'significant digital presence' in the market should be forced to declare tax residence in that country.

Ireland's official response to this threat is that majority of MNCs trading from here do have significant presence here in form of large offices and big employment numbers. This is a weak argument for two reasons. One: Irish operations are relatively small for the majority of MNCs, compared to their global workforce. Two: majority of Irish operations of MNCs are sales, sales-support, marketing and back office. In other words, these support larger markets workforce.


The first pillar of the proposal is likely to impact sectors such as phrama and tech, where significant profits are generated by IP, trademarks and patents and these are often held off-shore in what are de facto shell subsidiaries not registered for tax purposes in the countries where actual activities of the company are based.

The second pillar is even more damaging to smaller open economies such as Ireland, because it mirrors the old EU proposal for CCCTB basis of corporate taxation. This pillar will likely push activities that are registered in countries like Ireland back into the countries where actual transactions take place, favouring larger economies over smaller ones.

For example, take a US company running sales support centre in Ireland servicing Spain. This activity is supplied by Spanish-speaking, largely non-Irish staff that has been imported into Ireland not because they are more productive here or have better human capital or face lower costs of employing, but because their presence in Ireland allows the company to book sales in Spain into Ireland. In fact, absent tax arbitrage, it would probably be cheaper for the company to employ these workers in Spain.

Back in 2013, Reuters reported that 3/4 of the largest US MNCs in tech sector channeled their revenues from sales across the EU into Ireland and Switzerland, avoiding reporting these activities in the countries where actual customers resided.

If OECD proposals are implemented to reflect the spirit of the reforms, the tax arbitrage bit of the abnormal return on locating labour-intensive activities in Ireland will be gone. This, by itself, may or may not be enough to put those jobs on the airplanes back to Spain, Italy, Germany, France and elsewhere. But if other countries start making themselves more competitive in labour costs, tax and regulatory regimes, defending Ireland's competitive proposition will be harder and harder.

This process - of erosion of Irish competitive advantage - will be further accelerated by the OECD proposals on tax data sharing and clearance which envisages massive increase in the data reporting burdens on the multinational companies. The cost of compliance and audits this entails will be large and increasing in complexity of companies' structures, leading to more incentives for them to rationalise and streamline their operations worldwide. A tiny market, like Ireland, much more efficiently serviceable via the larger economy like the UK, is unlikely to win in this race.


OECD proposals can have a pronounced effect on economic growth, employment and financial health of a number of countries, including Ireland, Luxembourg, Switzerland, and the Netherlands because the proposals will force MNCs to change their global operations structures and move jobs out of tax optimisation states toward the states where real activity takes place.

From Ireland's point of view, closing off of the loopholes can have a dramatic effect on the ground if it is accompanied by other trends, such as renewed corporate tax rate competition that can challenge our attractive headline rate of 12.5%, erosion of Irish regulatory and supervisory regimes competitiveness, increase in cost inflation and other inefficiencies. Instead of competing on being a tax arbitrage conduit, Ireland will have to start competing on the basis of real economic fundamentals, such as skills, public policy, public goods and services, private markets efficiencies, etc.

Ironically, the threat of the elimination of tax arbitrage opportunities can result in Ireland becoming more competitive and more successful over time, assuming the Governments - current and subsequent - play it smart.

Saturday, June 7, 2014

7/6/2014: Ireland's Questioned Tax Regime & Taoiseach's Magnets


Two articles this week highlight the on-going saga of Irish corporation tax regime:

1) One covering California's Governor comments made to our Taoiseach: http://www.independent.ie/irish-news/politics/california-would-be-an-independent-state-if-it-had-irelands-tax-regime-30336242.html

2) And another covering the EU probe being launched: http://www.businessweek.com/news/2014-06-05/eu-said-to-decide-next-week-on-probe-of-irish-dutch-tax-breaks

The topic is of huge importance to Ireland and I covered it on the blog continuously over the years, so no comment from me on these.

One quick point. In the Irish Independent report, there is a quote from our Taoiseach Enda Kenny that strikes me as absolutely out of touch with reality. Taoiseach said that Dublin is "becoming a magnetic attraction for young people from all over the world".

Granted, he said Dublin, not Ireland, but… the bit of facts in order: based on CSO data (latest through April 2013, available here: http://cso.ie/en/releasesandpublications/er/pme/populationandmigrationestimatesapril2013/#.U5Npz5SwJ9k), in 2011, 2012 and 2013 the largest group with net emigration from Ireland was… the young people: those of age 15-24, in 2009 and 2010 the largest group was 'youngish' people - aged 25-44 (same group was the second largest source of net emigration in 2011, 2012 and 2013.

So, dear Taoiseach, it might be worth revisiting that high school physics class where you were (presumably) taught about magnetic force and polarity...

Saturday, February 8, 2014

8/2/2014: Yahoo's Tax Base (err… Optimisation) is Moving to Ireland


Some slowdown in the tax haven news for Ireland recently and now a return back: http://www.reuters.com/article/2014/02/07/us-yahoo-europe-tax-idUSBREA160Y420140207

Yahoo! Inc will shift its European tax base to Ireland from Switzerland, due to mounting pressures on Swiss tax codes.

Aptly, French authorities, already rather irate about Irish tax loophole known as Double-Irish are fuming: http://www.irishtimes.com/business/sectors/technology/yahoo-move-a-blow-to-france-1.1682566

And of course our own leaders are denying… citing our tight to have a low tax rate... as if someone is challenging the rate. Nothing like 'deflect and deny' strategy at work.

You can track some of the top stories on Irish tax regime in the news starting from here:
http://trueeconomics.blogspot.ie/2014/01/2112014-no-special-ict-services-tax-but.html
or by searching this blog for 'tax haven'.


As an aside: 

There is an interesting dichotomy being played out across Irish policy and state institutions and the MNCs when it comes to the Double Irish loophole in the tax code.

The dichotomy is based on the argument that since Double Irish is not illegal, there is nothing wrong with it.

Let's quickly consider this argument: MNCs and the Irish State promote good corporate 'citizenship' via extensive deployment of and support for Corporate Social Responsibility programmes. So far so good.

Via Double Irish, the same MNCs with the blessing of the Irish State are at the same time reducing tax payments in the countries where the MNCs use public infrastructure, institutions and benefit from returns to social capital that are paid for, in large, by taxes. When this is done by locating actual value-added activities in a country, like Ireland, with low tax rate, there is a reduction in demand for the above resources in other countries (e.g. MNCs employees use these services and returns in Ireland instead of, say, France). But when it is done via loopholes and transfer pricing, the employees of MNCs are staying in the locations where the value-added is created (e.g. France), while their tax base is partially migrating to an arbitrary and unrelated to value-added activities jurisdiction (e.g. Ireland).

Thus, the function of these loopholes is to transfer resources from the activity-linked jurisdiction to Ireland. It is a zero sum game (no new value is created) and it is a beggar thy neighbour system (one jurisdiction gains at the expense of the other). In simple terms, whether it is legal or not, it is wrong.

So how come the executives of the companies and the State officials who so loudly extol the virtues of corporate citizenship so quickly forget the said virtues and run for the cover of legal codes when it comes to tax regime? Is ti because the price of doing things right is different from the price of doing things legally?

Thursday, October 24, 2013

24/10/2013: Irish Tax Regime Hits the News, Again...

News on the Corporate Tax Haven front for Ireland:




You can follow the trend of links to various articles on Irish corporate tax status and scandals from here: http://trueeconomics.blogspot.ie/2013/10/4102013-tax-haven-ireland-is-trending.html

Wednesday, October 2, 2013

2/10/2013: Low Tax, Free Market Economy that is Ireland...

Two stories from 'low tax' 'market economy' marvel that is Ireland:

http://www.independent.ie/business/personal-finance/latest-news/6000-a-year-the-hit-taken-by-families-29626588.html

and

http://www.telegraph.co.uk/technology/google/10345335/Google-under-fire-over-tax-arrangements.html

Now, I know, 'employer' etc... FDI... investing in Ireland... confidence... best little country to do business in... (or rather from, since most of the revenue discussed by google has virtually nothing to do with any business done in Ireland)... etc... etc...

At least spare us the insults of telling us we are under-taxed, low-tax, free market etc...

You can follow sets of links to the topic of Ireland as corporate tax haven from this post: http://trueeconomics.blogspot.ie/2013/09/1392013-another-month-another-look-into.html

Friday, September 13, 2013

13/9/2013: Another month, another 'look into' Irish tax rules

The regular readers of this blog are aware that I try to track the more important news items concerning Ireland's corporate tax policies. The links to these stories can be successively follows from here: http://trueeconomics.blogspot.ie/2013/08/1982013-tax-haven-ireland-in-2009-news.html

Two more items from today are worth listing in addition to the above:

  1. An article from the Irish Independent (http://www.independent.ie/business/irish/state-to-lift-lid-on-us-firms-secret-tax-rulings-29575810.html). Couple of selective quotes: "Details of how multinational companies' tiny tax bills are calculated are to be revealed by the State for the first time." And per usual disclosure that the Stockholm Syndrome patients must have: "Irish authorities have always insisted that there are no special tax deals for companies. Under Irish law, all businesses are supposed to be subject to the same laws and tax rates." Alas, as article notes: "This is the first time information about how Ireland taxes big corporations has ever been shared outside of the Revenue Commissioners and the companies themselves... Tax rulings are so confidential that even the Department of Finance is never given details by Revenue of individual cases." Ok, nothing to see there, folks, it's just so we like secrets, we've just decided to have our own Area 51... cause we like it that way, not cause there's any smoking guns or something...
  2. And so we don't really have to worry about out tax policies, as the Government says we shouldn't, here's a article from the Irish Times (http://www.irishtimes.com/business/economy/eu-finance-ministers-put-state-s-tax-regime-in-spotlight-1.1525893). More selective quotes: "Ireland is likely to face tough questions about its corporate tax regime when EU finance ministers gather today in Vilnius for a two-day meeting, following confirmation that the European Commission has begun a preliminary inquiry into the country’s tax practices." Repeat with me... there is nothing in these codes to worry about. "... Ireland, Luxembourg and the Netherlands will be under pressure to defend their tax structures amid claims that all three countries may have offered tax deals to specific companies in breach of state aid rules." Clearly all G7 nations, plus all EU nations are just being taken for a ride by someone, somewhere, who got it into their heads that there is something questionable going on with Irish tax system. In case you have doubts: "Dublin moved quickly yesterday to deny suggestions that Ireland had engaged in anti-competitive behaviour, with Taoiseach Enda Kenny insisting that the State was committed to a “transparent” system. Tánaiste Eamon Gilmore said that Ireland’s tax regime was open and “statute-based”. He said his understanding was that the inquiry was part of an “information-gathering exercise which is done from time to time”." Yes, that's right folks: 'from time to time' 'routine stuff'... Would Mr Gilmore - with his wisdom and perfect knowledge of the matters suggest to us when was the last time the 'routine' thingy 'gathering' such information was done? Or when was the last time G7 and G20 discussed Ireland's tax rule before 2011-2013? Just for the record, please, Mr Gilmore?

Monday, August 19, 2013

19/8/2013: 'Tax Haven' Ireland in the (2009) news again

I've been tracking articles relevant to the debate on the tax haven status of Ireland in relation to corporation tax for some time now.

Here's the last link which sets the chain of previous links on the topic:
http://trueeconomics.blogspot.it/2013/06/1062013-corporate-tax-haven-ireland.html

And since the above, I had couple of posts relevant to the subject:
http://trueeconomics.blogspot.it/2013/06/1662013-minister-in-northern-ireland-is.html
and
http://trueeconomics.blogspot.it/2013/07/2272013-g20-spells-out-squeeze-on-tax.html

Here are couple of most recent ones:

The Guardian covers 2009 case of Vodafone in two stories:
http://www.theguardian.com/business/2013/aug/18/vodafone-tax-deal-irish-office
http://www.theguardian.com/business/2013/aug/18/tax-vodafone-dublin
while the Tax Justice Network responds to the OECD Action Plan on corporate tax avoidance, explicitly identifying Ireland as a 'tax haven'
http://blogs.euobserver.com/shaxson/2013/07/19/press-release-response-to-oecd-action-plan-on-corporate-tax-avoidance/
and lastly the editorial in the EUObserver that also labels Ireland a 'tax haven':
http://blogs.euobserver.com/shaxson/2013/05/02/the-capture-of-tax-haven-ireland-the-bankers-hedge-funds-got-virtually-everything-they-wanted/

Note 1: The Guardian article references EUR67 million rebate on EUR1.04 billion in Vodafone dividends booked into Luxembourg. The dividends were paid on underlying revenues that were booked into Irish GDP and, thus, into our GNI (netting out transfers of royalties etc).These, in turn, required a payment of 0.59% of GNI-impacting activities to the EU Budget. While is is hard to exactly assess how much Irish Exchequer unnecessarily paid into the EU budget due to Vodafone activities, the amount is probably in excess of EUR 5 million and this compounds the transfers of EUR67 million referenced by the Guardian.


Note 2: I am not as much interested in the legal definitions of a tax haven (there are none and, thus, technically-speaking no country can be definitively labeled a tax haven) or in specific groups' definitions of the tax haven (the OECD definition is so convoluted, it virtually makes it impossible for any country with any global political clout - including that acquired via membership in the EU - to be labeled one, while the Tax Justice Network definition is broad enough to potentially include a large number of countries). I am concerned with the spirit of the concept - rent-seeking via tax arbitrage, and with the potential fallout from this in terms of distortions to economic development models and risks arising from same.

Note 3: A 'thank you' is due to a number of people who reminded me - in the context of the Guardian articles linked above - that Ireland charges a 25% corporate income tax on non-trading income. TY to    

Sunday, May 26, 2013

26/5/2013: Corporate Tax Haven Ireland Weekly Links Page

"Taxes are not up to Google," Schmidt reiterated. "If the international tax regime changes we will follow. But virtually all American companies have structures like this; this is how the international tax regime works. The fact of the matter is if we pay more tax in one area, we pay less somewhere else."

Thus spoke Eric Schmidt of Google (http://www.wired.co.uk/news/archive/2013-05/22/eric-schmidt-tax) and guess what: he is right. Google is not breaking the law. It is the law that allows for countries, like Ireland, to follow beggar thy neighbour economic policies and strategies.

The issue is not the low tax rate, but the fact that various loopholes allow companies operating - allegedly in Ireland - to channel revenues from other countries into Ireland. This is not about exports from Ireland, and it is not about low tax regime in Ireland. When an MNC books revenue earned somewhere else to Dublin, MNC is not break a law. Instead, Ireland is facilitating transfer of funds that relate to value added activity elsewhere to its own economy. This, in the nutshell, summarises the entire nature of Irish economic development strategy: take value added from somewhere else and appropriate it as Irish.


And in the spirit of usual weekly posts (see thread start on Irish Corporate Tax Haven here: http://trueeconomics.blogspot.ie/2013/05/1452013-corporate-tax-haven-ireland.html ): in this week, it is virtually impossible to list all Tax Haven Ireland links from around the world in a post, but here are some:

I shall stop there, for now...


Tuesday, May 14, 2013

14/5/2013: Corporate Tax Haven Ireland Weekly Links Page

Corporate Tax Haven Ireland in the news... again:
http://www.bloomberg.com/news/2013-05-13/europe-eases-corporate-tax-dodge-as-worker-burdens-rise.html

Update: Twitter in the news: http://www.telegraph.co.uk/technology/twitter/10056570/Twitter-CEO-resigns-as-UK-boss-after-accounting-fiasco.html
Note Irish connection.

Keep track of 'Tax Haven' view of Irish economic policies by following the links, starting here:
http://trueeconomics.blogspot.ie/2013/05/352013-not-week-goes-by-without-tax.html

Update 17/5/2013:
Three more stories, both relating to Google operations in Ireland:
http://www.independent.co.uk/news/business/comment/ben-chu-lets-not-get-bamboozled-by-google-in-the-global-tax-avoidance-debate-8620046.html
and
http://www.guardian.co.uk/technology/2013/may/16/google-told-by-mp-you-do-do-evil
and
http://www.independent.ie/business/irish/no-apology-for-low-tax-regime-as-google-debate-drags-on-richard-burton-29274843.html

I find it bizarre that Minister Bruton feels anyone on earth is asking for Ireland's apology. I think the point of this debate about the role of tax havens, like Ireland, is that policymakers around the world are seeking to close the loopholes through which companies engage in aggressive tax optimisation. Minister Bruton should focus on how Ireland can deal with this threat, as well as on how Ireland can develop a business platform (low tax is an important part of this platform) that actually operates on adding value here and not on beggaring our trading partners.

Minister Bruton's point about the need to create jobs in Ireland is nonsensical in the above debate. If we create jobs here on foot of value added in the Irish economy, then there is no problem with our MNCs activities globally, because low tax regime applies only to value added created here. Our trading partners have a problem with Ireland acting as a conduit for tax minimization whereby there is zero value added created in Ireland, but instead value added created elsewhere is booked via Ireland into tax havens. These forms of tax arbitrage do not create any jobs here in Ireland and generate no tax revenue here.

Friday, May 3, 2013

3/5/2013: Not a week goes by without a Tax Haven Ireland story?


More from the 'Tax Haven Island' newsflow, with a second story this week: "US firms paid an average tax rate of 8% profits in Ireland"
http://www.rte.ie/news/business/2013/0503/390280-us-corporations-tax/

I wonder if Michelle Obama's rumoured trip to Ireland will include a visit to such sunny tax haven locations as Barrow St, Dublin 2, or IFSC...


To track my posts on Irish Corporate Tax Haven, follow this link : http://trueeconomics.blogspot.ie/2013/05/252013-news-from-irish-tax-haven.html

Hat tip to:

Updated 08/05/2013: Two new links on the same subject:
and
Hat tip to: