International Corporate Tax

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The international tax principles underlying the taxation of corporate income are attracting more and more attention.  Ireland, in particular, has come under the spotlight.  There is merit to some of the complaints made but most of it is little more than political posturing.  Few substantive proposals are being made.

The latest is a report prepared for US Senators Levin (D) and McCain (R) which includes a very interesting appendix on Apple.  The appendix opens:

“The Apple case study examines how Apple Inc., a U.S. corporation, has used a variety of offshore structures, arrangements, and transactions to shift billions of dollars in profits away from the United States and into Ireland, where Apple has negotiated a special corporate tax rate of less than 2%.”

The submission by Apple to today’s Senate hearing is here.

There are no special corporate tax rates in Ireland.  There are rules (which apply to all companies) on how taxable income is calculated to determine the figure to which the 12.5% rate is applied.  This rate is applied to taxable income not gross profit.

Royalty payments for intellectual property licenses are one of the largest differences between gross income and taxable income for some companies.  For example, if a company with a gross income of A incurs a trade charge of B for royalty payments then taxable income (to which the 12.5% rate is applied in Ireland) is A minus B.

Effective tax rates can be calculated using gross profit as the base but tax is actually charged on taxable income.  Aggregate figures from the Revenue Commissioners show that the effective tax rate in Ireland on the gross income of companies in 2010 was 6.0%.  However, the effective tax rate on taxable income was 10.3%.  The important thing is how taxable income is calculated not “special” rates.

Are royalty payments on intellectual property licenses a legitimate business expense? Yes.  Are there issues in how the prices for such licenses are set? Yes.  Are the rules for setting these prices individual to each country? No.

The report accuses Ireland of being a tax haven on the basis that the effective tax rates on Apple’s gross income are very very small.  They are.  But this is achieved because the trade charges on intellectual property are very very large.  The intellectual property (which was not created in Ireland) is held somewhere else and subject to tax there.

The intellectual property used by Google is held by a Bermuda-resident company and its income is subject to the 0% rate of corporation tax there.  The interesting thing in the Apple case is that the Levin-McCain report suggests that the holding company is not tax-resident anywhere!  These profits will not be subject to Irish tax but should be tax-resident somewhere.

The main problem from a US perspective is when these companies are subject to the 35% tax on corporate profits.  This has to be paid when global profits are repatriated to the US.  From a US perspective it doesn’t really matter how much tax is paid in Ireland, Bermuda or the like.  The US wants its 35% share.

The problem is that companies are indefinitely deferring this tax by holding the money offshore and not repatriating it.  The money will be subject to the 35% rate when it is repatriated but the companies refuse to do so. 

Apple has more than $100 billion of cash (mostly held by subsidiaries outside the US) but recently issued $17 billion of bonds to engage in a share-buyback to return some of that cash to shareholders.  Apple didn’t use its own cash because that would have meant repatriating it and incurring the 35% tax.  This key concern of the US has very little to do with Ireland.

The provision that allows these companies to defer their US corporation tax is the “same country exemption” for Subpart F Income in the US tax code.  The scheme for royalty income works because of this exemption granted by the US rather than any provision in the Irish tax code.  The body of the Levin-McCain report discusses the “same country exemption” and a useful, short summary of Subpart F Income is here.

International taxation is hugely complex and should not be reduced to simple sound-bites but I can’t resist.  Ireland is not a tax haven.

263 Responses to “International Corporate Tax”

  1. Rob S Says:

    We could do with that being published by one of the broadsheets over the next few days.

  2. brian lucey (@brianmlucey) Says:

    “Ireland is not a tax haven”
    Well, the US Senate says otherwise. Loudly and clearly. Many many times.

  3. brian lucey (@brianmlucey) Says:

    http://www.ft.com/intl/cms/ab635df2-c18c-11e2-b93b-00144feab7de.pdf
    Page 3 : “A number of studies show that multinational corporations are moving
    “mobile” income out of the United States into low or no tax jurisdictions, including tax havens such as Ireland, Bermuda, and the Cayman Islands” This links to a longer study
    and as they say … et seq
    We may think we are not a Tax Haven. We may even not be one. But that hardly matters if those that count think we are. Now why would they think that?

  4. brian lucey (@brianmlucey) Says:

    http://www.ft.com/intl/cms/ab635df2-c18c-11e2-b93b-00144feab7de.pdf
    Page 3 : “A number of studies show that multinational corporations are moving
    “mobile” income out of the United States into low or no tax jurisdictions, including tax havens such as Ireland, Bermuda, and the Cayman Islands” This links to a longer study
    and as they say … et seq
    We may think we are not a Tax Haven. We may even not be one. But that hardly matters if those that count think we are. Now why would they think that?

  5. seafóid Says:

    Tax havens are coming back into the news in a big way. Amazon in the UK pays very little tax and same with Google. Loads of waffle about work that is actually done in Dublin, as if. The UK has a massive deficit and the people are sick of tax dodging multinationals.

  6. rf Says:

    As has been hinted at above, the truth really doesnt matter, and trying to get US senators to stop talking in soundbites is a futile endeavour. Politics always wins over reality sure

  7. DOCM Says:

    A contribution of exceptional value in the present heated political atmosphere both in the UK and the US.

    The Tánaiste just now!

    “They are not issues that arise from the Irish taxation system,” Tánaiste Eamon Gilmore ahead of a European Union meeting in Brussels . “They are issues that arise from the taxation systems in other jurisdictions and that is an issue that has to be addressed first of all in those jurisdictions.”

    Ireland is not a tax haven but it does have a very attractive company taxation regime relative to other countries.

  8. seafóid Says:

    http://www.guardian.co.uk/technology/2013/may/15/amazon-tax-bill-new-questions

    “Meanwhile, job adverts posted this month on the careers page of Amazon.co.uk invite application for scores of roles in the UK. Among them is a vacancy for a senior financial analyst. “Based at our UK Head Office in Slough, Amazon seeks a Senior Financial Analyst to support Amazon UK’s Merchant Services business,” the advert said.
    “This Senior Financial Analyst will help establish revenue targets, lead pricing analysis and recommendations, generate competitive analysis and support key operations metrics and goals.”
    The Slough office is also this month looking for applicants to its MBA leadership development programme in the UK. “From day one, you will be given ownership of large, complex problems in various areas of our business,” the advert states.
    Despite booking a tax charge of just £3.2m in its UK accounts for 2012, Amazon received £2.5m in government grants as well as significant tax breaks for building new warehouses. It opened a new site at Hemel Hempstead in September.
    The company would pay much more tax if its sales were booked through a UK business but they are all routed through Luxembourg. Altogether it has taken £12bn from online shoppers in the UK in the last four years.
    Amazon avoids paying many tens of millions of pounds in tax because it tells the taxman its main UK-focused business, which collects revenue from British shoppers but is incorporated in Luxembourg, cannot be classed as a “permanent establishment” in Britain.

    Amazon has a permanent establishment in the UK that operates the warehouses and provides “corporate support services” to the wider group. Despite employing 4,191 staff – and an additional 10,000 temporary workers to cope with the Christmas rush – it had a tax bill for 2012 of just £3.2m because British shoppers are invoiced from Luxembourg.
    Margaret Hodge, chair of the public accounts committee, said: “My committee has real concerns about the extent to which companies like Amazon are stretching the rules in order to avoid paying their fair share in tax.
    “By any measure of common sense Amazon appears to have a proper established presence in the UK, and that there is a discrepancy between some of the evidence in this report about its activities in the UK and what the committee was told by Amazon when they appeared before us last year. We will now consider whether we need to recall them to explain that discrepancy.”
    Six months ago Amazon told Hodge’s committee: “All the strategic functions for our business in Europe [including the UK] are based in Luxembourg. That could be our retail business, our third-party business, our transportation teams, our customer service, HR, finance.”
    UK staff, he added, were only offered “support” to these activities.
    Hodge has recalled the UK boss of Google and the head of tax at Ernst & Young, the accountancy firm which advises Google and Amazon, to answer new questions raised about the search firm’s low tax bill. The recall was prompted by a Reuters investigation which focused on Google’s claim its UK-revenues were not part of a taxable British business.”

  9. Fiatluxjnr Says:

    Apple International Sales had a “turnover” of 74b from 2009-2012. Does this mean that our export figures are overstated by this amount?

  10. Michael Hennigan - Finfacts Says:

    @ Seamus Coffey

    Lets not quibble about what’s a ‘tax haven’ and in 2009 the Dutch were upset when the Obama administration labelled the Netherlands a tax haven.

    Using techniques with nicknames such as the “Dutch Sandwich,” multinational companies routed €10.2tn in 2010 through 14,300 Dutch “special financial units,” according to the Dutch Central Bank. The Netherlands hosts 20,000 mailbox companies.

    Lets say tax haven activities tend to be concentrated in some countries.

    You say: “There are no special corporate tax rates in Ireland.” but the panel reports:

    Apple told the Subcommittee that, for many years, Ireland has provided Apple affiliates with a special tax rate that is substantially below its already relatively low statutory rate of 12 percent. Apple told the Subcommittee that it had obtained this special rate through negotiations with the Irish government.

    It also appears that Apple was facilitated in using what it regarded as stateless Irish companies as resident companies for booking foreign income.

    No tax filings anywhere in respect of Irish companies with billions worth of transaction. It makes Anglo Irish Bank seem like Noddy’s playtime.

    Senator Carl Levin’s record in particular is not characterised by ‘political posturing.’

    Irish policy makers have for long assumed that the veto on tax harmonisation could protect Ireland’s position and there is no threat to the corporate rate but with little gain for itself, Ireland has facilitated massive tax avoidance.

    Some politicians maybe posturing but at a time of cuts, falls in income or stagnation for decades, coinciding with stock market records and a growing imbalance between capital and labour, people are right to protest.

    Profit margins were at their highest level in 2010 since the mid-1960s, according to Michael Cembalest, the chief investment officer of JP Morgan Chase. He said: “There are a lot of moving parts in the margin equation,” but “reductions in wages and benefits explain the majority of the net improvement in margins.” This decline in wages and benefits, Cembalest calculated, is responsible for about 75% of the increase in major US corporations’ profit margins.

    At a personal level, Europe has had a strange toleration for tax havens that facilitated rich citizens of neighbouring countries to engage in criminal activity.

    At company level, tax authorities are much more likely to hold local companies to account than big international companies. The accounting transactions are also much more likely to be termed false accounting than if a big name company was involved.

    Besides in Ireland, the huge rise in tax-related revenue diversions has given a false sense of economic improvement: today an article in the Independent begins: “IRELAND’S booming exports are seen as the main evidence that our bailout is the only one that can be called a success.”

    The real facts show that this claim is a fairytale — but don’t underestimate that market.

    Dell closed its Limerick plant in Ireland in 2009 and its Polish output makes it Ireland’s biggest goods exporter today.

    Eric Schmidt, Google’s executive chairman, on Sunday gave support to corporate tax reform and he correctly said that it was the politicians who make the laws. He didn’t note that in Washington DC’s system of legalised bribery, big companies like his, have significant power.

    If the US changed its tax system from a worldwide one, to a territorial one, the only way it could protect its tax base is to set minimum tax rates for low-tax jurisdictions such as Ireland.
    Keep in mind about Ireland’s dual economies, full-time jobs in the exporting sectors are at a 13-year low; almost two-thirds of private sector workers are in non-exporting firms.

    @ Fiatluxjnr

    Apple International Sales had a “turnover” of 74b from 2009-2012. Does this mean that our export figures are overstated by this amount?

    Yes

    We don’t know how much they leave in Ireland at a year end as the accounts have been shielded from public view since 2005.

  11. Michael Hennigan - Finfacts Says:

    The indigenous situation is grim and little serious attention is being given to it.

    Not only do companies like Apple and Google pay little corporate tax, it’s likely given the geographical span of their services, that a big number of the new subsidised hires in recent years came from overseas.

  12. Fiatluxjnr Says:

    @ MH
    Thanks. Interesting how we “legitimately” inflate the numbers. So it seems the export “surge” is a mirage.

    But this is troubling..
    ““The Apple case study examines how Apple Inc., a U.S. corporation, has used a variety of offshore structures, arrangements, and transactions to shift billions of dollars in profits away from the United States and into Ireland, where Apple has negotiated a special corporate tax rate of less than 2%.”

    If this is an accurate reflection of Apple’s submission to the US Senate then someone is being economical with the truth.
    Porkys to the Senate are frowned upon. Better plead the fifth.

  13. Peter Stapleton Says:

    The problem is that different countries (Ireland and the US, for example) have different definitions of ‘resident’ for tax purposes.

    Apple avails of the anomaly that a company can be resident in Ireland for some purposes, in the US for others, and nowhere for tax liability.

    Here’s how the New York Times summarizes the ploy:

    “Because the United States bases residency on where companies are incorporated, while Ireland focuses on where they are managed and controlled, Apple Operations International was able to fall neatly between the cracks of the two countries’ jurisdictions.”

  14. eamonn moran Says:

    From the NewYork Times-”Apple Operations International, which is incorporated in Ireland — where Apple had negotiated a special corporate tax rate of 2 percent or less in recent years — but keeps its bank accounts and records in the United States and holds board meetings in California.

    Because the United States bases residency on where companies are incorporated, while Ireland focuses on where they are managed and controlled, Apple Operations International was able to fall neatly between the cracks of the two countries’ jurisdictions.”
    So the company is incorporated in Ireland but is not resident for tax purposes in any??
    So it wouldn’t be included in the revenues figures above for gross or taxable income presumably?
    When does legitimate avoidance become evasion? When the company is not even resident to pay tax in any country?

    2003 was a special year for Ireland.
    It was the year that our corporate tax rate as a % of the total tax rate began to decrease (well before the recession kicked in) This was a tipping point where Ireland became less attractive low tax economy and became more of an enabling conduit for global tax avoidance.

    Still calls of fowl play from Washington are a little hard to take.
    The funny thing about being the major superpower is you often see the splinter in the eyes of others while ignoring the planks in your own.
    That’s how you get to remain the superpower I guess.

  15. colm mccarthy Says:

    “….Apple has negotiated a special corporate tax rate of less than 2%”

    according to the US Senate committee.

    Someone (the Revenue Commissioners?) needs to clarify quickly whether rates of corporation tax in Ireland are ‘negotiated’. News to me.

  16. Ossian Smyth Says:

    Another clear and coherent post from Seamus Coffey. His blog is also excellent, full of coherent, objective analysis:
    http://economic-incentives.blogspot.ie/

    Royalty payments for intellectual property, such as branding and search algorithms, paid to foreign tax domiciled companies are counted as imports and subtracted from Irish GDP. As Seamus points out, this intellectual property was neither developed here nor owned by Irish companies so it’s not part of our taxable value-add.

    Computer services and IP royalty exports and imports are reported by the CSO.

    The question is whether the tax treatment of royalty payments is any different in Ireland from other European countries. Starbucks came to the attention of the UK press recently for not paying tax on gross income. Clearly the Starbucks branding and formula is worth a lot to a coffee shop so it is natural that rental payments for using these imported intangibles leaves the country.

  17. Seamus Coffey Says:

    @ Michael Hennigan,

    I agree completely about Carl Levin. This submission he made to the same committee last September on “Offshore Profit Shifting and the U.S. Tax Code” is almost universally excellent.

    http://www.hsgac.senate.gov/download/?id=31551efc-5f77-4e27-af5e-4d590de662bd

  18. Fiatluxjnr Says:

    This 2% could be a problem…
    As reported by NYT..
    “Atop Apple’s offshore network is a subsidiary named Apple Operations International, which is incorporated in Ireland — where Apple had negotiated a special corporate tax rate of 2 percent or less in recent years — but keeps its bank accounts and records in the United States and holds board meetings in California

  19. BeeCeeTee Says:

    “2003 was a special year for Ireland.
    It was the year that our corporate tax rate as a % of the total tax rate began to decrease (well before the recession kicked in) This was a tipping point where Ireland became less attractive low tax economy and became more of an enabling conduit for global tax avoidance.”

    Not entirely accurate. 2003 is when the Corporation Tax rate on most FDI activities was raised from 10% to 12.5%, as part of the process of equalising the CT rate across all types of enterprise.

  20. Seamus Coffey Says:

    @ colm,

    Revenue spokesperson:

    Revenue does not do special tax rate deals with companies. There is no special extra low corporation tax rate for multinational companies.

    All companies in Ireland pay the standard 12.5 per cent rate on their trading profits arising in Ireland and they pay a corporation tax rate of 25 per cent on their Irish non trading income.

    As reported here (also with comments from the DoF).

    http://www.thejournal.ie/apple-ireland-tax-918635-May2013/

  21. Fiatluxjnr Says:

    @Seamus Coffey

    All companies in Ireland pay the standard 12.5 per cent rate on their trading profits arising in Ireland”

    Rte reporting at 1… Apple tax rate 0.05%…they helpfully noted that RPT is 0.18%.

    The Revenue didn’t say what tax they pay on profits arising elsewhere. Interesting that the rate is 25% on non trading income…obviously they don’t hold their vast cash hoard in Ireland. That would yield a tidy sum.

    Should be a good ding dong at the Senate hearing today.

  22. Economic Refugee Says:

    Jesse Drucker of Bloomberg:

    “Meanwhile, Ireland, already an attractive destination for multinational companies, is making it even easier for them to avoid taxes.

    Last year, for example, Irish revenue authorities agreed to let Google make billions of dollars in royalty payments directly to a Bermuda subsidiary, helping to cut the company’s tax bill by at least $2 billion a year, according to U.S. and overseas securities filings. Previously, Google had routed those payments through a shell company in the Netherlands to avoid a 20 percent Irish withholding tax on payments destined for island havens. According to a person with knowledge of the arrangement, Ireland agreed to accept an additional tax well below 20 percent in exchange for the favorable treatment.”

    http://www.bloomberg.com/news/2013-05-13/europe-eases-corporate-tax-dodge-as-worker-burdens-rise.html

    But Ireland is most definitely not a tax haven.

  23. Michael Hennigan - Finfacts Says:

    @ Seamus Coffey

    Yes the rates are the rates….but there must be some agreement promising that the effect would be the equivalent of capping the rate.

    Haughey was taoisech at the time refrerred to.

    It’s possible that one party misunderstood what the other said but the reportn states more than once that Apple provided this specific information.

  24. fergaloh Says:

    Luxembourg was being used as a billing location as it had the lowest VAT rate in the EU and VAT was based on the rate at Point of Sale but that is changing from 2015 when the rate applied should be based on the rate applicable to the location of the purchaser.
    Big VAT loss to Lux but probably won’t change the corporate structure though
    so Lux should continue to get the Corp tax income.

  25. Michael Hennigan - Finfacts Says:

    @ Fiatluxjnr

    The trapped overseas is usually effectively in the US as it would be in the overseas dollar accounts of US banks to avoid currency losses and it can also be invested by the overseas units in US Treasuries.

  26. Yields or Bust Says:

    @Ossian

    “Royalty payments for intellectual property, such as branding and search algorithms, paid to foreign tax domiciled companies are counted as imports and subtracted from Irish GDP. As Seamus points out, this intellectual property was neither developed here nor owned by Irish companies so it’s not part of our taxable value-add..”

    This does indeed sound and reads dandy – but the problem with the arrangement is the substance of what actually goes on in Bermuda.

    I’m pretty sure most of the operations in Bermuda and the BVI are nothing more brass plate operations. Why for instance would Google or Apple pay billions of dollars to an office location which employs a handfull of people making sure the bank recs are completed on time for the monthly accounts? I appreciate the bank recs are big numbers but hardly warrants paying the employees billions?

    In order words the underlying substance of what is going on is not commerce per say but tax avoidance (legal I know) but it still amounts to tax avoidance as the rationale for transferring billions of dollars to a one man and his dog office can’t really be labelled as anything else.

    Therein lies the real problem – its not residency per se, its commercial substance. If the companys had to prove on an ongoing basis there was a real commercial substance behind these transfers rather than the taxing authorities having to make the case then I’m absolutely confident it would cease rather quickly. Paying Royalities by the billion to Bermuda would suggest that in Bermuda one would expect to see thousands of IT tech heads beavering away. Not so it seems.

    A few years ago the institution I was working with were asked to prove the underlying rationale and substance behind our transfer pricing transactions. We failed to make the case robustly enough and lost.The HRM tax authorities eventually got paid plus significant interest and penalties. Our residency argument counted for nought as the income was deemed to have originated in the UK.

  27. Michael Hennigan - Finfacts Says:

    @ Ossian Smyth

    Who puts a value on intellectual property?

    In the fiscal 2011 accounts for Microsoft’s main Irish operations, revenues jumped by €2.1bn but charges rose €2.6bn and it paid less tax than the previous year.

    In FY 2011 and FY 2010,Microsoft Inc. had the same net income sales ratio.

    Why teh big charge in Ireland to offset a jump in revenues?

    Is the Revenue likely to query the valuation changes of intellectual capital from year to year or the self assessed R&D tax credit claim?

    Even if it wanted to what would it do? Hire Accenture which moved its hq to Ireland in 2009 from Bermuda as palm-fringed tax havens were inviting criticism.

    A briefing document from solicitors Arthur Cox cited Accenture in promoting Ireland to German firms, saying the tax rate could be cut to as low as 2.5% by moving their intellectual property portfolios to Ireland.

  28. john gallaher Says:

    hope the link works,if not cspan has it-secongd link-live now.

    http://www.hsgac.senate.gov/subcommittees/investigations/hearings/offshore-profit-shifting-and-the-us-tax-code_-part-2

    http://www.c-span.org/Live-Video/C-SPAN3/

  29. Michael Hennigan - Finfacts Says:

    “A well-known global company recently moved the ownership and exploitation of an IP portfolio worth approximately $7 billion to Ireland.”

    http://www.finfacts.com/biz10/Ireland_tax_multinationals_IP_intellectual_Property.pdf

    The figures are usually big – - the Dublin law firms that get MNC appear in Europe’s top 20 fee earners — but life beyond is less rosy.

  30. Ossian Smyth Says:

    The Bermuda based company owns the right to profit from Google’s technology and brand outside of the USA. How was this right acquired? Has anyone shown that Ireland treats royalty payments any differently to other EU countries?

    Presumably the capital value of ex-USA IP rights for a company like Google are worth >$100bn given that a majority of sales are outside the US and market cap is in the hundreds of billions.

  31. Aidan R Says:

    Re: Seamus Coffey

    All of what you say is true but it misses the crucial point which is of particular interest to political scientists: distribution and legitimacy. It is not political posturing to call into question fiscal policies that benefit hugely powerful and profitably multi-national corporations in a context where the government is slashing public spending to pay for two major public policy mistakes: institutionalizing a pro-cyclical tax regime in boom times and guaranteeing the private liabilities of reckless banks in the financial sector.

    Across Europe (not least where I am in Italy) international tax competition has become a high salient political issue. It is absolutely rational for electorates across the Eurozone (and UK) to probe the distributional implications of tax avoidance for democratic politics. In Ireland it has yet to become a high salient issue because the media have largely ignored it (much like the property bubble). I think it would be a healthy development if this becomes a politically salient issue as it will force a public debate on one crucial question that has been ignored in Ireland: what is a sustainable tax-base for funding collective goods in the context of a fixed monetary union?

    There is a growing gap in all EMU countries between public revenue and public expenditure, with the implication that governments have to increasingly borrow money on international markets to service the state. In the aftermath of the Eurozone crisis governments stepped in to guarantee the debt of private markets. The outcome was a sovereign debt crisis. Rather than the state ‘taxing’ market activities to pay for the crisis they now ‘borrow’ it from the same markets. What has not been analysed in sufficient detail is the impact this has on the ability of political parties in government to use discretionary fiscal spending to pay for the social investments we traditionally associate with the welfare state. That is, democratic political choice.

    The crisis of the democratic state is precisely at this nexus between the irreconcilable tension between decreasing revenue and rising social expenditure. With less revenue and increased dependence on financial markets for expenditure, national governments have prioritized the interest of corporate creditors in negotiating fiscal adjustment. The outcome is that national governments, regardless of political partisanship, are increasingly unable to use taxpayer’s money to invest in social projects that benefit
    citizens. They must satisfy the interests of a new growing constituency; private creditors and international investors. Apple and a whole host of other MNCs are caught up in this financial game.

    Contrary to many assumptions underpinning the policy response to the crisis (cut spending) it is not democratic pressure from citizens that is restricting the composition of budgetary adjustments but tax
    competition. It seems to me that the fundamental problem in the EMU is a declining capacity by the fiscal state to raise revenue. In the aftermath of the crisis successive Irish governments have adopted a strategy in Brussels to accept and promote fiscal discipline as a solution to macroeconomic imbalances. But the international diplomatic strategy of aligning Ireland with austere Northern Europeans is primarily designed to protect our low corporate tax regime. This is why so many Europeans are skeptical of the Irish response to the Eurozone crisis.

    It is not lost on informed European citizens (particularly in Germany) that the Irish have opposed all attempts at a coordinated transaction tax on financial trading in the EMU, which reduces the capacity of European policy-makers to collectively raise revenue within its jurisdiction to solve the crisis. Lest we not forget – the Irish policy to resist a European financial transaction tax was designed by the Clearing House Trading Company; a financial lobby group with direct access to the Prime Minister. This story about Apple further confirms the perception of Ireland as a tax haven.

    In the midst of unprecedented cuts to social spending, governments are defending international tax competition to incentivise inward investment. The economic interests of this new growing constituency in the Irish state (corporate creditors and international investors) has significantly more influence on public policy than citizens.

    It is for all this reasons that international tax competition is and should become a politically salient issue among the Irish electorate. To just brush it off as populist soundbites ignores the underlying politics of why it has become centre stage in European public policy.

  32. brian lucey (@brianmlucey) Says:

    This issue is not going away. Michael H has been pressing on the “real” level of exports for a while. I and others have noted the need for a debate on the corporate tax level (not just rate).
    Saying the rate is the rate is one thing ; putting in place, and I for one do not imagine that this was done by revenue etc without external prodding and lobbying, a set of exempptions such that the effective rate is much much less, thats a horse of a different colour.
    We need to stop facilitating tax arbitrage and get on with deciding what we really want as an economy and society. Smoke and mirrors or reality …

  33. Economic Refugee Says:

    @Yields or Bust

    Far from having thousands of IT people hacking away both Google Ireland Holdings and Google Bermuda (registered in Ireland and Bermuda) have exactly nil, null, zero employees.

    But Ireland is not, was not and never will be a tax haven.

  34. Economic Refugee Says:

    This is even all over the German tech press:

    http://www.heise.de/mac-and-i/meldung/Irland-bestreitet-Steuerverguenstigungen-fuer-Apple-1866364.html

    Methinks Gilmore is trying to close the bag after the cat has bolted.

  35. Seamus Coffey Says:

    @ brian,

    What corporate tax exemptions in Irish tax law are you referring to?

  36. brian lucey (@brianmlucey) Says:

    It hasnt gone away you know
    https://twitter.com/SiCarswell/status/336851378188206084

    Even with Shatter gate, abortion and all this is a real story. We have built our economic model on, in large part, a tax arbitrage facilitated FDI base. that flapping sound is a herd of fowl coming home to roost…

  37. brian lucey (@brianmlucey) Says:

    Seamus ; the exemptions, exceptions, favourable treatments and so forth of the flows you mentioned above – IP etc.
    Look, you see this as not a problem. I and I suspect many others, beg to differ. As this recession/depression goes on all sources of monies will be looked at. Frankly, if you want to defend the indefensible, go ahead. I wont. Theres whats legal, and whats right. Whats legal is that Apple, not the worst, pay paltry amounts to anyone. Whats right is they pay a fair whack.

  38. DOCM Says:

    @ All

    For a true flavour of what this is all about, the intervention of Senator Rand Paul and the reply of the Sub-Committee Chair Senator Levin in the first video linked to by John Gallaher above is worth a listen. (57 minutes in).

    As Senator McCain, referring to Ronald Regan, states; “facts are stubborn”. Either there is a special negotiated tax rate for Apple as claimed by him or there is not. If there is, it is a clear case of discrimination and open to legal challenge by the Commission. As Ireland’s entire tax strategy is based on (i) the principle of non-discrimination (hence the introduction of the same corporate tax regime for all companies!) and (ii) transparency, it will be interesting to see what emerges as between the the only instances that can clarify the position i.e. the parties to the supposed negotiation. The position of the Revenue Commissioners has already been made clear.

  39. brian lucey (@brianmlucey) Says:

    A special negotiated rate can be two things
    a) A secret codicil to the tax code that says “apple pays x”.
    OR
    b) a set of lobbied for and agreed loopholes, amendments, adjustments etc that ensure that the effect is a)

    Saying there is one rate is saying a didnt happen. What about b)?

  40. DOCM Says:

    @ Brian Lucey

    This is about taxes, not moral philosophy!

  41. DOCM Says:

    @ Brian Lucey

    That is somewhat better. You have moved from moral philosophy to supposition.

  42. brian lucey (@brianmlucey) Says:

    Err. no. Its exactly that. Its political economy and this is that. Economics needs to go back to its roots.
    You want to defend this? Be my guest. I always love seeing the indefensible defended.

  43. brian lucey (@brianmlucey) Says:

    supposition? No, logical alternatives. Pray tell where is the supposition. I guess the fella from Apple could have lied to the US senate but thats a risky business. He said negotiated – he didnt really elaborate.

  44. Aidan R Says:

    @ DOCM

    Taxes are about the sovereign-state taking resources from market activities for collective investment. It is about the politics of distribution. Therefore it most definitely is about what is ‘right’ and what is ‘wrong’. Call it moral philosophy if you like. I call it political economy. Adam Smith did not see a difference.

  45. Bond. Eoin Bond Says:

    @ Brian Lucey

    i dont think Seamus is saying its not a problem. I think he’s saying the problem is being framed inaccurately (“avoidance, exemptions, special rates!!”) and the blame at the wrong people (it should be the end destination where 0% rates apply, ie Bermuda). Tax codes could be changed tomorrow by any of the big countries “losing out”, but for their own reasons they dont seem to want to.

  46. DOCM Says:

    @ Brain Lucey

    There appears to be a conflict with regard to the facts. I have set out what is known to those – like myself – with no knowledge other than what they read in the media. I await the definitive outcome; assuming there is going to be one.

    @ Aidan R

    It is indeed. Ireland is such a state and it administers its taxes in conformity with all established international codes.

  47. DOCM Says:

    @ BL

    Oops! Apologies for misspelling your name!

  48. Aidan R Says:

    @ DOCM

    True. But that technical-legal conformity does not mean that facilitating tax avoidance is okay or the right thing to do. Most Irish and US banks were conforming with the law six years ago. Does that mean that we should not challenge their actions or behavior?

  49. brian lucey (@brianmlucey) Says:

    Aidan R. Spot on. DOCM etc are here defending the narrowest possible interpretation of the law. Maybe they are lawyers? Meanwhile, justice weeps in a corner…

  50. Bond. Eoin Bond Says:

    @ Brian L

    do you agree or disagree that “big countries” (ie where most of these companies have their parents and shareholders domiciled) could end this issue relatively easily by closing legislative loopholes at their end? If you agree, why then is Ireland painted as the facilitator in all of this? I would argue a system of global tax minimisation has been allowed to expand over the last decade or two, and Ireland has simply been quite good at benefitting from that.

  51. brian lucey (@brianmlucey) Says:

    Eoin
    course. I suspect we are rather powerless to end world wide tax arbitrage by ourself.
    I agree we have benefitted from this. But, that was then and this is now. If it unwinds quick quick , how are we positioned? And should we facilitate it? These are big issues, pragmatic and philosophical. We should debate them not deny them.

  52. DOCM Says:

    @ Aidan R

    Absolutely not! If you have had occasion to read some of my other posts, you will have noted that I am totally committed to the principle of all paying their levied taxes, including assessing all able-bodied adults other than those in full-time education. But what is at issue here is a matter of negotiated arrangements between sovereign states where each must accept their share of responsibility. Landing it all on one – and not the biggest – as a fall guy is not IMHO very sensible.

  53. john gallaher Says:

    As always good coverage here,the NYT kinda kicked this off with some articles on apple/taxes…etc.
    http://bits.blogs.nytimes.com/2013/05/21/live-blog-apple-and-corporate-taxes/

  54. Aidan R Says:

    @ DOCM

    Agreed. But I don’t think Ireland is a fall guy here. Ireland has been an active participant and promoter of international corporate tax competition for years. The government – with active support from the media – have successfully kept it a low salient political issue. The sooner we are exposed the better. Our opposition to the coordinated financial transaction tax in the EMU is a perfect case in point. For years we have adopted a beggar thy neighbor approach to the Eurozone (a semi-closed trading economy). We actively defend the narrow interests of our financial sector in order to seek comparative advantage over other countries. This economic strategy is not lost on our European partners. Not least the Germans. The Irish are great at blaming others. But on the issue of international corporate tax competition we are completely naked.

  55. Michael Hennigan - Finfacts Says:

    @ Bond. Eoin Bond

    Between 1999 and 2002, the profits of US affiliates doubled in Ireland and the Netherlands and remained static in the big European markets through the decade.

    Then the growth of web services increased the opportunities for tax avoidance.

    I’m not surprised that when global consumer brands are market leaders in big European markets, that stories of people and local firms struggling while the giants pay little or no tax, get a reaction.

    Of course, there could have been a clampdown before now but there is a powerful eco-system in each country that does very well from all these shenanigans.

    It’s also the extent of the tax avoidance today that has contributed to the reaction.

    At the personal tax level, Switzerland’s banking secrecy is under siege after almost 80 years and it is a matter of time before it ends. There have also been developments in respect of British island tax havens.

    As to Ireland, it was the short-term that mattered and the demand for special income tax exemptions for foreign workers supported by Bruton is part of a tradition of doffing the cap to the US Chamber of Commerce.

  56. Seamus Coffey Says:

    @ brian,

    As I see the issue of how much tax corporations should pay is a separate issue. The issue is whether Ireland has “hard questions” to answer in the current international system of corporate taxation. My opinion is that the role of Ireland is being hugely overstated.

    The “same country exemption” that allows the “Double-Irish” scheme (two companies in the same country) to function is a provision of the US tax code. The “Double-Irish” reduces a US company’s US tax bill. It is not effective for non-US companies and has little impact on the amount of tax paid outside the US.

    It is the transfer pricing rules operated in the US that allows US-created intellectual property to be moved to jurisdictions such as Bermuda which further boosts the effectiveness of the “Double-Irish”.

    I really would like to know what it is precisely we are supposed to do about this. We charge 12.5% on the profits generated in Ireland.

    The US is in a bit of bind. It has a 35% corporate tax rate but double tax agreements mean that companies get credits for tax paid elsewhere. If the companies paid 12.5% in Ireland they would pay around 22.5% in the US. As it is the companies pay 0% in places like Bermuda and the US would get 35% when the money is repatriated. The problem for the US is that the money is not repatriated and exemptions in the US tax code allow for this deferral until repatriation.

    The US would like to find a way where companies continue to pay 0% in Bermuda and then it can collect its 35%. A situation where the companies pay more tax somewhere else (even 12.5% in Ireland) is not in the US’s favour because it reduces the amount of tax it can levy.

    It is up to the US to solve this problem and asking hard questions in Ireland is largely irrelevant. A debate on how much tax corporations should pay is probably more important but that is not the issue being discussed.

  57. john gallaher Says:

    Tim Cook up now with his team…NBC has broken the hearings down,also live streaming……not exactly watergate but will Cook be asked about any ‘deal’ ..who knew what when…..Q/A now!
    http://www.nbcnews.com/video/nbcnews.com/51950319/

  58. john gallaher Says:

    Mr Bullock…….”in accordance with our agreement” with Ireland….hmmm

  59. eamonn moran Says:

    @ john Gallagher.
    It could be fairly serious stuff.
    The Dept of finance has said there are no deals for a 2% tax rate but that contradicts what has already been reported. If apple provided such an agreement that would be a major embarrassment.

  60. rf Says:

    Corporate tax rates in Ireland might be an issue of political economy but they are more realistically one of international political economy; we have absolutely no control over larger trends in the global economy and have to adapt as suits to protect our interests. As such where is the evidence: (1) That there are any significant economic benefits in scrapping the low corporate tax rate (2) that we can feasibly build a political constituency to do this, and that it would be worth the political capital we expend on it (3) That there is a realistic alternative to building a model on “ tax arbitrage” (or even that this is what we’ve done)

    By all means lets develop an ‘alternative model’, but let’s first decide what it is before we scrap the old one, and that it has the support of enough domestic (and global) interest groups to make it politically feasible. Having a ‘conversation’ is not enough

    There seems little point in talking about the politics of distribution domestically without acknowledging the politics of distribution in the global economy

  61. john gallaher Says:

    @eamonn..2hr50mins in link above……….what relationship its all transparent..no !!!

    “Mr. Cook is asked why A.O.I. exists, and he replies that it was created in 1980, before the days of the iPod, iPhone and Mac.

    The relationship between Apple and the Irish government is still there today, he says. “

  62. Aidan R Says:

    @ RF

    “There seems little point in talking about the politics of distribution domestically without acknowledging the politics of distribution in the global economy”.

    True. It is for this very reason that I talk about the Eurozone (the second largest trading zone in the world) and the aggressive tax-competition strategy of one region within it: Ireland.

  63. rf Says:

    Dont a number of European countries engage in the same practices though (actual corp tax rates being much lower than advertised) and arent trends moving in this direction (lowering of corporation tax rates throughout the Eurozone)..? (Theyre genuine questions, btw, not pronouncements)
    Also if we’re going to get rid of it, is it not better to wait for Europe to pressure us to do so (and make it’s scrapping dependant on getting something from Europe?)

  64. john gallaher Says:

    Cook’s statement getting ripped apart by – David Kocieniewski-NYT-Link above…
    “1) “We don’t rely on tax gimmicks.” The precise definition of the word “gimmick” may be debatable, but Apple’s use of two Irish entities, which it claims are stateless (and help it sidestep $10 billion per year in taxes, according to the Congressional report) would seem to qualify.

    2) “We don’t move its intellectual property into offshore tax havens.” Apple’s intellectual property is held by its Irish subsidiary, Apple Operations International, which has no employees or physical presence in Ireland, has received $30 billion in income since 2009 and paid no income tax to any government for the past five years, according to Congressional investigators. Ireland is not on the official list of tax havens compiled by the Organization for Economic Cooperation and Development, but it is offshore and Apple’s special deal with the country allowed the company to enjoy rates lower than some companies that shelter income in the Caribbean. What’s more, Apple’s unique agreement hinges on its ability to take advantage of a wrinkle in Irish tax law that allows it to avoid Irish taxes by holding a fraction of its ownership in a shell company called Baldwin Holdings Ltd. in the British Virgin Islands.”

    Wall to wall coverage over here…’special deal’ keeps getting mentioned !!!!

  65. Michael Hennigan - Finfacts Says:

    @ eamonn moran

    Neither the DoF or Revenue have issued written statements on the issue.

    @ All

    The issue of tax avoidance is not a threat to the Irish rate. It’s about the erosion of tax bases in other countries.

    Corporate tax rates have been falling since the 1990s and among the 34 mainly developed member countries of the Organisation for Economic Cooperation and Development (OECD) the average rate has fallen from 37.6% in 1996 to below 26% in 2010 as low rate small countries such as Estonia, Israel and Slovenia joined

    The headline US federal rate is 35% but it could be cut to about 25%, without losing revenue, by closing loopholes.

    According to the Congressional Research Service, the share of corporate income taxes has fallen from a high of 32.1% of federal tax revenue in 1952 to just 8.9% in 2009.  Meanwhile, payroll taxes — which almost every income earner, rich, middle-income and poor, must pay – - have skyrocketed from 9.7% of federal revenue to 40%.”

    In fiscal year 2011 which ended on September 30, 2011, the US effective corporate tax rate on domestic profits fell to 12.1% - – the lowest since 1972 and well below the 25% companies paid on average from 1987 to 2008. The low rate reflected accelerated investment writoffs that were introduced during the recession.

    Floyd Norris of The News York Times said in late 2011 that in the eight decades before the recent recession, there was never a period when as much as 9% of American GDP went to companies in the form of after-tax profits. Now the figure is over 10%.

    During the same period, there never was a quarter when wage and salary income amounted to less than 45% of the economy. Now the figure is below 44%.

  66. john gallaher Says:

    @MH………right then…but but..Gilmore/Kenny ?
    “This afternoon, Taoiseach Enda Kenny told the Dáil that Ireland “does not do special tax rate deals” with companies.”
    http://www.rte.ie/news/business/2013/0521/451564-apple-tax-arrangements/

  67. seafoid Says:

    Apple’s tax rate is a joke. 40% profit margin and the richest company in the world while the US can’t afford to pay new teachers in many towns. Taxes are going to go up all over the oecd. Ireland’s stance on the tobin tax as Aidan r says was disgraceful. Private Eye has been banging on for some time about how cooperative the UK tax authorities have been with the likes of google and amazon but tax planning and regulatory capture are ultimately subject to the vagaries of politics.

  68. Fiatluxjnr Says:

    Apple paid 10 m on 22,000,000,000 of sales…a rate of 0.05%… Source RTE 6.1 news.

    How?

    Senator Levin just repeated “the deal” on live TV. Who is lying….or maybe it is all a misunderstanding. After all they don’t pay 2%….just 0.05%.

    It looks like the game is up.

  69. Overseas commentator. Says:

    Nobody objects to the fact that the Irish corporate tax rate is 12.5% for goods or services produced in Ireland , but the US, British, German and French taxpayers are sick and tired of the multinationals (Google,Amazon,Microsoft,Apple etc. ) paying no taxes in countries where they have most of their personnel ,their infrastructure, their sales forces ,their research centers because of bogus transfer prices and the active complicity of a few European states like Luxembourg or Ireland . All of that is legal ,but so is Swiss bank secret .Swiss bank secret is doomed and I think that the Irish tax heaven is too .Laws can be changed with enough arm twisting from the US and Europe ,the question is not any more if they will change ,but only when.

  70. Fiatluxjnr Says:

    Not so sure it will affect us badly ….yet. FT story today about multinational pharma company Warner Chillcot being acquired by Activis for 8.5b dollars. Apparently Activis will move its headquarters to Ireland for “synergy”.
    Up go the export figures again!

  71. vinny Says:

    By any definition Ireland is a ‘corporate tax haven’ – we are being caught out!
    The deal is – in return for the ‘crumbs’ from our global digitised profits – here’s a 100,000+ jobs and ancillary revenues – we multis will do our tax magic and you guys will facilitate or turn a blind eye.(Guys=Gov/DOF/Rev)
    We, the multis, will eventually ‘rest’ our tax avoided profits in the other ‘tax havens’ so that our owners and senior execs can continue to remain significant members of the 1% super rich – totally unconnected in every way from the common herd of humanity – we have seen figures quoted of 30 thousand billion dollars as being the estimated amount ‘resting’ in tax havens – tee/hee!(Mind you a lot of that is from the ‘despot/rip-off gang’ who have nothing to do with us!).
    In the meantime, we love working with you Irish who are all so nice to our lobby groups such as the ‘Clearing House Group’.
    The ‘Laundry by the Liffey’ is a great place to work – Fridays are really great and we rest easy that the party continues, particularly in view of our ability to influence income taxes on top earners -for our most valued execs – and we note the recently reported lobbying efforts of one Richard Bruton who is working hard to reduce our income tax burden and to his brother who is an active supporter of the top 1% and features regularly in your media.
    Keep it going lads – as they say in Ireland – don’t get too feisty now or we will consider withdrawing our ‘crumbs’!(Only joking – tee/hee).

  72. DOCM Says:

    @ Aidan R

    I am not a fan of excessive reliance on FDI. But that is a separate issue. If you think that Ireland is exceptional in defending what it perceives as her national interest, you need to think again.

    On the FTT, for example, the situation is far from being as straight-forward as you suggest. Both the Bundesbank and German industry have come out against it; not the weakest of combinations!

    http://www.ft.com/intl/cms/s/0/b8cdc3e6-bef9-11e2-87ff-00144feab7de.html#axzz2Tm3Lq1q0

    As to the Senate hearings, when the chairman cannot even get the level of Ireland’s corporation tax right, the general level of the competence of the committee’s staffers must be in some doubt.

    We are green enough as it is. Let’s not add to it!

  73. Seamus Coffey Says:

    From the NYT liveblog in relation to the contribution of Prof. Stephen Shea at today’s session.

    Although Apple has listed their “location for tax purposes as Ireland,” he said, he learned for the first time on Sunday night that two of Apple’s subsidiaries, Apple Operations Europe and Apple Sales International, actually “are not tax residents in Ireland.”

    “It’s not clear” where taxes on most of their income is paid, he said. Their income is being designated as belonging nowhere. It appears, he said, to be what is “oddly referred to by international tax planners as ‘ocean income.’”

  74. john gallaher Says:

    “There are no special corporate tax rates in Ireland. There are rules (which apply to all companies) on how taxable income is calculated to determine the figure to which the 12.5% rate is applied.”-above.

    PG.20/21…report….
    “Since the early 1990’s, the Government of Ireland has calculated Apple’s taxable income in such a way as to produce an effective rate in the low single digits …. The rate has varied from year to year, but since 2003 has been 2% or less.”

    oh ok……

  75. John Foody Says:

    For me the issue is one with American Tax law. Our competitive tax rate of 12.5% is being confused with deficencies in American tax laws that allow profits to remain offshore and so not subject to the US 35% rate or that allow companies to be not resident in any country (Apple)!

    What’s hilarious is the policy makers engaging in soundbits there have facilitated it. It’s a joke. ‘You mean the laws WE’VE made allows you to pay no tax, LEGALLY……HOW DARE YOU! HOW DARE IRELAND!’.

  76. John Foody Says:

    @ Seamus Coffey

    ‘Ocean Income’ I love it!

  77. Seamus Coffey Says:

    Where do these “no resident” companies carry out their operations?

    In response to questioning from Senator Levin, Phillip A. Bullock, Apple’s head of tax operations, confirmed that Apple owns the foreign subsidiaries Apple Operations International (A.O.I.), Apple Operations Europe (A.O.E.) and Apple Sales International (A.S.I.). Mr. Cook confirms that A.O.I.’s central operation is based in the United States. Mr. Bullock confirms that A.O.E. is functionally managed and controlled in the United States.

    Mr. Cook says Apple has significant employment in Ireland. He confirms that A.S.I. is functionally managed and controlled in the United States.

    It is unlikely that these companies would meet the requirements of any tax residency test for Ireland. Hence, even though incorporated in Ireland, they are legitimately non-resident for tax purposes. But surely they must be tax-resident somewhere?

  78. seafóid Says:

    Dublin cut Apple tax rate following US lobbying

    http://www.ft.com/intl/cms/s/0/ee6c1b64-c1f2-11e2-ab66-00144feab7de.html

  79. John Foody Says:

    Apparently they’re not. They’re exploiting the difference between US and Irish requirements for tax residency.

    http://www.hsgac.senate.gov/subcommittees/investigations/media/subcommittee-to-examine-offshore-profit-shifting-and-tax-avoidance-by-apple-inc

  80. Fiatluxjnr Says:

    “For example, in 2011, 64 percent of Apple’s global pretax income was recorded in Ireland, where only 4 percent of its employees and 1 percent of its customers were located, Mr. Harvey said.”

    64% of pretax income is Ocean money. Maybe Di Caprio will make a film.
    Ocean ?

  81. john gallaher Says:

    here is the link to the whole NYT series-won a Pulitzer-part 3 protecting profits most relevant to above.
    http://www.nytimes.com/interactive/business/ieconomy.html

  82. Seamus Coffey Says:

    Some details on the Irish residency requirements used by the Revenue Commissioners are here.

    http://www.revenue.ie/en/tax/ct/basis-charge.html

  83. DOCM Says:

    @ All

    How to be an utterly confused US commentator!

    http://www.businessweek.com/articles/2013-05-21/tim-cook-taxes-and-avoiding-the-right-thing#p1

    Apple should now act as the conscience of the US Congress!

    Captain Renault: “I’m shocked, shocked to find that gambling is going on in here.” Emile: “Your winnings, sir.” Captain Renault: “Thank you very much.” (Casablanca).

  84. paul quigley Says:

    Fascinating discussion, and long overdue, IMHO.

    @Aidan R 2.15

    ‘Rather than the state ‘taxing’ market activities to pay for the crisis they now ‘borrow’ it from the same markets.’

    While so many good points have been made, I think you come nearest to the heart of the issue. Hayekian ideas provided a necessary antidote to overweening state power, but an obsession with ‘free markets’ leads to another form of tyranny. The reality is that market participants have very different levels of power, and that the resulting ‘freedom’ is very unequally distributed.

    The nation state, for all its faults, is, as Pierre Bourdieu puts it, the repository of hard won freedoms and rights. It is the nearest thing we have to the general interest, and Polanyi showed in his 1947 Great Transformation, it provides the framework within which market activity is properly regulated.

    We are a very small nation. We are faced today with the overwhelming power of transnational private entities which have inserted themselves into the heart of the biggest governments. Haughey and Co saw how little Ireland could make itself useful to ‘international markets’, so we have bred a whole tribe of ‘fixers’. Traditional religion may be on the decline in Dublin, but social magic is alive and well.

    ‘The constitutional order of the 21st century market state will supersede the 20th century nation state as a consequence of the end of the Long War. A constitutional order is distinguished by its unique claim for legitimacy. Give us power, the nation state said, and we will improve your material well-being. The nation state, with its mass free public education, universal franchise, and social security policies promised to guarantee the welfare of the nation; the market state promises to maximize the opportunity of the people, and thus tends to privatize many state activities. Voting and representative government will be less influential and more responsive to the market. This does not mean that market states cease to be interested in the well-being of their peoples or that nationalism is any less potent, but that the State no longer claims legitimacy on that unique basis’

    http://en.wikipedia.org/wiki/The_Shield_of_Achilles:_War,_Peace,_and_the_Course_of_History

    @ DOCM
    ‘I am not a fan of excessive reliance on FDI. But that is a separate issue. If you think that Ireland is exceptional in defending what it perceives as her national interest, you need to think again.’

    What is the national interest, and how is it represented by the insiders and lobbyists who have penetrated our state so thoroughly. ? As Joe Lee put it in his Ireland 1912-85 p654

    ‘ The beauty of traditional morality was that the area to which it applied was so conveniently circumscribed. Traditional Ireland had largely succeeded in excluding from the agenda of moral discourse doctrines potentially subversive of the material interests of the dominant social elements’

    Plus ca change.

  85. Tull Mcadoo Says:

    This is a god send for Ireland. It brings closer thee day when we have to get back to making and selling stuff and cut out the ridiculously high salaries paid to public servants including hyper ventilating university professionals. Oh, transfer payments are going down as well.

    In the US, it will lead to a cut in the ludicrous 35% statutory tax rate and the closing of loopholes but that will take 20 years.

  86. Bryan G Says:

    Have a look at the principal executive offices of the largest disk drive manufacturer in the world, Seagate – an Irish company.

    For Apple:

    What’s more, Apple’s unique agreement hinges on its ability to take advantage of a wrinkle in Irish tax law that allows it to avoid Irish taxes by holding a fraction of its ownership in a shell company called Baldwin Holdings Ltd. in the British Virgin Islands.

    The Irish tax and intellectual property laws enable huge tax arbitrage. To suggest that country-specific rules are not involved is disingenous, at best. It is Irish government strategy to make Ireland a base for intellectual property management, and the tax laws are a key element of this. Apple, Google, Microsoft, Seagate etc. route all their non-USA income via Ireland for a good reason.

    It is not the USA that has to bear the real consequences of this. The USA is out-of-step with the rest of the world by regarding worldwide citizen and corporate income as taxable. Apple pays taxes on profits earned in the USA and does not use its Irish operations to reduce its USA tax. The main problem is that, for example, Apple paid no taxes on profits earned in Spain (who with 25+% unemployment could do with the money).

    Of course Ireland is facilitating tax arbitrage. There’s no point in denying the obvious. It is in Ireland’s interest to do so, but it should come as no surprise when there are aggressive moves to stop this by other countries, protecting their own interests. How much can be done by domestic or EU laws (CCCTB) in other countries (cutting off the flow of profits to Ireland at source) and how much will require Irish law to be changed (via political pressure) remains to be seen.

  87. hari naidu Says:

    Under comparative international tax law – Ireland is a Tax Haven indeed – otherwise Us Senate wouldn’t be exposing Ireland and its corporate tax laws.

    The moral political issue wouldn’t arise in this discussion even taking into account the (im)moral case of nationalistic (Irish) arguments above.

    Once FTT is finally approved by EP, and it becomes EU law, the case of Ireland might end up in ECJ (Lux).

  88. Seamus Coffey Says:

    @ Bryan G,

    It is Irish government strategy to make Ireland a base for intellectual property management, and the tax laws are a key element of this. Apple, Google, Microsoft, Seagate etc. route all their non-USA income via Ireland for a good reason.

    How many non-US companies use Ireland for tax arbitrage? Seriously.

    It is not the USA that has to bear the real consequences of this. The USA is out-of-step with the rest of the world by regarding worldwide citizen and corporate income as taxable. Apple pays taxes on profits earned in the USA and does not use its Irish operations to reduce its USA tax.

    If this is not about reducing Apple’s US tax bill why was a US Senate Committee holding a hearing on it?

    Is the US “out of step” by regarding worldwide corporate income as taxable?

    Here is a quote from the Revenue Commissioners on Irish Corporation Tax. link

    “A company resident in the state is liable to Corporation Tax on its worldwide profits, not just its Irish source profits. Whether or not these profits are brought into Ireland is irrelevant for this purpose.”

    The main problem is that, for example, Apple paid no taxes on profits earned in Spain (who with 25+% unemployment could do with the money).

    Samsung sell more phones in Ireland (and probably Spain) than Apple do. Is that a bigger problem? How much corporate tax should Samsung pay here or in Spain? Where do we/they send the bill?

  89. Robert Browne Says:

    I was on here 3 years ago saying how daft it was to have FDI as the corner stone of the Irish government strategy and that it was inevitable that this was going to happen. It was a no brainer. Obama promised to sort this during his first Presidency so he is only 4 and a half years behind schedule.

    These corporations are quickly starting to realise that even from a public relations and brand perspective it is not wise to be too clever, too amoral, just because your half a million bucks a year accountant tells you that it is called tax avoidance not tax evasion.

  90. Dorothy Jones Says:

    http://www.welt.de/wirtschaft/article116397191/Apple-fand-heiligen-Gral-der-Steuervermeidung.html
    Whatever way you cut it; Message in Germany very clear: Ireland is enabling this. Grist to the mill in all financial press headlines.

  91. Bryan G Says:

    @Seamus Coffey

    There has been a lot of debate in the US about changing from a worldwide corporate taxation system to a territorial one. Territorial systems whereby companies only pay tax in the country where profits are earned are the norm, rather than the exception

    Most countries have a territorial system. Among G-7 countries, only the U.S. has a worldwide tax system. Among OECD nations, 26 have territorial systems including Australia, Canada, France, Germany, Japan, Spain, and the United Kingdom. Eight OECD nations have worldwide systems, including the U.S., Greece, Ireland, South Korea, and Mexico. The other OECD nations with worldwide tax systems have top tax rates far below the top U.S. corporate tax rate.

    As far as I understand it in both territorial and worldwide systems, the tax bill is sent to the local subsidiary first. For worldwide systems a tax credit is then applied for foreign taxes already paid. So the bill gets sent to Samsung Ireland Ltd. or Samsung Iberia S.A, based on trading profits in that country. Each country determines its own tax rate.

    The issue as to why it is only or mainly USA companies using Ireland for tax arbitrage is a fair point. I think that the combination of the worldwide taxation system and the very high rate of 35% for the USA provides a stronger motivation for USA companies to do this. Also who knows what Samsung are actually doing – it is possible they have an office in Fitzwilliam Sq. too; with SEC reporting requirements and Senate hearings etc. USA compaines tend to be more transparent than most others. Other companies may use Luxembourg/ the Caribbean etc. based on proximity or historical ties. However I admit I don’t have a compelling answer to that point.

  92. John Foody Says:

    If the music stops and competition is no longer allowed on Corpo tax. Then surely it would have to be an international agreement. Say then there’s no tax advantage to having your European HQ in any European state over another.

    Why would the existing jobs leave? If I was an American Multinational in Ireland and there was no tax advantage to moving elsewhere then why would I move in Europe?

    In fact even new NMCs would still want a country that speaks the language and is in the Euro. Not that the current arrangements have added much jobs in a decade (read MH)

    In any event, it certainly looks like the coming years will show just how ‘competitive’ we really are.

    @ Tull
    I agree in the sense that we need to look at our economy. Be honest with ourselves and develop actual policy. We still don’t know where on the ‘Boston or Berlin’ spectrum we want to be.

    We can start with Energy policy. The current ‘policy’ isn’t exactly transparent in terms of true cost.

    How about education policy. It seems to consist of trying to send as many people to university as possible so they’ll be well educated once they arrive in Australian and Canadian. Not everyone is suited to or will benefit from university. Germany seem to have a great system of trades people feeding business, feeding trades etc..

    How about the dangerous inequities being created between the new, usually young, more motivated, better educate staff on worse pay/T+C in the public/civil service and the older pre-bubble burst employees. Easiest political solution but not great for moral.

    How about the Irish language. We’re either serious about creating a bi-lingual society or we’re not.

    How about pension policy?

    How about pre-school education? We’re spending a lot of money educating young women, only to force them (usually the woman, tho not always!!) out of the work force for years due to the high cost of child care. Or force them to have less children, depending on the choice of the couple.

    How about immigrant integration policy? Sweden now added to the list with England and France of countries that have seen riots, aka serious problems with integration, due to a lack of serious policy over the last few decades.

    How about learning the lessons from the boom. Caps on earnings to borrowing ratios. Limit on Loan to value eg 20% deposit. Make new mortgage lending non-recourse. Let us not have another bloody boom/bust property cycle. Look around, they are baaaaddddd for society. Let us promote investment in SMEs, actual industry, not another round of speculative property price betting.

    And of course how about our current debt slaves. Though at least they’re being talked about. Though it hasn’t exactly been a prompt process to date.

    The list of issues goes on…

  93. John Gallaher Says:

    @Bryan G…apols pay wall…can’t find a breakdown but…
    “How many multinationals operate in Ireland?
    There are more than 1,000 multinationals with operations in Ireland, employing about 150,000 people. The strength of this sector has helped Ireland to return to modest economic growth following its economic crisis in 2008. Google, Microsoft, Apple and Pfizer are just a few of the companies with significant Irish units.”
    http://www.ft.com/intl/cms/s/0/46e44b6c-c203-11e2-ab66-00144feab7de.html#axzz2TyJVRzOG

    Not just the yanks that are a tad upset over Ireland being a tax haven..this level of denial by some,is up there with the dead parrot sketch from Monty Pyton.

    “He was deeply critical of Ireland’s generous corporation tax, blaming it for Germany losing income from German companies, when he was finance minister in the previous coalition government with Ms Merkel. ”
    http://www.irishexaminer.com/ireland/gilmore-bids-to-reassure-merkels-heir-apparent-212198.html

  94. Fiatluxjnr Says:

    @dorathy jones

    Therein lies the danger. Plays right into Schauble’s hands.

  95. Mickey Hickey Says:

    “Even Before Apple Tax Breaks, Ireland’s Policy Had Its Critics”

    http://www.nytimes.com/2013/05/22/business/global/ireland-defends-attractive-tax-rates.html?hpw&_r=0

  96. Michael Hennigan - Finfacts Says:

    The obsession with attracting foreign companies comes at a cost – in particular in a system of limited accountability.

    It was funny to read reports in recent weeks on Michael Noonan’s response to questions on the international clamour about tax avoidance.

    He spoke of the importance of defending the corporate tax rate – knowing that journalists were not well informed about the issue.
    Allied to the small mainstream media, it’s unusual that in Ireland’s national parliament, members don’t specialise in particular areas. So lacking forensic facts, they generally are incapable of putting ministers under pressure.

    Richard Bruton’s department insisted to me that there is no one official figure for the total value of 2012 exports. €182bn is the preferred total not €177bn, the CSO’s total after deducting €5bn from the goods total because of double-counting.

    Eamonn Gilmore used the term ‘transparent’ for Ireland’s tax system yesterday.

    Last January in Davos, Enda Kenny said Ireland’s tax regime is “very clear, very transparent.” He also said the effective corporate tax rate is 11.9% compared with the headline rate of 12.5%. One claim was false and the other was very misleading.

    In the same month Bruton had used the 11.9% figure at a press briefing.

    The 11.9% rate comes from a report, ‘Paying Taxes 2013,’ that was produced by PricewaterhouseCoopers (PwC), the Big 4 accounting firm.

    The case study company is:

    1) A limited liability company;
    2) Produces ceramic flower pots and sells them as a retailer;
    3) Operates in the country’s largest business city;
    4) Is 100% domestically-owned and has 5 owners;
    5) Has purchased capital equipment for use in the business;
    6) Has 60 employees;
    7) Sells a property and realises a capital gain during the year;
    8) Pays a dividend at the end of the year;
    9) Is in its second year of operation;
    10) Has a trading loss brought forward from previous year.

    Post the crash, decision makers from ministers to senior civil servants, university heads, the mainstream media, professions etc, are older men who are protected from the ravages of the recession; many had believed that the free lunch had been invented and now they are oblivious to the shifting sands under their comfortable seats.

    This year 2013 was the one when Ireland was to be recognised as a “world class knowledge economy” and the failure has given way to a new vision: “Ireland in 2020 is the best country in the world for scientific research excellence and impact.”

    This is the flagship enterprise policy at a time of a national jobs crisis and the failure has been met by silence from ministers; the Oireachtas; the well-heeled vested interests! and The Irish Times, the “newspaper of reference.”

    Statistic of the Day: Only 25% of IDA Ireland client companies spend more than €100,000 annually on R&D despite a 25% R&D self-assessed spending credit.

    More here…

    http://www.finfacts.ie/irishfinancenews/article_1026011.shtml

    As for the indigenous sector, what is really known about it?

    Yesterday, the Examiner had a piece on manufacturing (see below).

    Here is another statistic that is unlikely to become a ministerial taking point: “Only 3% of Irish SMEs are active in manufacturing, whereas the equivalent figure for the EU is 10%.”

    Ireland may benefit from the increase in wages in China as a growing number of companies look to bring manufacturing back to their core markets.

    Hourly wages in China have increased by over 400% since 2001 and, coupled with the time difference and an average shipping time of six weeks, the attractiveness of manufacturing in the East may diminish for some sectors. 

    The Cork Electronics Industry Association will hear from Caroline Dowling, president of integrated network solutions at Flextronics, who believes now is the time to bring manufacturing industries back to Ireland. 

    “This is an ideal time for Ireland to harness the opportunity that re-shoring presents,” she said. 

    It depends on what markets are being served.

  97. francis Says:

    when I read above

    “Ireland in 2020 is the best country in the world for scientific research excellence and impact.”

    and put the emphasis on “impact” which should maybe interpreted as jobs and taxes paid, or …. ?

    I would like to give you

    http://en.wikipedia.org/wiki/Rambus

    and make you wonder, what chance folks in Ireland have to pull something like this, and at what risk, and with how many employees.

  98. Richard Fedigan Says:

    Likely behind a pay wall but today’s New York Times/International Herald Tribune Front Page headline is:

    ‘Dublin on Defense against Tax Critics’

    All fairly predictable stuff.

    With Robert Browne ( and others), long before the advent of the current government and the Troika one attempted to flag the urgent need for outside strategic advice ( a sort of Telesis II), with a view to formulating a NEW enterprise strategy… and a different way of looking at ‘emigration’.

    http://www.irisheconomy.ie/index.php/2011/02/02/taoiseach-from-mars-a-guest-post-by-richard-fedigan/

    Who’s in charge?

  99. Bryan G Says:

    @John Gallagher

    I agree with your Monty Python dead parrot sketch characterization.

    It is important to note that there are two separate issues here

    (1) the attempt by the USA to collect on its “worldwide income” tax regime – i.e. forcing Apple to pay more tax in the USA

    (2) the erosion of the tax base in all non-tax haven countries (as pointed by MH in an earlier post) – i.e. forcing Apple to may more tax in Spain, for example.

    Now there’s a conflict of interest between (1) and (2) – who gets any additional tax paid by Apple – the USA or Spain? However the “proof” that Ireland is a tax haven, if such proof is needed for the doubters, is that there’s a third country involved in this calculation, namely Ireland. Why should Ireland have any place in discussions on the distribution of tax revenues for a product developed entirely in the USA and sold in Spain?

    For a little more detail on (2). Apple actually made a loss in Spain, in a year in which they broke all records for profitability. They sold 2bn worth of iPhones/Macs and paid no Spanish tax, by routing all the revenue through Ireland. (Of course there’s nothing specific to Spain here – the same scheme is replicated across the world).

    The US firm’s unit Apple Marketing Iberia’s turnover in the year to September 2012 was 20.31 million euros. But since this consists of a commission of only one percent to facilitate sales, turnover generated by their other units in Spain amounted to a record two billion euros. Personnel costs reduced pretax profit to 6.5 million euros. Its Apple Store retail network in Spain posted losses despite a rise in sales of 82 percent to 142 million euros. The combined loss of the two units was almost 12 million euros.

    Apple, Google, Microsoft and Facebook did the same, using Ireland. Ireland isn’t the only tax haven of course. Amazon did the same using a Luxembourg holding company.

    At a time when the G20/OECD are trying to limit tax avoidance from intangible assets and profit shifting, there appears to have been something of a surge of companies incorporating in Ireland (Accenture, Seagate, Ingersoll-Rand, Covidien, Cooper Industries…) for the purposes of doing precisely that.

    And Ireland has such a “transparent” system that none of the holding/shell companies are required to file any accounts, even though they are registered in Ireland, as they convert to unlimited status. For a glimpse of the process involved you can see the pitch made by Irish law firms, who profit very nicely:

    We have put various structures of this nature in place by incorporating a new limited company which acquires the shares from the owners of the existing limited liability company. In turn, we put in place two non-EU-incorporated companies, one being a limited liability company and the other being unlimited, between the new holding company and the original limited liability company. The non-EU limited company would own the non-EU unlimited company, and both in turn would own the original limited liability company.

    Yes, very transparent indeed.

    And the parrot isn’t dead, and Ireland isn’t a tax haven.

  100. Bryan G Says:

    @Seamus Coffey

    While US companies predominate, there appear to be some others that use the system too. Possibly the most bizarre example is this – a state-owned company using the system to avoid paying taxes to the state that owns it.

    State-owned railway group NS uses Ireland to dodge Dutch taxes

    The state-owned Dutch railway company NS has managed to cut its Dutch tax bill by at least €250m since 1999 by routing the cost of new trains through Ireland, the Volkskrant reported at the weekend.

    The tax dodge means the treasury has lost out on income generated by a company it owns, the paper points out. The finance ministry, meanwhile, is said to be ‘unhappy’ about the arrangement, which it has been aware of from the beginning.

    In effect, NS’s Irish subsidiary, NS Financial Services, has spent €1.7bn on new trains which it then rents to the NS in the Netherlands. None of the trains has ever been used on the Irish railways, the paper said.

  101. paul quigley Says:

    @ Bryan G

    + 1

    It may well be that our company law structures have not just been captured, but are more or less controlled by overseas corporations. Given the extraordinary sums involved, and the web of professional firms which have been drawn into the game, it is hard to see how matters could be construed otherwise.
    The judicial, executive and parliamentary branches of the state have all been led tacitly understand that these activities are in a ‘special’ untouchable, discretionary category. They are treated a matters of ‘national security’, and so exempt from normal procedure.

    While a broad swathe of the society has a stake in FDI, the main stakeholders are the cabal of accounting and legal facilitators. Its a Haughey legacy, IMHO where the security of the insiders has usurped the security of the nation.

    As the FDI wave takes on an increasingly ‘distributed’ and ‘virtual’ character, in the form of royalties, phantom services etc, the shell game becomes impossible to conceal. When Gurdgiev and John Fitzgerald are more or less agreeing on the VB show, the dogs on the street have it.

  102. Gavin Kostick Says:

    Some great posts above.

    For background in the USA:

    ‘Behind the Decline in Labor’s Share of Income’

    And related papers.

    “Economists have identified three long-term factors that can explain why the wage-productivity gap has widened and the share of income accruing to labor has declined. The first is the decrease in the bargaining power of labor, due to changing labor market policies and a decline of the more unionized sectors. Another factor is increased globalization and trade openness, with the resulting migration of relatively more labor-intensive sectors from advanced economies to emerging economies. As a consequence, the sectors remaining in the advanced economies are relatively less labor-intensive, and the average share of labor income is lower. The third factor is technological change connected with improvements in information and communication technologies, which has raised the marginal productivity and return to capital relative to labor.”

    http://www.clevelandfed.org/research/trends/2012/0212/01gropro.cfm

    In the EZ/EU

    ’2013 edition of the ‘Taxation Trends’ report’

    Slide on page 6 shows the steep fall from 1995 in corporation tax rates.

    http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_structures/2013/presentation.pdf

  103. Overseas commentator. Says:

    The problem is not only the corporate tax but also the VAT. Every month I am billed by Google from an Irish address for my use of their “Adword” advertising services .The ads are in French and German and published only in continental Europe. The service is sold through Google’s Paris office .Google search software is American ,it runs on computers located in the States ,in fact there is zero contribution from Ireland except the billing address, there is also zero VAT on the bill . The value added is clearly created in France and the French government is clearly deprived of its taxable revenue .Amazon is using Luxembourg instead of Ireland in doing the same thing. This type of things has to stop because it is clearly immoral .

  104. Rob S Says:

    I’d echo Seamus on what exactly is wanted from Ireland in terms of unilateral action?

    Are we that unique? Couldn’t these companies setup subsidiaries in Cyprus, Lux or the Netherlands if conditions here became ‘uncomfortable’?

    Also, do some of the domestic commentators here really think things would be better for Ireland is these companies didn’t or couldn’t operate the way they currently do?

  105. eamonn moran Says:

    @ Seamus and all

    I think people are missing the actual story here.

    This is the situation.
    Apple do pay corporate profit taxes on its US business at an effective rate of about 20%

    The thing that the US Senate is highlighting is not something that will benefit the US that much but would benefit all the non US countries apple makes profits greatly if it were sorted out.

    All of Apples non US profits go through a company that is incorporated in Ireland but is not Registered for tax anywhere.

    Ireland is the only country in the world I am aware of that allows companies to incorporate themselves but not have to register themselves for tax anywhere.
    All of Apples non US profits get dumped into this entity.
    Then Gilmore comes out and says it’s nothing to do with us, other countries should make them have to pay tax where their profits are made.
    It’s a poor excuse and doesn’t explain why we allow a company to be incorporated in Ireland but not have to pay tax anywhere. I think we are setting a new president.
    Centuries ago we passed laws that allowed companies be legal people. Ireland’s tax code allows them to be legal aliens and not have to pay corpo tax anywhere on planet earth. That is unique as far as I can see.

    I am guessing there are countries other than Ireland that allow countries to be incorporated in them but pay taxes in another country if their main center of economic interest lies elsewhere but are there countries that just wash their hands and say we will incorporate you but if you decide that you don’t want to register yourself for tax here or another country we are fine with that? I am not aware of them.

    That is why Ireland can be seen in this regard not to be a low tax economy but an enabler of wholesale tax avoidance . If no other country was willing to provide this service and Ireland stopped i guess apple would have to pay fair taxes in all the jurisdictions they make profit. Given that their products are popular all over the world in countries that include many people living on below $1 a day we seem to be enabling something that is fairly (as Brian Lucey has stated) indefensible.

    As to why the senate gives a damn?
    That’s a good question. Crisis of conscience? The US seems to have least to gain financially from apple sorting this situation out. Apple are tax complaint in the US.

  106. eamonn moran Says:

    @ Michael Hennigan
    Thanks for pointing out that the report that has been quoted by various politicians on Prime Time and by Chris O’Donoghue on news talk on several occasions, has been completely debunked. Its based on an imaginary hypothetical company. Why use that when we can use actual reality? Oh!

    So every time someone says Irelands effective tax rate is 11.9 and Frances is only 8.9 can every one please let them know they are using bad data.

    Ireland’s Effective Corpo tax rate is no where near the headline rate. How could it be when MNC’s account for about 80% of our corpo tax take.

  107. Michael Hennigan - Finfacts Says:

    @ eamonn moran

    So Apple’s effective rate is less than 2%; Microsoft said last year that its effective rate was 5.69% and Google wipes out most of its gross margin to leave a tiny tax charge on the net income.

    Apple over-provides for future taxes in its accounts, giving the impression that its rate is higher in the US than the reality according to The Wall Street Journal

    Senator Levin referred yesterday to the ‘golden goose,’ ie the intellectual property that was developed in the US, being transferred to the stateless/ ghost Irish company, Apple Operations International, thereby reducing taxes paid in the US.

    Levin said that just in 2012, Apple had exploited tax loopholes allowing it to avoid $9bn in US taxes, or $25m per day, and said such practices did “real harm” to the US economy.

    As for Apple using its ghost or stateless Irish companies as resident companies when it suited (receipt of foreign income and in the case of one company paying tax to the Revenue), it’s interesting news in the context of Ireland’s prosecution service’s current preparation of a case of alleged false accounting against former executives of Anglo Irish Bank.

    I have been writing about the issue of corporate tax avoidance for about 9 years and as with highlighting the risks of the property bubble, dissenters were not welcome by the establishment elite and their networks.

    I wrote in October 2004: “Ireland is the world’s most profitable country for US corporations, according to analysis by US tax journal Tax Notes. In a study by the journal’s Martin Sullivan, it was found that profits made by US companies in Ireland doubled between 1999 and 2002 from $13.4 billion to $26.8 billion, while profits in most of the rest of Europe fell. In his analysis Sullivan termed Ireland a ‘semi-tax haven’ for US firms, because firms are involved in real productivity in contrast with locations such as Bermuda.”

    In 2005, The Wall Street Journal published a report on Microsoft Ireland that began: “A law firm’s office on a quiet downtown street here houses an obscure subsidiary of Microsoft Corp. that helps the computer giant shave at least $500 million from its annual tax bill.

    The four-year-old subsidiary, Round Island One Ltd., has a thin roster of employees but controls more than $16 billion in Microsoft assets. Virtually unknown in Ireland, on paper it has quickly become one of the country’s biggest companies, with gross profits of nearly $9 billion in 2004.

    The rise of the web giants and Apple rapidly increased the diversions of revenues from other markets.

    Reform of the current laws would likely result in a plunge in Ireland’s reported services exports.

  108. eamonn moran Says:

    http://www.irishexaminer.com/opinion/columnists/colette-browne/little-people-pay-the-price-as-big-businesses-avoid-their-fair-share-231914.html

    Great article by Colette Browne.

  109. Kevin O’Rourke Says:

    If this article is to be believed

    http://www.ft.com/cms/s/0/ee6c1b64-c1f2-11e2-ab66-00144feab7de.html#axzz2TpYAEvLP

    then MNCs based in Ireland are not just avoiding tax as a result of the passive interaction between the Irish and foreign tax systems; they are successfully lobbying the Irish government to change Irish laws so as to facilitate such interactions. This is not innocent behaviour by the Irish government.

  110. Rob S Says:

    Seamus OP published in the Examiner today.

    http://www.irishexaminer.com/opinion/columnists/guest-columnist/the-us-just-wants-its-bite-of-apple-231983.html

  111. Aidan R Says:

    Brilliant article by Collete Browne in the Irish examiner. Pulls no punches.

    Arthur Beesley has an article in the Irish times saying that the Irish corporate tax rate was reduced from 38 percent in 1997 to 12.5 percent in 2003. He the goes on to state that Google an ther companies then located in ireland.

    If my memory serves me correctly this is wrong? The foreign manufacturing tax rate was 10 percent in 1997. The higher rate was for domestic companies. Hence foreign companies saw their rate increase by 2 percent in 2003. Clarifications?

  112. Paul F Says:

    The higher rate was for services; the 10% for manufacturing – there was no distinction between foreign and domestic.

  113. Seamus Coffey Says:

    @ Kevin,

    The headline is somewhat misleading. There was no reduction in tax burden because of the change.

    The withholding tax on patent royalties was not paid before July 2010 (mainly because of double taxation agreements in tax treaties with other countries). The withholding tax on patent royalties was not paid after July 2010 (but now because they were made exempt in Irish tax law).

    The amount of tax to be paid was not changed. What did change was the administrative burden on both the companies and the Revenue Commissioners. Prior to this change the Revenue Commissioners were doing work to record and subsequently offset these withholding taxes but no tax revenue was being generated. They have better things to be doing. The move was one of administrative efficiency.

    Companies moving patent royalties through Ireland did not face a withholding tax long before this change in July 2010.

  114. rf Says:

    My understanding is that most SME’s can also take advantage of the 12.5% corporate tax rate, contra Colette Brownes claims they are taxed to the hilt?

  115. John Gallaher Says:

    One ahem small problem with the OP….

    “The main problem from a US perspective is when these companies are liable for their 35% tax on corporate profits. This has to be paid when global profits are repatriated to the US. From a US perspective it doesn’t really matter how much tax is paid in Ireland or elsewhere; the US just wants its share…”

    Any taxes paid overseas are offset/deducted,but if there are NO taxes paid via tax havens there is a disincentive to repatriate “profits” !
    So of course it matters the amount of taxes paid overseas,or maybe it’s just the Guinness after all….
    http://ctj.org/ctjreports/2013/05/apple_holds_billions_of_dollars_in_foreign_tax_havens.php#.UZyqGsu9KSM

  116. eamonn moran Says:

    @ RF
    She is not referring to Profit tax.
    She is referring to rates, VAT, Employer taxes etc.

    The Vast majority of Small Irish businesses do not even make profits and therefore do not pay Corpo tax.
    Infact it was said recently by the Central bank that half of small businesses in Ireland have impaired loans.

    She is trying to get people to look at the bigger picture where Profits have been shifting away from what the Americans call Main Street and has been flowing into WallStreet (financial and tech companies).

  117. Seamus Coffey Says:

    @ John,

    Agreed. Maybe I should have clarified what the US share would be. It was subsequently addressed though.

    http://www.irisheconomy.ie/index.php/2013/05/21/international-corporate-tax/#comment-426347

  118. DOCM Says:

    @ JG

    On reflection, the analogy with the dead parrot in Monty Python does not really work. The international tax forest is full of live parrots and it seems that there are several species from the US i.e. the tax deals cut with individual companies by individual states.

  119. eamonn moran Says:

    “There are no special corporate tax rates in Ireland.”
    @ Seamus Coffee
    Seamus if that statement is true then Apple appear to have lied to the Senate. It is Apple who have claimed to have negotiated the 2% rate with the Irish government 10 years ago.

  120. JeromeK Says:

    Some observations on the interesting discussion:

    MNCs are holding huge amounts of cash on their balance sheets – partly this is because they can avoid paying tax by keeping offshore. Taxes might help the CFO’s who measure themselves on EPS/ free cashflow to do something with the money more than keeping in the bank or handing back to shareholders.

    If an MNC is big enough to avoid paying tax, then this gives it a clear advantage over a smaller domestic competitor (who cannot) and is not conducive to a healthy competitive environment.

    For some MNCs (like Amazon) corporate profits are small – as they operate on tight margins and invest massively in R&D for the long game, so frankly corporation tax is minimal in comparison to local sales taxes that they do pay.

    The tax code rules around nationality/where business is conducted/executed are no longer applicable to cloud-based software companies – this has implications for sales tax as well as corporation tax.

    From Ireland perspective, if our politicos get their head around it, the international attention actually provides great cover for us to remove the loopholes that lower the effective rate – we are just being a good international player. The (accidental!) impact of this should be that tax revenues from MNC sector should increase.

    Are we confident enough in our spiel re educated workforce/gateway to Europe/good place to do business etc.. to carry this out?

  121. rf Says:

    eamonn

    I get her point and generally agree, but this seems another one of those non solution solutions (leave the eurozone, dont pay the bank debt) which never comes to anything and imagines Ireland as a self reliant potential Utopia with a variety of perfect options, rather than less bad ones (if these are general trends, even in the EU, then we need to stop looking at it as a domestic issue)
    My question was only, is the 12.5% rate applicable to most domestic businesses? If it is, then its going to be even more difficult to change it. IIRC correctly Phillip Lane wrote a paper on the history of Irelands low corp tax rate and its precurrsors, tracing the policy idea back to Lemass? Do we really think we’re going to change policy dramatically on this?

  122. Frank Moll Says:

    Apple Located in Europe to get access to the European market. It chose Ireland due to the tax advantages associated with here. The whinging from the US is not our problem. It’s there own problem for having too high a rate.

    We have two options (1) crack down on tax deductible royalty payments along with R&D relief to lose the image as a Tax Haven. This will lead to us losing these US MNC’s who have created jobs which leads to a flow of capital into the economy and income , employer taxes collected.

    (2)Ignore the protestations and wait for international agreements on tax rules. In the long run we are likely to lose these companies but we are better off keeping them for as long as we can.

  123. Seamus Coffey Says:

    @ Michael Hennigan,

    On your “statistic of the day”.

    Statistic of the Day: Only 25% of IDA Ireland client companies spend more than €100,000 annually on R&D despite a 25% R&D self-assessed spending credit.

    This is one of the swings and roundabouts of our tax system. For international companies it makes close to no sense to place R&D expenditure in a low-tax environment such as Ireland (even with a tax credit).

    Such expenditure is far more valuable in a higher-tax country where the tax benefits of relief on the expenditure are far greater. MNCs don’t want their R&D costs based in Ireland they want their revenues here. The statistic is a direct outcome of the system in place.

    The total amount claimed under the R&D tax credit in 2010 was €142.4 million.

  124. Michael Hennigan - Finfacts Says:

    @ Seamus Coffey

    [On your “statistic of the day”]

    What I was highlighting here was the delusion that a country like Ireland with a small indigenous exporting sector, could rely on the FDI sector to develop a research base.

    The big FDI and indigenous exporters do not do a material amount of patentable research in Ireland.

    In 2004, an analysis of the profile of Irish-based companies engaged in patenting showed that none of the top 50 exporters were among the top ten foreign-owned patenting companies, and leading computer manufacturers were entirely absent. Only one of the top 15 pharmaceutical exporters (Abbott) appeared on the list.

    Current European Patent Office data shows that the situation hasn’t changed.

  125. Seamus Coffey Says:

    @ eamonn,

    Apple didn’t claim to have negotiated a 2% corporate tax rate. Just because something was in the question asked by a US Senator does not mean it was in the answer provided by Apple.

    There is no doubt we are attractive to these companies [insert subjectively chosen reason]. How our tax system interacts with other systems is one of them but there is little to suggest that we negotiate special corporate tax rates with companies.

    http://economic-incentives.blogspot.ie/2013/05/a-special-rate-for-apple.html

  126. Taxing times | TechCentral.ie Says:

    [...] On the one hand there is outrage that companies such as Apple and Google, but not limited to tech (ie Starbucks), might be generating huge profits and not paying tax on them by not repatriating the cash, and then there is recrimination that countries such as ourselves and Holland (featured in the famous ‘Dutch Sandwich’ of the ‘Double Irish’) are facilitating these things with loopholes in our systems. One very interesting and, it has to be said, quite naïve commentary came from the BBC’s Robert Peston. This is most surprising as Peston is a long time commentator on such things. But in this article, where he quite rightly states that the storm of controversy could be bad for brand Ireland, he says that while it may be individually a good idea for these companies to take full advantage of tax avoidance, collectively it means that they are failing to contribute to the very infrastructures that produced the people who create their intellectual property in the first place. Now pardon me for being a cynic, but to use the parlance of the cool kids, WTAF?Peston appears to be suggesting that these companies exercise a social conscience and pay what is right instead of the absolute minimum they can legally get away with. When, in the history of business has that ever happened?Imagine the uproar at the shareholder meeting of a major multinational company when it was revealed that it was paying more corporate tax than it absolutely had to. But the paradox is that it is the ravenous greed of shareholders that drives this situation in the first place. It is a delicious irony then that companies such as Apple can generate these vast slushes that remain tantalisingly offshore and unavailable to the very ravenous drivers of the need to create them in the first place! Indeed, Apple recently, after much criticism about paying dividends, issued a bond to pay shareholders instead of paying tax on these massive offshore funds!So, who is kidding whom here? It is utterly naïve of anyone to expect a corporation to pay more tax than is absolutely necessary, irrespective of how right, moral or just that is. Corporations are driven by the profit motive because their shareholders tell them to be-that is all there is to it. Shareholders don’t care how immoral tax avoidance is as long as they get their expected benefits from being a shareholder, unless of course the whole dirty scheme is revealed publically attracting the ire of the hard pressed public and prompting politicians to hypocritically condemn them and thus denting the share price and causing sales to slump.Whose job is it then to ensure that these companies do pay their fair share? Well, it is the job and responsibility of individual governments through tax agreements and regulators (both state and collective such as EU) to ensure that any loophole or extraordinary facility is sufficiently controlled and regulated to prevent exploitation. For example, the double Irish was originally a facility set up in the hope that Irish founded companies could scale to global-sized operations. As such, it was never envisaged that a tech company would set up Irish operations which would licence IP from a US parent and then channel royalties, not sales, from an Irish subsidiary, through a Dutch company, before being whisked off to a haven such as Bermuda.But this is not a new situation and has been known about for some time. Indeed, it is no revelation that Apple or Google or any one of a multitude of other companies has "special" tax status here either. Governments should be free, within reason, to make special arrangements to encourage or facilitate certain industries, specialities or verticals in a territory, but not to the extent where it facilitates their tax avoidance elsewhere-because we know they will if they have the chance because corporations are utterly amoral when it comes to making money. Note I said amoral, not immoral. This has already drawn a repsonse from the Tánaiste here, defending our "transparent" tax regime. Indeed, it is that, so transparent as to be exploitable by any good coporation. The fact is that governments need to grow a pair when dealing with such entities in the full recognition that such things will be exploited instead of any presumption of fair play because it simply will not happen. And it reflects badly on anyone who knows how international business really works to expect a company to do the right thing when clearly "right" by definition of shareholders and corporations is very far from the "right" of Mr and Mrs Joe and Joanna Public.  For a dispassionate look at the situation that explains it far better than I can, go to The Irish Economy Blog.  [...]

  127. Michael Hennigan - Finfacts Says:

    @ Aidan R

    Companies that were entitled to the 10% manufacturing rate before 1998, were allowed keep the rate until 2010.

    Companies that had the pre-1981 tax exemption on export profits also had some years to run after Jan 1 2003.

    @ Seamus Coffey

    On special rates, maybe there are none but it would hardly be a surprise that the government approves special sweeteners on a case by case basis.

    This issue is likely a matter of semantics.

  128. Fiatluxjnr Says:

    It appears Mr. Cook gave a magnificent performance before the US Senate committee yesterday.
    The danger for us though is contained in the following..
    “According to one study cited by Mr. Levin, 30 of the largest American multinationals, with more than $160 billion in profits, “paid nothing in federal income taxes over a recent three-year period. Zero.”

    Corporate tax loopholes, Mr. Levin said, need to be closed “whether or not we reform the overall tax code.”
    http://www.nytimes.com/2013/05/22/technology/ceo-denies-that-apple-is-avoiding-taxes.html?hpw&_r=0

  129. Yields or Bust Says:

    @MH

    “..Apple over-provides for future taxes in its accounts, giving the impression that its rate is higher in the US than the reality according to The Wall Street Journal..”

    This sounds like nonsense. Auditors are paid a great deal of money to properly assess if the tax charged in any set of financial statements is correct and in line with the relevant legislation. Suggesting that Apple over accrues its tax charge to somehow pull the wool over its own investors eyes and the eyes of the IRS to enable it to pay more tax than it legally should is borderline bananas.

  130. Michael Hennigan - Finfacts Says:

    @ Seamus Coffey

    I should add that of course the Government would deny that special rates were available as otherwise it would be in trouble with the European Commission.

    What is clear is that Apple’s CFO and head of tax have no issue with the statements in the report as they both appeared at yesterday’s hearings on Capitol Hill and they did not object to the statements.

    So it is reasonable to assume that Apple has what it perceives as a written commitment to keep the tax liability below 2%.

    These individuals felt compelled to disclose this information in fear of being held in contempt of Congress.

  131. Michael Hennigan - Finfacts Says:

    @ Yields or Bust

    Wall Street Journal blog

    Apple Tax Bill Overstated to Investors

    http://allthingsd.com/20130521/apple-tax-bill-overstated-to-investors/

  132. john gallaher Says:

    @seamus,tks explains it ..
    @DOCM-would a special deal be a contravention of any EU rules!!!!

    great piece here………on progressie sorry regressieve taxation..

    “Apple’s exact arrangements in Ireland have changed over the years.
    Up until 2004 or later, the three Apple companies were assessed for taxation in Ireland, although the declared profits were much lower then.
    In 2004, ASI declared a profit of $325 million and paid Irish tax of $21 million, its accounts from the time show.
    In 2011, according to the subcommittee’s report, ASI earned $22 billion and paid just $10 million in “global taxes”.
    http://www.reuters.com/article/2013/05/21/us-apple-tax-loophole-idUSBRE94K0MH20130521

    Regarding any deal….oh we lost those documents…sorry…
    “The company told investigators that it lost all records concerning why Apple Operations International was originally set up in 1980, and why all of Apple global sales go through it. You might have a few ideas why if you keep reading.”
    http://qz.com/86740/the-seven-craziest-findings-in-the-us-investigation-of-apples-tax-avoidance-practices/

  133. Seamus Coffey Says:

    @ Michael Hennigan,

    Maybe. I’d say there will be some pointed PQs set for Michael Noonan over the next few weeks as a result of the testimony from the Apple executives. It does seem that they think they got a special deal from Ireland either in 1980 or later in the 1990s or even on both occasions.

    It seems ripe for a tasty set of questions from SF in particular as they have no skeletons in this particular closet. It’s gone less than a week but already the void left by NWL is being felt.

  134. brian lucey (@brianmlucey) Says:

    Seamus
    your doing a great job but…
    you say “Apple didn’t claim to have negotiated a 2% corporate tax rate”

    Versus
    “Apple told the Subcommittee that it had obtained this special rate through negotiations with the Irish government..
    Since the early 1990’s, the Government of Ireland has calculated Apple’s taxable
    income in such a way as to produce an effective rate in the low single digits …. The rate has varied from year to year, but since 2003 has been 2% or less.”

    http://www.ft.com/intl/cms/ab635df2-c18c-11e2-b93b-00144feab7de.pdf p20

    So, THEY state negotiation. Not a senator stating in a question. They state it.
    Now, as I mentioned earlier this can be by overt rate change or by item by item deductibility etc. The effect of the latter is the same as the former in this case. So, lets cut the pretence here ; lobbying and negotiation secured a deal. To state otherwise is to engage in doublethink duckspeak.
    Eastasia has always been at war with Oceania.

  135. john gallaher Says:

    @Seamus…could just ask the Irish director of AOI,she’s named on pages 21/22..most likely spearheaded the eh..negotiations….
    “Since its inception more than thirty years earlier, AOI has not had any employees.80 Instead, three individuals serve as AOI’s directors and sole officer, while working for other Apple companies. Those individuals currently consist of two Apple Inc. employees, Gene Levoff and Gary Wipfler, who reside in California and serve as directors on numerous other boards of Apple offshore affiliates, and one ADI employee, Cathy Kearney, who resides in Ireland….”
    link above.

  136. Seamus Coffey Says:

    @ brian,

    I have no doubt the the MNCs lobby the Irish government. They have a responsibility to their shareholders to do so. I am merely stating that no where do Apple say that something like the following happens

    Taxable Income * 0.02 = Tax Due

    Now it is clear that something along the lines of

    Taxable Income * 0.125 = .02 Gross Profit

    Where the percentage of gross profit paid in tax has been even less than 2% of gross profit. The differences between Gross Profit and Taxable Income are fairly well understood. And of course changes in the calculation of taxable income or in the tax rate applied can have the exact same effect on the bottom line so really it doesn’t matter which one is changed.

    However, Apple make clear that the changes introduced in Ireland were for the calculation of Taxable Income rather than a “special rate” as suggested by the US Senators. Apple said:

    Since the early 1990′s, the Government of Ireland has calculated Apple’s taxable income in such a way as to produce an effective rate in the low single digits, and this is the primary factor that contributed to Apple’s rate. The rate has varied from year to year, but since 2003 has been 2% or less.

    The first line you quote is what the Levin/McCain report said Apple said. The quote here is what Apple actually said. I see nothing in that to suggest a “special” deal for Apple. Apple may have lobbied for it. They probably did. But if the calculation of taxable income changed for one company it only changed because it changed for all companies. There is nothing special or unique about it. We could have a debate about whether or not this change to the calculation of taxable income should have been introduced to the Irish tax code but again we’re not having that discussion.

    If you have a quote where Apple say they negotiated a special 2% corporation tax rate with the Irish government that applies just to them it would clear up a lot of confusion.

  137. Bond. Eoin Bond Says:

    @ Brian

    that comment is the Senate subcommittee saying what Apple apparently told it. So there is by necessity at least some element of paraphrasing going on. You’ll notice that the part about the “special rate” is not included in the “quote” there, and in fact the term “effective rate” is the one eventually quoted. It then goes on to use the term “assessed rate”. So all in all, we can’t be quite sure what terminology Apple themselves would attach to this “special” rate. I would again suggest its the rulings over what is taxable that has been negotiated, not the rate itself. The point would be that a ruling would be relatively transperent and would have to be made available to other entities on a similar basis, as opposed to a specially “negotiated” rate other than 12.5%.

  138. Seamus Coffey Says:

    @ brian,

    This excellent piece from Tom Bergin of Reuters was linked above:

    While the Senate subcommittee referred to Apple negotiating tax rates of below 2 percent, Ireland usually facilitates low tax payments not by undercutting its headline corporate tax rate of 12.5 percent but by allowing companies to declare low taxable profits – often by making deductions for payments to tax-exempt affiliates, usually offshore.

  139. brian lucey (@brianmlucey) Says:

    SEamus. Is it economics or semantics you lecture in? Coz, im confused….

  140. brian lucey (@brianmlucey) Says:

    Ditto Eoin. Note my earlier comments back up in the thirties. This looks like a special rate, it calculates like a special rate, it is clearly therefore a …?

  141. Bond. Eoin Bond Says:

    @ Brian

    you’re the one who was focused on what Senate said vs what Apple said…

    I would also think there is an important difference between Ireland allowing a transperent legal ruling on a particular transaction vs just deciding “hey, stick 2% on that bad boy”…

  142. yoganmahew Says:

    @fergaloah
    “Luxembourg was being used as a billing location as it had the lowest VAT rate in the EU and VAT was based on the rate at Point of Sale but that is changing from 2015 when the rate applied should be based on the rate applicable to the location of the purchaser.”
    That’s news to me given I pay 23% on my purchases from Amazon and indeed from any large retailer with significant trade into Ireland… I thought the rules on this had changed some years ago?

  143. brian lucey (@brianmlucey) Says:

    Eoin
    No, I focused on what Seamus said – to wit that apple had said nout about a deal. Hey, parse and sentence strucutre as you will. We have lost the PR battle on this a long time ago. Like dealing with the banks the longer we leave doing a solid analysis of the effects of changing our tax structure the worsener it will be. Ostriches make good eating…

  144. Chris Short Says:

    @ Seamas

    I agree with Brian Lucey above. This appears to be a quibble.

    It would seem to me to be entirely possible that the Revenue Commissioners could have agreed with Apple that certain transactions could be used to reduce their taxable income. It may even be the case that the Revenue applied a slightly more flexible approach than it otherwise would have (I understand the Revenue does have some discretion in these matters like the Gardai with penalty points) with another company.

    I am, of course, open to correction.

  145. eamonn moran Says:

    @ Seamus

    It seems ripe for a tasty set of questions from SF in particular as they have no skeletons in this particular closet. It’s gone less than a week but already the void left by NWL is being felt.

    I often thought NWL was writing Pearce Doherty’s questions for him, either that, or who ever it was, had the same economically inquisitive mind.
    However in this case there is no chance of any disclosure on the part of the Irish government. That would be a big caught with pants down moment. It would have to come from Apple.

  146. Michael Hennigan - Finfacts Says:

    There will unlikely be any further clarity on the rates issue and the politicians will stick to the line that there are no special rates.

    They are not saying there are no special deals agreed on an individual company basis.

    So there are many ways to skin a cat.

    In the past, there used be Section 84 loans and other incentives available to the chosen.

    The official agreed line appears to be to keep harping on the rate and try and avoid the issue of massive revenue diversions and the booking of them as exports.

    Kenny

    it is very clear, it is very transparent and we do not do special deals with individual companies in regard to that tax rate.

    Kenny said that the OECD was about to issue a report on transparency in multi-national taxation and that “Ireland has been to the forefront of this …. one of the front runners in building a new international consensus regarding transparency on tax issues.”
    ???

    O’Leary of the IDA

    Ireland isn’t a tax haven

    “There are many countries that have good tax offerings, including individual states in the United States and countries like Luxembourg, Belgium, Holland and the UK increasingly.

    Bruton

    Minister Bruton said that all companies brought to Ireland by the IDA contributed significantly to Ireland’s economy.

    Mr Bruton said a low-tax rate was always part of Ireland’s “offering” to international companies and it would continue to be so.

  147. Bond. Eoin Bond Says:

    @ Brian/Chris/et al

    a regime that makes interpretations of rulings is somewhat different to one that just decides whatever rate it wants for each individual company. It would be the difference between a very accomodative and nuanced corporate tax policy and a tax haven regime that literally just makes it up as and when and for whomever it wants. So yes, the PR battle which Brian refers to should understand the difference.

    Secondly, what keeps getting missed here is the point that if we applied higher tax rates to Apple’s earnings, Ireland would be the beneficiary, not the US or UK or France or wherever, so i really dont think they’re all that annoyed that Ireland isn’t applying a harsh and restrictive tax regime. Indeed, given that usage of tax credits, if/when the money does eventually arrive back in the US, it will allow GREATER taxation by the US Treasury of these profits, not less.

    What they are really annoyed about is that after leaving tax policy in their own jurisdictions so loose and accomodative for all the boom years, in order to present an investor friendly environment, they’ve realised that both corporates and other economies have gotten quite good at fully utilising those laws for their own economic purposes, and large US corporates have become rich enough that the cash never actually needs to come back onshore and be used in the US economy. It either sits in the Caribeaan, or is used to invest in foreign economies far from US shores. As such, its political problematic to have low-tax-paying corporates that dont use these lowly-taxed profits to support domestic economic activity in the US at a time of low growth, high deficits and high unemployment.

    They could easily end this practice by closing off the required loophles, but of course then they probably wouldn’t continue to receive corporate donations lobbying them to maintain the current practice. So the problem is how to maintain low foreign taxes, high domestic taxes, high tax avoidance, but also encourage domestic investment. Not an easy condundrum to solve.

  148. OMF Says:

    Wow. I mean, just Wow. The US senate really hit a nerve with this one. If only there was this much rancour and debate about austerity eh?

  149. PR Guy Says:

    Any noises made by politicians about this is simply that: noisy PR guff to make it look to the proles as if the politicos are seriously going after these companies now….. but it will all end in …… status quo/no change. Come on… who do you think really runs this planet? The politicians or big business?

    On the subject of Status Quo… wasn’t one of their songs “Can’t give you more?” (1977)

    I think I read an article today – I read far too much and forget things – suggesting that if all this tax avoidance (maybe even ‘evasion’) suddenly stopped it would end poverty in the world. I beg to differ – I suggest it would end up in Swiss bank accounts held by politicians around the world as they siphoned off all this new ‘income’ – it certainly wouldn’t reach the masses. Has anyone ever truly wondered (i.e. really investigated) how some politicians in many countries seem to become fabulously wealthy over time despite the limitations of the actual salary they receive in their post?

  150. Chris Short Says:

    @ Eoin Bond,

    “a regime that makes interpretations of rulings is somewhat different to one that just decides whatever rate it wants for each individual company. It would be the difference between a very accomodative and nuanced corporate tax policy and a tax haven regime that literally just makes it up as and when and for whomever it wants.”

    A distinction without a difference.

    And, more importantly, the US, UK, France and Germany are inclined to agree.

  151. john gallaher Says:

    @PR Guy here..paper linked-second link
    http://www.dw.de/oxfam-says-12tn-stashed-in-european-tax-havens-ahead-of-eu-tax-talks/a-16829069
    http://taxjustice.blogspot.com/2013/05/oxfam-tax-on-offshore-trillions-could.html

  152. eamonn moran Says:

    @ Eoin Bond

    “they’ve realised that both corporates and other economies have gotten quite good at fully utilising those laws for their own economic purposes, and large US corporates have become rich enough that the cash never actually needs to come back onshore and be used in the US economy. It either sits in the Caribeaan, or is used to invest in foreign economies far from US shores.”

    In things like Bonds of Anglo Irish Bank which when the sh1t hits, can not be treated in the same was as a normal company because those who own the bonds are not the type of people you can hit.

    Look, the evidence from the United States is stark. The types of practices are leading the economy of the US to an extreemly unequal society.
    The 1% and all the articles Joe Stiglitz has written.

    But we are following the US down this same road and people like you and FG are pushing us down it as fast as possible.
    It ends badly for everyone except the 1%
    With one exception. We wont have our own 1%. It will be the guys in the US.
    If Apple paid 12.5% of their profits from all non US activity in Ireland, Ireland would be hugely better off It wouldnt be fair to China and Europe and the rest but that is not whats happening.

    We are enabling them to become way more powerful due to the tax avoidance measures we allow them have, so obviously every time they come back to deal with us or any other Government they are stronger and stronger and keep demanding better and better terms.

    What is happening is no less than an erosion of our (not just Ireland’s) democracy.

  153. Mickey Hickey Says:

    @Eamonn Moran

    I agree with you.
    Fate will unfold as it should, accelerated by adult and particularly youth unemployment. In the long run the ballot box still rules.

  154. Bond. Eoin Bond Says:

    @ Chris

    if the US et al are inclined to agree, then they will simply close their own legal loopholes. They wont need our help or support. My guess is that they dont close that loophole.

    @ Eamon

    i actually dont disagree. I think its insane that large corporates pay so little in corporation tax, particularly at a time when all else in society is being asked to suffer austerity. But for God’s sake, get the sequence of events and facilitators in the correct order – its a US legal loophole that allows this in the first place, not an Irish one. We’re simply jumping on their bandwagon, as they seemed to intend us to do by virtue of their being a loophole in the first place….(or else why else have it?)

  155. BeeCeeTee Says:

    For all the talk about negotiated taxation, the only specific issue that the Senate Committee highlighted that relates to the Irish State is the transparent difference between Ireland and the US in rules on corporate tax residency. If they had found anything else specific, one would imagine that they might have mentioned it.

  156. Jesper Says:

    How does one easily close the legal loopholes that companies are currently using to transfer profits to Ireland and then onwards?

    It is a serious question so if there is an answer it’d be very enlightening if an answer would be provided.

  157. paul quigley Says:

    @ Mickeyhickey

    Pace SF, youth unemployment is, IMHO, more likely to result in emigration, drug addiction, suicide or anomie than in the kind of political renewal you seem to hope for. The western world, core and periphery alike, is pretty much denuded of political and social capital. All those decades of mass consumer culture have taken their toll.

    http://www.youtube.com/watch?v=Hr0YZzL8KCI

  158. francis Says:

    @ paul quigley

    WE in Germany, and in the northern countries, and our eastern neighbors are NOT denuded of political and social capital, quite the opposite

  159. Tullmcadoo Says:

    The attitude of the MNCs seems to be that if societies want to provide extra wages and welfare benefits to it’s voters then self same voters can pay for it themselves. Totally understandable since these corporations are stateless in the main. AAPL, MSFT, XOM etc could prob. Move their domicile to an oil rig and avoid CT altogether …they probably will.

  160. Fiatluxjnr Says:

    @Tull
    It would be too cramped on an oil rig…they could buy one of the greek islands with all that dosh they hold offshore and set up their own independent Republic of Apple.

  161. Fiatluxjnr Says:

    Off topic but interesting..
    Brussels to use Spanish template for bank resolution….what’s that?
    http://gonzaloraffoinfonews.blogspot.ie/2013/05/brussels-to-tighten-rules-on-bank.html

  162. Tullmcadoo Says:

    Fiat,
    Won’t be crowded when company has no staff. But your idea has merit.
    This practise could be stamped our by the US Congress by closing loopholes & lowering the CT rate. Then all the money would reappear onshore. There would be a collapse in hourly rates in Dublin legal circles & the salaries of hyper Uni Profs would have to be cut. All very regrettable.

  163. Nevermindme Says:

    IMO This is mainly an issue with the US tax code. People there who have wrote rules or didn’t change the rules and/or have benefited from lobby groups who want the status Quo maintained are now engaged in soundbites and deflection. ‘How dare you follow the rules to your advantage’ ‘We never guessed an entity whose sole duty is to its shareholders would avoid paying tax’. It’s farcical, guess what Senator ‘You are the law!’

    ‘The Special Rate’ is the only question that arises for Ireland. If we make/made special laws exclusive to some companies and not others, then that’s wrong. If we make laws available to all companies that works to attract FDI here then that’s fair game.

    If companies weren’t using Ireland for this over the last decade they’d have being using other states.

    We have a low tax rate lead economy. Germany has an export lead economy. I don’t see Germany spreading it’s surplus around just because others are complaining.

  164. DOCM Says:

    @ John Gallaher

    In answer to your question I can do no better than to “lift” this reply by Seamus Coffey to a question on his blog.

    “Thanks Seamus. Do you think the Irish tax regime is sustainable? And if not, what then?

    Reply
    Replies

    Seamus CoffeyWednesday, May 22, 2013
    Hi Patrick,

    Nothing lasts forever. But in saying that I do not expect significant changes for a decade or more. The US may try to make it easier for their companies to repatriate global profits but even with recent noises from the Senate I cannot see that happening before the end of the current administration.

    The US doesn’t really want to change the low- or no-tax outcomes that the tax arbitrage strategies of companies like Apple achieve. They want to maintain that but find some way of encouraging/forcing the repatriation of the profits so the 35% US corporate tax rate can be levied.

    At present the companies are (indefinitely) deferring this by keeping the money offshore – though I do question the legitimacy of Apple claiming their holding companies are tax resident nowhere. Something could be done to tighten up on that quickly.

    When people talk of Apple using this scheme to avoid €X billion of tax it should be noted that it is US tax that is being referred to and that the tax liability is being deferred rather than avoided. Apple has a massive deferred tax liability with the US. There is no way of avoiding that on their global profits. What they are avoiding is paying by keeping the money offshore.

    It is the US tax code that allows this deferral but even if this “same country exception” for what is known as Subpart F income (passive income such as patent royalties) is removed it is hard to know what the implications will be for Ireland?

    Will companies still want to route their global profits to no-tax environments such as Bermuda and the Cayman Islands? Possibly. It may make low-tax countries with some substance more attractive for their international facilities, then again the consequence could be that they would favour moving their international facilities to high-tax countries. It really is impossible to tell.

    There is no doubt there are significant risks/threats and I’m sure the Dept. of Finance will be watching the US Treasury for any hint of changes coming down the track. For the moment no substantive policy proposals have been made. The Senate hearing might shake something out but it is still likely that it will be years before anything significant comes about.”

    The key element from an EU point of view is in another reply by Seamus above; that there has been no discrimination between Apple or any other company. Countries in the EU are free to administer their direct taxes in the manner in which they see fit but without breaching the competition rules of the EU. Contrary to what Michael Hennigan seems to think from his blog post above, they are not free to do what they like without prior approval of the European Commission which is the anti-trust authority (Justice Department) of the EU. It has very big teeth as it is in the interest of all the parties that it should have a sharp set of gnashers.

    To pick up further on the reply by Seamus, and to misquote Calvin Coolidge, “the business of America is business”.

    http://www.thisdayinquotes.com/2010/01/business-of-america-is-business.html

    I am not so sure about the time-line suggested by Seamus. Big changes occur suddenly (as Professor John Fitzgerald remarked today, in somewhat apocalyptic terms, of the possibility of a decision by Congress closing down 150,000 jobs in Ireland).

    Coincidentally, RTE is running a series on the “Big House” and its role as the local centre of both employment and industry during the era of the Ascendancy. American MNCs seem to have taken over the role (except for the fact that they are more transitory).

    On the fundamental point advanced by many on this blog, even those on opposing sides, he is correct; our dependency on mobile FDI is excessive and a sword of Damocles.

  165. DOCM Says:

    @ JG

    Final paragraph should read;

    The fundamental point advanced by many on this blog, even those on opposing sides, is correct; our dependency on mobile FDI is excessive and a sword of Damocles.

  166. Fiatluxjnr Says:

    @Tull
    Closing loopholes may work but the problem seems to be more complex…
    CNBC reporting tonight the Microsoft are to take on thousands of workers in China….patriotic? So much for bringing jobs back home to the US. Chinese might get a bigger tax take.

  167. DOCM Says:

    @ John Gallaher

    Coincidentally, this item from the FT on the second branch of the Commission’s treaty-based authority in relation to competition; state aid rules.

    http://www.ft.com/intl/cms/s/0/ef8c6f16-c2ed-11e2-9bcb-00144feab7de.html#axzz2U3JedC5P

  168. dylansgoneelectric Says:

    not so quick on losing the PR battle:

    http://www.ft.com/intl/cms/s/0/3bacfa14-c20d-11e2-8992-00144feab7de.html#axzz2U3K9MYbc

    High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/3bacfa14-c20d-11e2-8992-00144feab7de.html#ixzz2U3KzkhVn

    “The report is likely to put Ireland under the spotlight just when the OECD is focusing on profit shifting and base erosion, and Europe is again muttering about unfair competition. But to be fair, there is no evidence that Ireland struck preferential deals with Apple. Nor is there anything to suggest that Apple has acted illegally, as Tim Cook, chief executive, told the committee on Tuesday. Much of the avoidance cited is routinely used by US multinationals, thanks to a tax code which invites this through differing treatment of foreign and domestic earnings. At the last count, US companies held $1.7tn in unremitted profits.

    Rather than bash companies and foreign countries, the Apple example should encourage Congress to move on corporate tax reform. “

  169. Mickey Hickey Says:

    @Paul Quigley

    When a majority of youth are unemployed, collectively they create all kinds of civil disobedience. In addition to the youth vote there is the vote of people (parents/siblings/grandparents) supporting unemployed youth. All of this creates new kinds of incumbent friction for governments.

    Stoic people like the Irish are not likely to lead the parade. There are other countries where people tend to be quite volatile.

    The big issue in Kerry is potholes and the need for funds from Dublin. I kid you not.

  170. john gallaher Says:

    @DOCM one the more surprising findings in the report was where exactly offshore is….for me its around the corner…
    “Apple’s $102 billion in offshore profits is actually managed by one of its wholly owned subsidiaries in Reno, Nev., according to the Senate report on the company’s tax avoidance. The money is tracked by Apple company bookkeepers in Austin, Tex. What’s more, the funds are held in bank accounts in New York.”

    http://www.nytimes.com/2013/05/22/business/for-us-companies-money-offshore-means-manhattan.html?hp&_r=1&

    Dr Sheila Killian did an excellent report-cheat sheet/cliff notes here-report linked-a little dated but..
    “Driving the Getaway Car is a timely and useful contribution to an urgently needed debate. The new Irish government faces tough choices on tax policies. The current situation is unsustainable and a new development strategy is urgently required. They can either opt for further tax competition, which we would argue is harmful to the interests of other countries and ultimately self-defeating (see Sheila Killian’s article in Tax Justice Focus here), or they can strike out in a direction that reduces harmful impacts on other countries and contributes to strengthening internal fiscal sustainability.

    As Killian argues in this report, the current tax policy mix is not coherent with existing commitments to avoid causing harm to other countries. Change is necessary, but does the current government have the appetite to take on the vested corporate interests who find the current corporate tax regime, with all its gaps and loopholes, very much to their liking?”
    http://taxjustice.blogspot.com/2011/03/driving-getaway-car-ireland-tax-and.html

  171. paul quigley Says:

    @ francis

    I have always admired the way in which Germans can do hopelessness and despair

    http://voices.yahoo.com/the-city-anomie-german-expressionism-2222535.html

  172. paul quigley Says:

    :)

  173. paul quigley Says:

    @ Mickey

    With all those growhouses about country, potholes have acquired an entirely new significance…at least one sector of the economy is thriving…

  174. DOCM Says:

    @ john gallaher

    Talk about looking through the wrong end of the telescope! Ireland is not in a position to ride a tricycle, not to mind drive a getaway car. The heist is being organised by a much bigger player; corporate America.

    This is what the collected wisdom of the Heads of State and Government of the EU has come up with!

    http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/137199.pdf

  175. Fiatluxjnr Says:

    A lot of cheap property coming on the market in Spain. I see NAMA is no longer the biggest property company…the Spanish version has acquired 90b euro of property and loans. The discounts look similar to those of NAMA.
    http://www.bloomberg.com/news/2013-05-21/spains-bad-bank-begins-15-year-suicide-with-bull-sale.html

    Btw, did anyone notice that 2.4b in deposits left Irish banks in April. Yahoo news seems to be the only one reporting it. Could be they are buying Spanish property at a discount or perhaps they have taken fright at the Cyprus debacle and put it under the mattress.

  176. Mickey Hickey Says:

    @DOCM

    Notice the careful use of “tax evasion” as not being Kosher while carefully avoiding “tax avoidance” which is the cancer afflicting tax revenues.

    Apple admitted “tax avoidance” while emphasising it is legal. Apple also invited the Senators to consult it when changing the tax code. This means there will be some tinkering with the US tax code. They are looking at Canada which has corporate tax of 15%-20% with fewer exemptions.

  177. john gallaher Says:

    @DOCM…laughing here…tks for link was looking out for it caught some of the interviews.
    http://www.euronews.com/2013/05/22/ireland-branded-tax-haven-ahead-of-eu-summit-on-tax-evasion/

  178. john gallaher Says:

    @DOCM some yank stuff…off to a barstool…but here is some insight on the recent apple bashing..check out the chart.
    http://www.economist.com/blogs/graphicdetail/2013/05/daily-chart-14
    http://currencyofideas.tumblr.com/post/51032784874/apple-bashing-as-political-sport-modernize-the

  179. francis Says:

    @ paul

    a 5 year old yahoo post over some pre WWI painters. Sooooo ?
    We all hade some crazy aunt in the attic, some 100 years ago.

    @ all

    You do realize that after that double wammy of apple bond sale & 0% corporate tax deal 2010 in Ireland, that this whole business is dead, do you?

  180. John Gallaher Says:

    @francis like the parrot…..
    http://www.dailymotion.com/video/xoh8j_monty-python-dead-parrot-sketch_news#.UZ1Vdcu9KSM

  181. francis Says:

    Hi John,

    I like Monty Python a lot ,

    and I still kind of admire people who can keep talking complete BS with a straight face.

    Like they said: never , ever take an engineer with you to the customer

  182. Mickey Hickey Says:

    @Paul Quigley

    We had a thriving Poteen production business in Kerry, killed dead by the Tiger. Now it is coming in from as far away as Sligo. I am sure there are many house plants that would be thrown out if the woman of the house knew what they were. We are not capable of organising competitive grow ops. A good source of revenue for the Gov’t would be legalised grass (production and sale) and just regular common garden VAT. A far more stable business than the Dublin Financial District. More palatable than property taxes.

  183. Neville Bagnall Says:

    @Seamus

    I take your general point that what has been going on here is effectively a very targeted and particularly attractive form of the “growth incentives” that all tax authorities are fond of riddling their corporate tax codes with. I also take your point that reform is probably a long way off in the US and Europe and that it makes no sense for Ireland to be a first mover in this area. I don’t disagree, but the PR battle is lost and that is not unimportant. It appears the delicate niceties of tax law are (deliberately?) misunderstood, even at MNC Board and US Senate level, to say nothing of ordinary taxpayers.

    @Brian, and others.

    OK, so tax avoidance is a bad policy basis for FDI and wider economic development and getting more unsustainable by the day. I could get behind that. What are the alternatives? Given the Irish disadvantages by comparison to the core can you summarise what options we have in changing a long standing policy base in a way that has some hope of maintaining FDI and developing a competitive indigenous corporate sector?

    In particular, given that CCCTB appears to be the mechanism favoured by the Commission and the larger states for tackling transfer pricing, is there a configuration of the CCCTB apportionment formula that might keep Ireland an attractive FDI location? If so, how might we argue for such a formula and what would our chances be? I think I can guess the answers, but I’m interested to hear some knowledgeable opinions. Or have we a good PR counter-proposal if the CCCTB is anathema? As far as I can see, the recent kerfuffle crystallises the greater threat for FDI attractiveness of the CCCTB by comparison to any CT rate change.

  184. Brian Woods Snr: Says:

    @ MH: Hey up!

    “We are not capable of organising competitive grow ops. ”

    We could, but the pecuniary return is somewhat low. Better to plunder folk’s wallets – “We KNOW your MPRN, we do!”

    “A good source of revenue for the Gov’t would be legalised grass (production and sale) and just regular common garden VAT.”

    Yes and no. Just regulate it – like alcohol and tobacco. Simple. The legislation is already tried and tested. Small revenue potential though.

    The really big saving would be reduction in Garda, Court and prison resources (and the politically encouraged, criminal drug monopolies, of no fixed MPRN, should suffer some revenue decline as well). Regulation likely? No! Too many vested folk. We would need a Croagh Patrick Agreement for that!

    On a lighter note. Why do we need taxes in the first place? Oh yeah! No taxes, no urbanized society! Maybe Dev was correct. We need to back to rural crossroads! That should solve it.

    Or maybe its this:-

    “I have a funny feeling that there’s a necessity driving this (hinky tax stuff) that no-one quite understands and it is this: “honest business” doesn’t pay enough to keep the system expanding at the required rate to make the debt load at least appear sustainable.”
    [anon blogger: iTulip.com: 30-04-2010]

  185. Fiatluxjnr Says:

    Getting on to the serious business of debt relief….seems something going on in that department.
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_23/05/2013_500365
    Government remarkably quiet?

  186. BrianH Says:

    From an Opinion piece in the NY Times:

    “Question for the government of Ireland: Do you really want your country to be known as an offshore tax haven? Indeed, at a time when your citizens are dealing with the pain of an austerity program, how can you justify allowing Apple to pay virtually no taxes on a subsidiary established solely to avoid taxes in the United States? Just wondering.”

    Article here: http://wap.nytimes.com/2013/05/23/opinion/nocera-here-comes-the-sun.html

  187. Michael Hennigan - Finfacts Says:

    Michael Noonan is reported to have said at the Oireachtas finance committee meeting last evening that the stateless/ ghost Apple companies that were registered in Cork were neither tax resident in the US nor tax resident in Ireland, and “because they are not tax resident in Ireland they’re not liable to Irish tax”.

    However, according to the Senate report, one of them, Apple Sales International, has reported billions in income from bigger amounts in Irish tax filings and paid Irish tax on the net income.

    These revenues also likely became Irish exports.

    Noonan not transparent on Apple taxes and US Senate report

    http://www.finfacts-blog.com/2013/05/noonan-not-transparent-on-apple-taxes.html

  188. paul quigley Says:

    OK francis…no more jokes :)

    http://www.mpettis.com/2013/05/21/excess-german-savings-not-thrift-caused-the-european-crisis/

  189. paul quigley Says:

    This is from my mad aunt in the attic:

    ‘”According to accepted ideas, for example, a certain way of living is considered the upper limit to which a workman may aspire in his efforts to improve his existence, and there is another limit below which he is not willingly permitted to fall unless he has seriously [d]emeaned himself.” (Durkheim 249) That scale will be different for different people depending on their class or occupation, but it applies in the same way to everyone. The upper-limit for a person is dictated to them and regulated by society, and this will shape him psychologically: “’

    To what do the workmen and women aspire today ?

  190. DOCM Says:

    @ Flj

    A very interesting link, especially the last Q & A.

    “After the EU summit last June, Greece and other countries under adjustment programs, like Ireland, started hoping that the ESM would be able to recapitalize their banks directly. It’s not really clear yet what this means as each eurozone nation is giving its own interpretation of the decision. For example, Greece has borrowed 50 billion euros from the EFSF to recapitalize its banks. Will it ever be able to write this money off its public debt books?

    We are working very hard on all the elements of the banking union. As you know, we have already agreed on the Single Supervisory Mechanism and the Capital Requirements Directive. Our current work focuses on two elements, one is the Resolution Directive, which gives us a harmonized framework to deal with banks in trouble, and the second one is direct bank recapitalization. Now whether direct recap will be accessible also to countries which are already under programs and have recapitalized their banks is yet to be decided. So I can’t answer that. We are trying to reach an agreement before the summer, but of course there are no guarantees. There are still elements to be discussed. I think it’s crucial to have the public backstop from the ESM in order to help countries facing problems. The conditions for that are now being discussed. Hopefully, we will have more clarity on that before the summer.”

    The earlier agreement reached in the stand-off between Paris and Berlin – the key protagonists – was, it seems, that the conditions surrounding such re-caps would be put in place according to the June deadline, the actual implementation, whatever it includes, being dependent on the other pre-requisites set out by Germany; essentially all the elements in banking union being agreed.

    Keeping to the time-table poses an interesting tactical political question for Merkel. Guy Verhofstadt is not impressed and evidently has concerns as to how it will be tackled.

    http://www.ft.com/intl/cms/s/0/23d518d2-befb-11e2-87ff-00144feab7de.html#axzz2U7XoP8gP

    @ BrianH

    Is not the substantive question, allowing Apple “to pay virtually no taxes”, or rather more accurately to keep the profits subject to US tax in limbo technically nowhere abroad, more properly addressed to the US government?

  191. BrianH Says:

    @DOCM

    Apple is skating right up to the edge of the law to avoid paying tax anywhere (US and Ireland and UK and France and etc);

    The Republic of Ireland is very much facilitating this tax avoidance;

    Therefore, the Republic of Ireland is a tax haven.

    We are being called out on it now, loud and clear, from the US Senate chambers to the Opinion page of the NY Times to the halls of Brussels.

    I don’t think this is going to blow over, we are going to have to change.

  192. john gallaher Says:

    @francis,Ireland may be out of step on this one,some recent int. developments and a free book…no not lunch!
    http://www.publicintegrity.org/2013/05/22/12479/release-offshore-records-draws-worldwide-response
    https://icij-uploads.s3.amazonaws.com/Secrecy-for-Sale.pdf

  193. vinny Says:

    Not much interest by any posters on this site in the following –
    - the current type of ‘capitalism’ driven by massive corporations, globalisation and digital money-shifting – is utterly skewed in favour of the 1% super rich who, with the help of their political pals, stuff wealth created by the employees and consumers everywhere in tax havens throughout the world…any economic ‘ism’ that gets out of balance is dangerous…
    – the share of tax revenues contributed by employees continues to rise while the share of corporate tax contribution continues to fall…
    – U.S. companies have never been so profitable and are ‘resting’ vast sums of taxable profits in tax havens – they are not reinvesting – anti Obama?
    - there is no need for these ridiculous ‘austerity’ programmes in any country anywhere, more than enough wealth to go around – there is a need for vastly improved disciplines and cost/benefit approaches to govt programmes, revenue collecting and spending practices….
    – rapacious greed and corruption is endemic throughout capitalism, greed and corruption have always been and will be present and the super rich must be allowed hide at least some of their gains – its the way of the world – but the current version is utterly out of control and must be reined in…
    – the middle class strivers in austerity economies in Europe are close to the economic edge….
    – Ireland and its FDI policies and practices are corporate tax haven models which are no longer yielding the revenue returns and employment spinoffs needed for survival…. time for major re-evaluation and change….

  194. eamonn moran Says:

    Vinny if you are going to criticize the least you could do is be a little less lazy and read through some of the posts before you make bold incorrect statements.

    Most of the debate in the comments has been around your first three and last points.

  195. DOCM Says:

    @ All

    Off topic but an example of how soundbites can trip politicians up.

    http://www.telegraph.co.uk/news/worldnews/europe/eu/10074456/David-Cameron-ridicules-EU-olive-oil-jug-ban.html

  196. Brian Woods Snr: Says:

    @ vinny: “Not much interest by any posters on this site …”

    Yep! The so-called austerity consolidation programmes are a complete load of economic b****x. But sure, which local econ is saying this?

    The hinky tax stuff is due to the ‘need’ for multi-nationals to use the untaxed revenues for financial investment (aka: derivative gambling and commodity trading). This gives a good return – until it does not! So its a no-brainer if they do no buy-off the local legislators to do their bidding. And lots of folk are going, “Oh my God!”. Its pathetic.

    Expect little reform, change or whatever. Though some marginal reforms are happening. Things have to get a great deal worse: then maybe.

  197. francis Says:

    @ Paul Quigley

    This Michael Pettis is a funny fellow. Whatever happens somewhere, of course it is always the fault of Germany.

    1. “policies aimed at restraining wage growth “. Work tariffs are set in Germany between the employers and the employees, represented by their unions. That they made their choice for not ruining their fragile new companies in Eastern Germany by demanding wages above the productivity, in a situation of unemployment 15% or higher, is a perfectly reasonable choice.

    2. The endless repetition of false claims “German national savings rates excessively. These excess savings“, which he could have checked easily then leads to

    The criminal attitude of this Michael Pettis “except by forcing down the German savings rate” is really remarkable. Wage and savings decisions are done by the people it concerns here, and not by some alien control freaks.

    The same holds for this funny Marios from Cyprus we had here recently, who demanded that we should bail out people from their gambling debt, who have 10 times more wealth than us.

    Our saving rates are not too high, but average
    http://www.gfmag.com/tools/global-database/economic-data/12065-household-saving-rates.html#axzz2U7vaxays

    Given that the Wealth / income ratio in Germany and especially East Germany is substantially below many other European countries, and especially the medians, means that we should actually encourage our (lower income) folks to save a little more. But they do not trust stocks, buying real estate does not make sense, if you live in multi unit housing settings, and renting was until recently cheaper.

    The net replacement rate of our pensions is somewhat lower than in many other European countries, because we cap the retirement insurance contributions at 20%, and given our demographics, they should build some capital stock to add to their retirement consumption. Saving a little more and certainly not drastically less, is the reasonable thing to do.

    3. Of course “the German economy shifted from not having enough savings to cover domestic investment needs to having,”
    That Germany “saved too little” during the 1990ties (negative CA , until the net international position was ZERO in 1998) was the perfectly reasonable thing to do, we had plenty of invest to do in run down Eastern Germany.
    CIA world fact book: invest Germany 17.8% EU 18%. Apparently this amount of invest is enough to produce a 5 % CA surplus, with a 5% unemployment, there is absolutely no need to invest more, now

    4. “the relative decline in German household consumption “ was the perfectly reasonable thing to do, given the rapidly increasing household debt, until 1999, which was most of the times not covered by a corresponding asset in terms of owning real estate. We still have about 100 000 cases per year of personal bankruptcies, cleaning up excessive debt from 10 or more years ago.

    5. “The eurozone is not a small and open economy”, “let us pretend that Europe consists of only two countries, Spain and Germany.”
    It is a open economy, we are all trading our goods in a global market, especially Ireland, and not just within Europe. And it was in fact remarkable that the German trade with Europe and especially the EuroArea stagnated, but flourished with the rest of the world.
    And our Trade / CA surplus turned solidly positive in 2003, exactly at the time, the Euro Exchange rate went beyond the “Fair value” of about 1.2 Dollar, profiting from a strong Euro, which makes perfect sense, when our imports, like oil, are inelastic, and our exports of special machines as well, and it did not hurt that our competitors in Swiss Franc and Japanese Yen were a little undervalued. Just the opposite of what so many are claiming:”Germany did profit from a weak Euro”.

    6. “It is tempting to interpret Germany’s actions as the kind of far-sighted and prudent actions that every country should have followed in order”.
    LOL, this is not only tempting, but true : – )

    Germany is the most popular country in the world, even after the substantial hate mongering in countries like Greece, Spain, Italy, by people who always have to blame others for their own decisions:
    http://www.bbc.co.uk/news/world-europe-22624104

    Some other guy this week claimed that the house price bubble in Spain was because “The Germans bid up the prices”. Some Germans bought summer houses there, when they were relatively cheap, pre reunification 1990, and were not amused that at some point some folks in Spain suddenly discovered that there was something wrong with the building permits, 30 years ago. This is a sure way to attract new buyers, especially at their overhyped prices.

    7. “Germany’s Gini coefficient seems to have risen quite markedly”
    Of course this went up in the 90ties, with adding a lot of unemployed Have-nots in the East.
    Germany will not engage in any substantially larger redistribution of incomes to the lower side. Our net income distribution (e.g. Gini coefficient) is already less unequal (and slightly falling) than in most countries, especially in our southern neighbors.

    One of the interesting point of living in Eastern Germany is actually, that you can here really see in real life, how economic principles works. With high unemployment the demand of my cleaning lady was low, but did rise, in several steps, by full 50%, after unemployment fell below 10% in 2008.

    Up to the point, where my belly told me, that I need more exercise, and checking with some heart rate monitor, I found that rigorous cleaning is not only an excellent workout, but even trains muscles, I apparently used very little for anything else : -)

    People here use the old small shop setups in the neighborhood to run little shops in an integrated work-life setting. Especially when the left/green fraction in the city council uses every trick in the book, to keep large shopping centers out : – )

    8. And that, Paul, brings us finally back to your question “To what do the workmen and women aspire today?”

    A decent life, some (Schreber)garten, to own their house, when they can afford it. To live in peace with themselves and their neighbors. To provide a decent (public) education to their kids. To value every citizen, and not only those with a tertiary education or a PhD. To be safe against the risks of life, universal health care and relatively decent social security against the big risks of life (like expensive illnesses, disability)
    We value to live in walking distance to the things we need frequently. Our lifestyle looks pretty long term sustainable to us.
    Not hurting our neighbours by supporting tax fraud. And bitching somewhat about less holier neighbors makes apparently many folks also happy to some degree : – )

  198. Brian Lucey Says:

    Francis cleaning lady …is she a swabian housewife?
    Rest seems..disconnected self justificstii with more thab a soupcon of moral superiority and a dssh of “nobody loves us”…

  199. paul quigley Says:

    @ francis

    Respect, +1, or as we say in Ireland, fair play to you.
    I am somehow reminded of Smiths’ Theory of Moral Sentiments. Something was good in the old GDR after all . I can see that you don’t really concur with the late Ms Thatcher, God rest her, that ‘there is no such thing as society’. Neither do I.

    Thanks for all the detailed points. As I am not an economist, I won’t take issue with your specifics, except for this. Michael Pettis is, IMHO, one of the most open-minded and far seeing economists on the planet. Take a look at the comments section of his website, where he responds with the utmost courtesy and patience, to a whole range of expert and not so expert, commentary. We all learn by doing, so please make the effort to understand his perspective. As Shimon Peres put it, we don’t make peace with our friends.

    Your take is genuinely fascinating, as you bring both the Ossi and the Wessi experience to the table. Ireland, and Irish attitudes, cannot be understood without reference to our history, north and south, with its fiercely contested versions of the past. And then there is British history which provides the context for it all.

    I do think there is a difference between criticism and blame. Without criticism we get no new ideas, but blaming just makes people put up the fences. So blame, zero.

    Core and periphery is a big theme. Is there any real security for Israel which does not also deliver security for the Palestinians ? It’s still a Darwinian world, in many respects. The history of the world economy is also the history of genocide, or as Gore Vidal put it, ‘every civilisation is built on the bones of the defeated’ (sic). I am also reminded of the American general in Vietnam who said, ‘I have seen the enemy and it is us’. Ain’t dat de truf.

    With economic strength goes political responsibility. Nuclear war has been avoided, so perhaps anything is possible. The values which you express can, and should be shared, and I agree with DOCM that die Angela is the best of a mediocre bunch of leaders. In any case, I thought that co-operation, and not finger pointing, was what the EC was supposed to be all about.

  200. Tony Owens Says:

    Brian perhaps the only way to really understand the subtleties of the German perspective is by living there.
    In my observation any ‘moral superiority’ rank and file Germans may feel about the long terms sustainability of their country and its way of life (particularly compared with proto-Americans like the Irish) is well-founded and entirely justified.
    Germany is an ordered society with more constraints on how its citizens behave and use common resources than is found in UK/Ireland notably. Citizens are expected to behave like adults and there is less prudery than in recovering theocracies like Ireland. The upside of these attitudes and shared values is generally high levels of trust, in ones community, state and federal agencies and the quality of the services they provide, and in the contracting of business with German people and companies. It is this stability and trust that enables infrastructure to get built and small companies to grow and evolve. It contrasts with the US/Irish ‘quick buck’ mentality and political/legal/tax/financial shifting sands which make long term investments in Ireland that bit riskier and less likely.

  201. john gallaher Says:

    good summary/review in reuters today…c’mon down!
    “By this stage, the European Community had banned tax holidays of the kind given to Apple, so the company and Dublin negotiated an arrangement which had a similar outcome but fell within European rules.”
    http://www.reuters.com/article/2013/05/23/us-apple-tax-ireland-idUSBRE94M0NU20130523

  202. Vinny Says:

    @eamonn Moran- not sure about ‘most’ comments but I admit to missing some- ‘rant mode’ took over!
    @Brian Woods Snr.- re ‘no or little reform’ – agreed and it’s all too predictable -

  203. DOCM Says:

    @ Tony Owens

    Is this the same Germany as described by Derek Scally in the IT last January?

    http://www.irishtimes.com/news/new-airport-proves-not-to-be-best-example-of-german-efficiency-1.957296

  204. john gallaher Says:

    @DOCM looking forward to saturdays game:)
    http://www.nytimes.com/2012/12/26/sports/soccer/as-europe-struggles-germany-invests-heavily-in-soccer.html?pagewanted=all&_r=0

  205. paul quigley Says:

    @ DOCM

    No blame. Sh1t happens. :)

  206. DOCM Says:

    @ John Gallaher

    How could the NYT miss this?

    http://www.independent.co.uk/sport/football/european/champions-league-final-angela-merkel-turns-her-back-on-bayern-munichs-uli-hoeness-as-tax-row-clouds-wembley-showdown-8622409.html

    The truth of the matter with regard to the exchanges regarding Germany is that it is normal Western democracy with all the virtues and vices of same. The remarkable thing, it seems to me, is that Germans themselves seem hesitant with regard to accepting this, putting their trust in institutions, two in particular – the Bundesbank and the Constitutional Court – rather than their politicians. The jury is out with regard to their sportsmen. But that is true everywhere, I guess.

  207. paul quigley Says:

    @ tony owens

    We are a bit off thread, but my 1970s experience of working in N America was that the immigrant ‘German’ approach to work discipline and apprenticeship was quite a strong aspect of that society. The ‘quick buck’ is of course also a feature, but may have taken over since the Reagan years. That’s a huge loss for the US middle class, and insofar as we have been drawn into the financialisation/tax avoidance game, it is ultimately an economic cul de sac for us.

    Maybe it is a question of ‘reculer pour mieux sauter’, and back, as the Dork says, to the real economy and, as Francis implies, to decent, sustainable, social relations. Polanyi’s Great Transformation still makes good reading.

  208. John Gallaher Says:

    @DOCM tks that was great read,fun link…this has been widely reported,apols off topic but you may enjoy it!
    http://www.ibec.ie/IBEC/Press/PressPublicationsdoclib3.nsf/vPages/Newsroom~david-miliband's-ibec-accenture-annual-lecture-22-05-2013?OpenDocument?OpenDocument

  209. John Gallaher Says:

    Not sure about the link,MLB,

    David Miliband’s IBEC Accenture Annual Lecture

    http://www.ibec.ie/IBEC/Press/PressPublicationsdoclib3.nsf/vPages/Newsroom~david-miliband's-ibec-accenture-annual-lecture-22-05-2013/$file/David+Miliband+IBEC+Accenture+Annual+Lecture.pdf

  210. Mickey Hickey Says:

    Interesting article, including the video clip.

    http://ataxingmatter.blogs.com/tax/2013/05/rand-paul-demands-an-apology-for-congress-looking-at-quasi-sovereign-mnes-tax-avoidance-gimmicks-.html

  211. Mickey Hickey Says:

    A NYTimes Dealbook article.

    “The Threat”

    http://dealbook.nytimes.com/2013/05/21/finding-the-economic-roots-of-apples-taxable-product/?emc=tnt&tntemail0=y

  212. Mickey Hickey Says:

    Is Kenny telling the truth or is Cook lieing.

    http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/gipfel-in-bruessel-luxemburg-bremst-eu-im-kampf-gegen-steuerfluch

    “These are our conditions. Accepts it or not. ”
    Indirectly, the tax savings of the American company Apple were discussed in Brussels. The company is alleged to avoid higher taxes in the United States about Irish subsidiaries. French President Francois Hollande said the EU would not allow a Member State would permit companies to shift capital from purely fiscal motives. The Irish Prime Minister Enda Kenny denied, however, that there are exceptions for international companies: “We do not make special arrangements with individual companies.”t-12191543.html

  213. Mickey Hickey Says:

    If you’re Irish this is a must read. If you are not you will find it puzzling

    http://www.faz.net/aktuell/politik/ausland/europa/dankbares-irland-auf-der-insel-der-merkelseligen-12174617.html

  214. Brian Lucey Says:

    Tony
    Im in Slovenia. At lunch yesterday with some academics and business folk the issue of germanophilia came up. The concensus was that Germany had vastly overplayed its cards and that those advocating we (whomever de jure we are) must become more Germany should go live there coz rhe germans seemedimperviousto the notion of bilateral movement. In other words they would become more german if they felt there was the remotest hope our teutonic friends would become more slovene.
    Hard to disagree no?

  215. DOCM Says:

    @ Mickey Hickey

    We might as well put the core points of the article in Dealbook up in lights.

    “Nor is it an unusual problem [cost-sharing across a conglomerate company]. Apple’s approach is the industry standard.

    And it is an increasingly important problem. Apple’s ability to compete, based on engineering, design, and marketing, is the model for American technology companies in an era of globalization.

    And, finally, we know why Congress hasn’t done anything to work itself out of this jam. In written testimony to the subcommittee, Apple’s chief executive, Tim Cook wrote:

    ‘As an American multinational company, Apple is proud of its efforts to create American jobs. Its cost sharing arrangement enables the Company to use revenues earned overseas to fund R&D in the US. Some commentators have urged eliminating these types of cost sharing agreements, but doing so would harm American workers and the broader US economy. If cost sharing agreements were no longer available, many US multinational companies would likely move high-paying American R&D jobs overseas.’

    The threat is not subtle: If you try to lead us down the garden path of fixing tax loopholes, we’ll move research and engineering jobs overseas.”

    By the way, the article in FAZ may not come as such a puzzle to observers outside Ireland. It contains indirectly the answer already given by the Taoiseach to the stoicism of the electorate; “people went mad”. The ostensible reaction at the time showed the level of denial that existed then and which still does. The reaction on the ground is, however, very different. What concerns people most is that the burden of adjustment be fairly distributed.

  216. Tony Owens Says:

    @Brian
    “…Germany had vastly overplayed its cards and that those advocating we (whomever de jure we are) must become more Germany should go live there…”

    Been there done that. My family divides its time between Germany and Ireland – best of both environments. Note too that once again some of our departing countrymen are emigrating there, voluntarily or involuntarily, with/without German language skills.

    Germany has a functioning and healthy economy, by design. Many EU states no longer do, including our own and the UK. I know very little about Slovenia’s situation regretfully.
    Germany’s superior sustainability is instantly apparent in its built environment, particularly when compared with many Anglo countries. This reflects the national business model and the way its various social systems operate.

    Ireland has had a wake-up shot across the bows this week concerning the sustainability of its own national business model. Changes to the international tax environment will make the prevailing FDI-based BM less attractive, and tax revenues from the FDI business services sector powerhouses lined up along Dublin’s riverfront will begin to falter. It is now in a race to create economic ‘substance’ to underpin the misleading claims that many of its analysts and researchers have made concerning its economic and financial performance, before the wheels come off the cart.

    Some citizens are trying hard to build indigenous business but discovering how tough indigenous organic growth is, in the Irish environment, still configured as it is towards rewarding the old FDI-based BM. Very simply, Ireland has to choose between Boston and Berlin. It can either be an EU-based Puerto Rico or it can take a leaf out of Germany’s book, face down its ‘Bostonians’ and develop a fit for purpose enterprise strategy. Germany has little to learn about building a sustainable future from the Irish. On the contrary we have a huge amount to learn from Germany.

  217. DOCM Says:

    @ Tony Owens

    The points you make are, of course, entirely valid; if you are a country of 88 million people with a long productive industrial and social tradition bang in the middle of Europe.

    If, on the other hand, you are a small country on the periphery of Europe and you have joined with others in the establishment of a single market (and a single currency), abandoning national controls over the movement of goods, people and capital, you should be able to expect even-handed treatment and implementation of the agreed obligations involved.

    Ireland is not alone in being at a crossroads. The German economy is now also stagnating and Berlin has to decide whether to ride the recession out or adopt the same go-it-alone policies as she did post-Lehmans e.g. Kurszarbeit, effectively subsidising skilled labour until the storm blows over. It may not on this occasion.

  218. Tony Owens Says:

    @DOCM

    What needs to be done to restore sustainability in Ireland is very hard and despite its economic/political history fundamental change is needed. The prevailing BM is broken – we lost control of its operation somewhere along the way and for at least the last decade the FDI tail has wagged the Irish dog. The alternative to building a new business models is depression, socio-economic apartheid and Puerto Rico.

    There is no point in nursing expectations of even-handed treatment given the prevailing beggar-thy-neighbour BM. Ongoing negative PR about this will make it a political issue at EU level. For enforcing performance of EZ obligations there is the ECJ and we should use it.

  219. Fiatluxjnr Says:

    Isn’t the big danger that Angela and Co will decide the the Irish “model” isn’t sustainable. What then?
    Cyprus solution! As DOCM points out above we are a little island sitting in the Atlantic on the edge of Europe.

  220. DOCM Says:

    @ Tony Owens

    I agree that the PR battle is lost. But that aspect is not the decisive one.

    I referred deliberately to “agreed obligations”. These do not include any requirement to harmonize arrangements at an EU level in matters dealing with direct taxation. This is the gap through which all member states, Germany included, are driving a coach and four. If they want to change the situation, let them do so by all means (by changing the treaties or agreeing ex-treaty arrangements). But “inviting” Ireland to act alone is not on. This why I also deliberately referred to all acting in an “even-handed” way.

    The IT coverage is very good today and clarifies quite a few issues. What remains to be further clarified is the distinction between individual and company taxation. There is definitely a near agreement on the “automatic” exchange of information with regard to the first, provided some other non-EU countries also participate, notably Switzerland (on the insistence of Luxembourg which is not about to commit national hari kiri just to see German tax dodgers shift their money to Geneva). On the second, I think the aspect covered in the Dealbook extract above is the decisive one.

    The nature of international trade flows, and the location of associated profits, is dramatically different to what it was even in the 60s. I used on another thread the billiard table analogy for the classic macro-economic view of billiard balls (countries) interacting with one another according to a predictable set of rules. It is outdated.

  221. vinny Says:

    @Tony Owens
    +1

  222. DOCM Says:

    @ Flj

    I had posted the above before I read your comment but it makes exactly the same point. Cyprus set a very bad example. That the percentage the country was forced to accept is the current Irish corporation tax rate is hardly accidental.

    However, the individual tax dodger is much easier to target and I think that it is only on this front that we will see early movement.

    By the way; why should companies pay any taxation? All their inputs, and their employees, are already subject to taxation. The “excessive” profits flow from added value of the intellectual property involved in the case of Apple and Microsoft. (I had better not go there!).

  223. Tony Owens Says:

    @DOCM:

    “The “excessive” profits flow from added value of the intellectual property involved in the case of Apple and Microsoft. (I had better not go there!)”

    Actually we do need to go there. IP is at the heart of the economic/tax/growth issue. Irish public (semi-states, research agencies and universities) and private sector businesses fail to understand the relationship between building quality patent portfolios and wealth. Commonly there is merely a superficial understanding not just of the existence of this relationship but of how to build and manage patent portfolios. This is notably apparent in the statistics for Irish patenting.

    IP is about enforcing control of business environment. Without this, growth is not sustainable.

    Taking just one area, cloud computing, which is a major focal area for national enterprise, our research revealed that as of June 2012 approx 28,000 cloud computing patent families (inventions) had been published. 59% of these were filed by US companies, followed by Korean companies with an order of magnitude fewer. Ireland came in 16th, with 91 patent families. On analysis it transpired that around half of these were owned by three FDI operations based in Ireland: Accenture, Skype and SAP AG, and many of the inventions lacked any Irish resident inventors. In other words, half of Ireland’s cloud computing IP output originated outside Ireland.

    On patent metrics, Ireland substantially underperforms relative to potential peers countries in cloud computing e.g. FI, AUS, NL and Israel. Wise tax farming by the state through its various agencies must include greater focus on backstopping its educational, science and enterprise investments through requirements for well-managed patenting. This is a way of ensuring that, in the aggregate, there will be an eventual return to the state on its investments via tax flows, and also of protecting the indigenous sector from being crowded out by the dominant FDI sector.

  224. DOCM Says:

    @ Tony Owens

    The place to which I did not want to go was the iconoclastic idea that companies should not be required to pay any tax.

    On the IP aspect, this is all news to me but it seems to confirm the wisdom of Apple and other companies in retaining a large war chest overseas to ensure that they remain competitive.

  225. francis Says:

    @ Paul quigley, all

    All this has nothing to do with „corporate taxes“, at first glance : -)

    Sorry for the delayed reply, I didn’t mean to be impolite.

    Your reply “Ireland, and Irish attitudes, cannot be understood without reference to our history, north and south, with its fiercely contested versions of the past. And then there is British history which provides the context for it all.”, and a bottle of rum, set me off on a certain tangent.

    I actually don’t thing that Maggie was that anti-societal, as that phrase sounds.

    And I hope very much, that nobody in Europe perceives our situation now as this Jew / Palestine situation (“there is no mercy for the weak” vs. “we will drive them into the sea”).

    It made me actually wonder, whether there is a significant difference between people who once ran an Empire and were able to dish it out to others, and those who were not. Israel certainly lost no time on that : – )

    I would actually be interested, if people take issue with my specifics (I don’t want to spam with endless links and calculations, but most the times I would have them handy), because one of the reasons I engage in blogs like here is, that I have seen it often, that other folks go on a path, invest sometimes quite considerable time in things, I could have said in five minutes, why that is just wrong. And why and how sure can I be, without any local sparring partner, that this doesn’t happen to me as well.

    As one of those nerd migrants, I was actually sitting on my porch and reading the federalist papers, and later enjoyed reading Gore Vidal’s “Burr” as a healthy antidote to the pontification of the “founding fathers” : – )

    Tony Owens

    made a very good point with “Germany is an ordered society with more constraints on how its citizens behave” and emphasized in truly neighborly fashion only the “upside”.

    And so it is my duty

    to mention some of the “downside” of this cohesion, and that is the lesser tolerance for deviating opinions. Trying to tell some people, that 2 German states (Meck Pomm and Brandenburg) value their alley trees as high as the US folks their 2nd amendment in terms of dead people per year, as an example of different value systems, huuugh, plenty of wet dirty rugs slept around my ears, repeatedly : – )

    John Gallagher

    I read the very most of our links, most is very interesting, but I don’t spam here with repeat acknowledgements, without anything worth to add by me.

    DOCM

    pointed out that we screw up large public investments (airport BER, and I add Hamburg philharmony, without knowing much detail about that) at pretty much the same rate as others. And you are right, we do trust our institutions more than many countries, but I think , it is actually justified.

    In 2005 we were the “sick man of Europe” and “Das Ende des Sozialstaates” was looming. What has changed since then, here? Pensions and the median income of Hans Mustermann have just kept up with inflation, or maybe 0.5% real growth since then. It just looks so much better RELATIVE to the debt fueled and burst bubbles of neighbors, AND because people got used to it.

    „reculer pour mieux sauter“, in deed. I found my voice again, because I feel I have something worth to say. Solid social capital is built slowly over many years, and it carries people through hardships, even better that rallying them around the flag of the fatherland.

    “Freiheit in Geborgenheit” was the item and the book, I read 30 years ago, and I was looking for, after I read Paul’s reply yesterday, and searched for words, describing what I feel here. A just as bad translation of甘え “Amae” as the English “The anatomy of dependence”.

    But the german title pretty much reflects what we are aspiring to here, and what is, from my perspective, actually the opposite of the Japanese term and the English words.

  226. MickeyHickey Says:

    As I see it Ireland made great progress from 1973 to 2007. We pursued the “main chance” with vigour and intelligence. This led to narrowing options as prosperity increased, eventually we were left with a two trick pony namely low corporate taxes and a property boom. The property boom went bust and now we are left with low property taxes as low as 2% if we believe Tim Cooks Senate testimony. Since Cook was under oath in the most litigious country on earth it is highly likely he was telling the truth.

    Now it appears increasingly likely that our one trick pony is for the abattoir.

    We differ from Germans most markedly in our ideas of what is right and what is wrong. In Ireland right and wrong consist of a range of grey shades that expand and contract to fit the immediate situation. In Germany right is right and wrong is wrong and never will two meet never mind overlap.

    Our corporate tax policy to most Germans looks lazy, simple minded, unfair and doomed to failure for the simple reason that any idiot can implement low/no tax policies. The Germans have created more options for themselves and are not forced to shortsightedly and desperately grasp for straws. One could say that German manufacturing is causing the country to be overexposed to competition worldwide. Germans are acutely aware of this and know that their Gov’t has to act responsibly particularly wrt Gov’t debt. Most Germans are unhappy with a debt to GDP ratio over 80%.

    It should be possible for the PIGS to get Germany to buy into a major public works program that will cause at least 3% inflation in the EZ. This will allow property to increase in price which in turn reduces risks for all EZ governments and particularly German Banks. Rogoff and others are promoting this as the gentle way out with austerity likened to giving castor oil and senna leaves to a person with diarrhea. German workers would welcome the portion of inflation that could flow to them.

    Our political culture which reflects what people vote for is crippling us. This too will change. Reality is for people who cannot face up to alcohol.

  227. MickeyHickey Says:

    Ooops!

    Fifth line down, “low corporate taxes” not “low property taxes”.

  228. Michael Hennigan - Finfacts Says:

    @ Seamus Coffey

    Ireland is not a tax haven.

    Finfacts v Irish Status Quo: Corporate tax and property bubble taboos

    http://www.finfacts.ie/irishfinancenews/article_1026037.shtml

  229. francis Says:

    @ Mickey

    I don t see it as crass black and white in Germany. There is also some acceptance of rule bending here. But we are, like our northern neighbor, much less tolerant against downright rule breaking.

    These lower corporate taxes in Ireland, in most of Eastern Europe, and also in the beginning years in eastern Germany were well known. Their priority was to attract and grow new business, and you do this by lower taxes and wages. That means of course, that you can distribute less government income to the needy and elderly, and we saw that as the natural long term limitation.

    I am wondering what kind of public works programs you have in mind. Where, what, how does this lead to sustainable new jobs, who pays.

    My understanding is, that the EU has already financed lots of infrastructure everywhere in the last 20 years, with the national contribution of only 15%, so anything reasonable should have been built. Could you describe anything specific, you have in mind, a city hall in Cork, or, ….?

    Hospitals, public schools, and elderly homes, etc. fully staffed.

    German workers would enjoy wages rising more than inflation, but inflation itself erodes their cash heavy little savings, especially in the lower 2/3.

  230. Mickey Hickey Says:

    @francis

    The kind of public works that deal with the most basic needs and stand up to public scrutiny.

    Speaking of Ireland the public transit systems are a disgrace compared to what one sees in Germany and neighbouring countries. There are widespread water quality (this in a country with high rainfall) and sewage isues. Teaching of second languages instead of wasting tens of millions every year on a dead but not yet interred language. This would require importing people who know how to teach a second language and the sending of Irish people abroad to learn how to teach a second language. A boost for European unity the biggest since hundreds of Irish signed up with Napoleon the descendants of whom rose to the French Presidency. From this would follow more Irish students in European universities leading to a greater understanding of Europe in Ireland and of Ireland in Europe.

    My opinions are coloured by my experiences with Germans and Greeks at close quarters over years all of which I found to be beneficial both personally and in a business sense. We can all make progress and I believe the will exists.

  231. Conor O'Brien Says:

    This thread is probably winding down. All the contributers were valuable. The voice of Francis has been very useful. Whether he/she found IE by chance or was invited he/she is very welcome.

    It has been one of the many very good debates on Irish Economy with contributers using strong facts and also strong emotions. The challenge is to combine the power of strong emotion with the workmanship of strong facts to produce coherent actions.

    Two thoughts come out of the thread for me.
    1. It might be a good thing for the site administrators to find a few more like Francis from other nations.
    2. Experimenting with a decision making capacity such as the Icelandic ‘Citizens foundation’ method could be a useful contribution to Ireland’s social capital development.
    http://citizens.is/

  232. paul quigley Says:

    @ Michael H

    +1

    Remorseless denial, and at length, on RTE lunchtime radio. Everybody’s brother, cousin,son, lover, neighbour, colleague, drinking buddy, sports affiliate, is getting a slice of the tax avoidance pie. Everyone who matters that is. The fact that our entire establishment is defending the indefensible says a lot about the degree to which the suits have captured our state :(

  233. Mickey Hickey Says:

    Here is a link to the documents that started Apple’s gainful association with Ireland.

    http://valleywag.gawker.com/heres-the-document-that-started-apples-hidden-irish-t-509119857

  234. paul quigley Says:

    @ francis

    To the specifics, and in the absence of any response from an economist (apart from Brian Lucey’s not inaccurate jibe about the Schwab Hausfrau : )

    You have a lot of numbers, but you may not be up to speed on financial economics or macroeconomics. This is Pettis’ central point, which you haven’t really acknowledged or addressed:


    In an open economy, in other words, a country’s total savings matters because to the extent that it exceeds investment, it must be exported, and it must result in a current account surplus. Here is where the confusion so many analysts, including economists, have about the difference between national and household savings. Household savings represent the amount out of household income that a household chooses not to consume, and so can be affected by cultural or demographic factors, the existence and credibility of a social safety net, the sophistication of consumer finance, and so on.

    The national savings rate, on the other hand, includes not just household savings but also the savings of governments and businesses. It is defined simply as a country’s GDP less its total consumption. While the household savings rate may be determined primarily by the cultural and demographic preferences of ordinary households, the national savings rate is not. Indeed in some cases the household share of all the goods and services a country produces, which is primarily a function of policies and economic institutions, is the main factor affecting the national savings rate’

    This is not about blame, or national character/culture, or political governance, it’s a strictly technical matter, and it’s about understanding financial dynamics and flows. Ever since Keynes, we have understood that money is not just a veil over real economic activity. In many ways, maybe, it is more real than the real economy, probably because it is channel for the transmission of power.

    Social relations are grounded in various forms of hard or soft power. You are living in a place where a whole range of theories around economics and power were reflected in hard practice. I refer, for example, to Marx’s Kapital, Lenin’s vanguardism, Stalin’s base and superstructure, or Gramsci’s notion of hegemony.

    It’s hard to believe how much struggle, destruction and chaos occurs in the world, unless one is directly exposed to it. Organised religion is not longer at the centre of western society, but it still play a big part in global events. Ideologues pile up plenty of corpses, but they are not always wrong about everything.
    Power lies mainly with banks and MNC today. Arrighi’s Long Twentieth Century is the best, IMHO, overall synthesis of what the modern MNC represents, and how it fits into world history, especially the history of the declining US. David Stockman’s ‘Great Defomation’ is a lengthy but gripping analysis of the way the state has been captured by financial market interests.

    The MNCs are liable to be captured too, when the accountants find a way to ‘virtual patent’ all that IP. A bit like putting a meter on the sun. St Augustine said money was the root of all evil, because interest payments took precedence over Christian duty, but the Church made its peace with business after a while :)

    We had an Irish version of the Swabian Housewife back in the early day of the state. One of our first finance ministers, Joe Brennan, I think, took a pride in reducing income tax below the British level. Needless to say there was little public investment and massive emigration, hence the rise of the Fianna Fail alternative in the late 1930s.

    Your version sounds a lot more democratic, and a dose of responsible government can do us no harm. One of our big problems, though, is the traditionally weak powers of our city and local authorities. The current adjustment is making this problem worse, and alienating the citizens further. Fiscal adjustment without political reform cannot work.

    Irrespective of how well governed any city or nation is, there are processes, like finance, economics or environmental issues, which transcend national boundaries. One way or another, the German problem is the Irish problem and vice versa. So back to Pettis for the big picture.

    http://www.amazon.com/dp/0691158681/ref=as_li_tf_til?tag=chinfinamark-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0691158681&adid=1BM492HM6CMTC50ZBA5J&&ref-refURL=http%3A%2F%2Fwww.mpettis.com%2F

  235. John Gallaher Says:

    @francis a fav of mine,it’s shovel ready and big enough to attract funding,can’t understand why the govt. not promoting it.
    http://www.ggda.ie/
    On a lighter note and its a holiday weekend here….
    http://www.voxeu.org/article/are-germans-poorer-other-europeans-principal-eurozone-differences-wealth-and-income

  236. Michael Hennigan - Finfacts Says:

    @ paul quigley

    A late night ahead to support Germany in the Champions League final!

    Meanwhile, Chris van Egeraat of NUI Maynooth has sent me the following linK:

    ANALYSIS-Low-carat gold at Irish end of US corporate rainbow

    http://www.cnbc.com/id/100765321

    [At a conference in Dublin on Friday the head of Ireland's largest bank gave small business leaders the "15-second elevator pitch" he gives to U.S. executives when he is in New York or Boston.

    "I've mentioned to U.S. investors that U.S. companies have more capital invested in Ireland than they do in Brazil, Russia, India and China put together," said Richie Boucher, chief executive of Bank of Ireland.

    "We have had a record year of FDI (foreign direct investment) in 2012."

    The numbers are eye-catching. About $30 billion of net FDI flowed in to Ireland from the United States in 2011, the last year data is available. That is double the level at the peak of Ireland's boom and the equivalent of 6,670 euros for every man, woman and child in the country.

    And yet in the real economy, the number of jobs in foreign-owned firms fell by 9 percent, according to state enterprise board Forfas. Total employment fell even more - 15 percent.]

    Lies, damn lies and statistics!

    Richie Boucher quoted US Chamber of Commerce in Ireland ‘statistics’ – - the total for Irish inward investment flows includes retained earnings — ‘trapped cash’ in US bank accounts!!!!!!

    It’s bullshit.

    Maybe he should tell Wilbur Ross.

    UNCTAD, the UN trade agency, says inflows in 2011 were at $13bn; outflows were at -2bn.

    Total inward stock in 2011: $243bn; outward stock $324bn — the later is for that big market in fairytales.

  237. Mickey Hickey Says:

    NYTimes on German initiatives to alleviate youth unemployment in the EZ.
    Is our dear Enda on to this.

    http://www.nytimes.com/2013/05/23/business/global/germany-works-to-curb-eu-youth-unemployment.html?src=rechp

    Excerpt

    “Wolfgang Schäuble, the German finance minister, and Vítor Gaspar, his counterpart in Portugal, announced a plan on Wednesday to use the German state development bank to help set up a financial institution to assist Portuguese under age 25 in getting jobs or job training.

    This week, Ursula von der Leyen, the German labor minister, signed an agreement with her Spanish counterpart, Fátima Báñez García, that foresees bringing thousands of young Spaniards to Germany for apprenticeships. At the same time, Germany will seek to help Spain build a dual-track vocational system in which young people earn qualifications through a combination of work and study.

    The initiatives are part of a multipronged effort by Berlin to quickly get more young people into the work force, a move that experts say is crucial if a unified Europe is to survive into the next generation. “What is decisive is that we must be faster and more definitive in fighting youth unemployment,” Mr. Schäuble said.”

  238. francis Says:

    @ Mickey,

    the sister of one of my best friends was over to Dublin for many years. She came out of the real estate run slightly positive and is now with her Irish musician lover /husband(?) in Berlin.

    My friends daughter, clever little girl, skipped one school year, comes over for studying to Dublin this summer.

    There was actually a recent article, that we were one of the 3 most intensively cross breeding species here in Europe (minimum delta between “self” and “other” in Table one : – )
    http://www.plosbiology.org/article/info%3Adoi%2F10.1371%2Fjournal.pbio.1001555

    @ Paul Quigley

    I understand the difference between privately prudent behavior and national / organization size problem, if everybody sits tight on his money very well. More to that complex tomorrow, probably.

    And that the US with their nationalist mindset wiki/Smoot–Hawley_Tariff_Act in 1929/30 was one of the amplifiers (see Fig. 16.9 in Reinhart / Rogoff TTID), we are well aware.

    These “national savings rate” calculations, somewhat like that de Grauwe recently, I am deeply skeptical about.

    One of the reasons we have now the 4th version of our stability laws (first version in 1967 with some investment equalizing, blablablah), was that some states succeeded in redefining higher teacher wages as infrastructure investment. Classic case of Chutzpah : – )

    Since the game has started, just one last point for today, some more comments to good points here tomorrow.

    This apprenticeship stuff is good but not the holy grail, and it needs massive adaption to the local situations, just lording it over with an English translation of the german manuals will not work, at least not very well.

    We only have strength in numbers, if we are all prosperous, depriving our neighbors of their intelligent and eager, this would produce terrible consequences.

  239. brian lucey (@brianmlucey) Says:

    ” depriving our neighbors of their intelligent and eager, this would produce terrible consequences.”
    whats the % of youth unemployment in the peripheral countries again Francis?

  240. Mickey Hickey Says:

    Sheila darlin tis world leaders in soft drink syrup we are.

    http://www.nytimes.com/2013/05/26/opinion/sunday/who-will-crack-the-code.html?hp

    A snippet

    “IRELAND and Singapore have no natural resources that make them obvious places to manufacture the concentrate used in soda, nor have they developed innovative new soda-making techniques. Yet they have nonetheless become global capitals for making soft-drink concentrate.
    In Singapore, Coca-Cola recently opened a plant with the capacity to produce the underlying ingredient for 18 billion cans of soda a year. In Cork, Ireland, PepsiCo has located its “worldwide concentrate headquarters,” which until 2007 had been in New York. More than half of all PepsiCo soda sold around the world starts, as concentrate, in Ireland.”

  241. Mickey Hickey Says:

    This is a fascinating fact laden interactive graphic. It will not copy (functionality) and is firewalled but I believe you get 5 to 10 free dl per month at NYT.

    http://www.nytimes.com/interactive/2013/05/25/sunday-review/corporate-taxes.html

  242. DOCM Says:

    @ Mickey Hickey

    The only thing that is more bizarre about the soft-drink concentrate story is that billions – literally – of people, especially children, drink the resultant concoctions to the great detriment of their health.

  243. DOCM Says:

    @ All

    FYI article by Colm McCarthy in the Sindo.

    http://www.independent.ie/opinion/analysis/colm-mccarthy-criticism-of-our-tax-policy-the-height-of-hypocrisy-29297233.html

    However, the game has moved on as the ever excellent Ann Cahill, Brussels correspondnet of the Examiner explains.

    http://www.irishexaminer.com/business/eu-eyes-tax-residency-law-change-232325.html

    I very neat way of calling assorted bluffs in the hypocrisy correctly identified by CMcC.

  244. francis Says:

    DOCM

    brought right in time the reminder that this about corporate tax, and in Ireland.

    When I read the piece of Colm, I say, whatever he smoked, I want some from too. But it is not business, it will be the UK and US, who will push you on that.

    @ Brian

    my brain drain comment was more with other countries in mind, because that was one the next things I wanted to say, that there are many other countries in Europe, I actually worry a lot more about than Ireland. The 10 year rates, as you can find them in a nice overview at The Economist , Market data, actually reflect the extend of my relative concerns, especially that a number of countries are not on the list.

    The last thing I wanted to say is that if baffles me on a routine basis, what people are dishing out what advice to us. The BoE Mark Carney came with proposals for harmonization of unemployment insurance in the EuroArea this week. And the EU commission lectures Germany on urgent efficiency improvements : -)

  245. DOCM Says:

    @ All

    FYI this article by Robert Reich well up to his usual high standard.

    http://www.guardian.co.uk/commentisfree/2013/may/26/technology-apple-amazon-google

    @ francis

    It takes a Canadian then to rub the nose of Europe’s leaders in the obvious need to stop a competitive race to the bottom with regard to employment conditions!

  246. paul quigley Says:

    ‘If it was possible to expand manufacturing employment by 70,000 through the period up to 2001, it is possible to do so again.’
    Hmmm….

    Colm has been around a long time, so we’ll let him draw the long bow.
    The important bit is that he acknowledges that Ireland’s business model is clapped out. You would never guess that from the rah rah which RTE has been pumping out all weekend. The IDA is even going to look at a taxpayer funded opinion wave reversal strategy. Canutenomics.

    Colm also acknowledges the influence of corporate lobbyists on political parties. Plutocracy lives, and not just in the US. Rank hypocrisy and rank corruption too. Individual shareholders have little clout, and the CEOs in many cases control their boards.

    There is a humungous principal/agent problem, as explored at length by Joe Stiglitz, in today’s corporations, but maybe that’s too deep for the Sindo readership.

    It’s hard to tax MNCs, because they inhabit a global space, and have the upper hand over mere nation states. That’s what the market state means. Ref Philip Bobbit.

    Colm also acknowledges Micheal H’s points about the bogus nature of much service exports. Let’s hear it for Mick. It’s a long road that has no turning.
    The quoted 87-01 rise in Irish manufacturing employment needs more analysis.

    What proportion of that was FDI sector ? Joining the euro blew up Irish domestic credit, and inflated the property bubble, but the MNCs never used Irish credit. There were two substantially, if not entirely, different dynamics involved.
    I thought the decline in competitiveness was about a composition effect, with a much bigger proportion of less productive activities in construction. We don’t have much domestic high tech manufacturing, because the FDI activity didn’t really link domestically. There is no Irish Mittelstand :(

    A thorny problem, as a certain Joe Lee recognised many moons ago. The possessors versus the performers. I listened to an interesting debate on Newstalk about Poynings Law. Déjà vu again.

    http://www.youtube.com/watch?v=DON3xCMwpqk

  247. Michael Hennigan - Finfacts Says:

    Colm McCarthy rightly refers to hypocrisy but there is plenty of it about.

    We Irish camels like the Austrians and Luxembourgeois want to avail of club benefits while facilitating banks and other companies to engage in shady activities with our neighbours.

    Tax competition is one thing but when Microsoft books a sale made in Madrid in Dublin and we demand solidarity, it all gets a bit confusing.

    There is going to be no revival in manufacturing nor a credible policy in response to the jobs crisis until it’s a crisis for the comfortable with a grip on the public megaphone. Give it 5 more years.

    Last month an ‘expert’ group produced a report with a target of 43,000 net additional mfg jobs by 2020.

    The term ‘strengths’ appears in the manufacturing report 49 times; ‘weakness’ or ‘weaknesses’ get no mention. The apprenticeship system is a joke and Bruton decided to come up with his own target of 20,000 new mfg jobs by 2016.

    Do we really want to know why the number of SMEs in manufacturing is much lower than European levels?

    Bruton announced a few tepid measures and moved on to the next announcement in his permanent publicity campaign.

    The reaction to the report and Bruton’s announcement? What crisis?

    At the weekend, I came across a mid-week Irish Times editorial on tax that could have been penned by a Department of Finance official, playing the old victimhood card. It called for an education tour to the US to acquaint them about the transparent Irish system — presumably the writer was thinking of the endemic spin that works so well at home. We wouldn’t of course want to tell them that we needed tax-related revenue diversions to report growth in 2012 or that almost half of services exports are fake.

    The proposal of a ‘”a major diplomatic initiative in the US” seems so quaint but the blarney could make the situation worse.

    The naive writer also suggests the problem could be solved by the US cutting its corporate tax rate – - of course it could if it was slashed to a low single digit.

    K Street firms in Washington likely have been asked for quotations. We are the victims!

    The charges made now need to be countered, speedily and effectively, by both political and diplomatic means. First, by Government setting out a clear narrative on corporate tax that can be easily understood – at home and abroad – and that rebuts some of the erroneous claims made. Second, through a major diplomatic initiative in the US to ensure there is a better understanding of the Irish position on corporate taxation…In this regard the scapegoating of Ireland, for a problem partly of the US’s own making, is unfair and hypocritical. The failure of the US over many years to lower its high (35 per cent) rate of tax on corporate profits, and thereby encourage multinationals, like Apple and Google, to repatriate some of their huge global profits to the benefit of the American taxpayer, is something its own politicians might well first choose to explain.

  248. Michael Hennigan - Finfacts Says:

    Ireland’s confusing FDI data in age of spin

    http://www.finfacts.ie/irishfinancenews/article_1026038.shtml

  249. Apple’s Tax Dodge Should Prompt Rethink in Ireland | Xtax Says:

    [...] there another explanation for why Apple pays such a low tax rate? Seamus Coffey offers a convincing one on the Irish Economy blog: Apple benefited from a perfectly legal loophole in the [...]

  250. John Gallaher Says:

    Well the above is certainly on “message”…..

    “Ireland should take its hands out of other countries’ pockets. Ireland’s tax system is designed to tax income other people have earned,” Sven Giegold told Reuters, underscoring how emotive the issue will be in elections in his native Germany.”
    http://www.reuters.com/article/2013/05/27/us-ireland-tax-idUSBRE94Q0D420130527

  251. francis Says:

    Hi John,

    I actually don’t think that the Attac / Green Party MEP Sven Giegold is that influential, but it will be anyways the US /UK who will dish out the beatings : – )

    But “Anglo-American capitalism” is certainly not popular with anyone here.

    We like our “Soziale Marktwirtschaft”, even the communists : – )

  252. John Gallaher Says:

    Hi francis,yeah the yanks want the money put to work after a bite naturally enough.The pr effort is rather lame,some letter on its way to the sentate committee…a letter !
    But these salaries have to be paid somehow…tax haven so be it!
    http://www.independent.ie/irish-news/ucd-tcd-professors-paid-more-than-those-at-worlds-top-colleges-29298324.html

  253. francis Says:

    John,

    that certainly makes you ask: Cui Bono?

  254. John Gallaher Says:

    @Francis here is the American comparison….the Meg Greene piece linked by SC is about as good as its going to get.
    There is NO explanation none zero nada zilch for Apple having companies not subject to tax,defending it is pointless.But agreed the Irish are not going to change Lichenstien by the Liffey,the yanks will,there is significant cross party support over here.

    http://www.insidehighered.com/news/2013/04/08/aaup-survey-finds-average-faculty-salary-increased-rate-inflation-last-year

  255. francis Says:

    Colm?

  256. john gallaher Says:

    @francis 2 b contd….ipso facto.

  257. Apple’s Tax Dodge Should Prompt Rethink in Ireland | farecomputers.com Says:

    [...] there another reason for since Apple pays such a low tax rate? Seamus Coffey offers a convincing one on a Irish Economy blog: Apple benefited from a ideally authorised loophole in the [...]

  258. eamonn moran Says:

    From Joe Stieglitz latest article.

    “Why should taxpayers in Germany help bail out citizens in a country whose business model was based on tax avoidance and a race to the bottom – and why should citizens in any country allow their companies to take advantage of these predatory countries?”

    Even though you could argue by taking on the debts held by German banks Ireland has actually done the opposite….

    Still Ouch!!

    http://www.guardian.co.uk/commentisfree/2013/may/27/globalisation-is-about-taxes-too

  259. Mickey Hickey Says:

    @francis

    Ireland, Scotland and parts of Wales have had a brain drain for centuries with little ill effect. Ireland has exported half its graduating Medical Doctors every year since 1922 . Germany has had similar experiences since before WW1. The world has scattered manufacturing hubs started by German engineers and machinists. Frank Stronach although he is Austrian founded and ran a huge international corporation called Magna staffed at the executive, engineering, tool and die maker levels by Germans.

    In Ireland the Gov’t looks at emigration as a pressure relief valve. The valve is now being closed off in Australia, Canada and the USA which have problems of their own.

  260. Mickey Hickey Says:

    The national radio network RTE spills the truth in minute 41.

    http://www.newstalk.ie/player/listen_back/24/1406/26th_May_2013_-_The_Sunday_Show_Part_1

  261. Dorothy Jones Says:

    http://www.rte.ie/news/business/2013/0531/453905-ambassador-us-tax/
    Irish ambassador to the US criticises senator’s ‘tax haven’ claim

  262. Dorothy Jones Says:

    http://www.levin.senate.gov/newsroom/press/release/levin-mccain-statement-on-letter-from-irish-ambassador-to-the-united-states
    Levin, McCain Statement on Letter from Irish Ambassador to the United States
    Friday, May 31, 2013

  263. Chris Dalzell Says:

    The question surely for Ireland as it goes forward in this frightful ‘European Project’ is for how long will it retain independence in setting corporation tax.

    With a Federal Europe on the cards in the coming years me thinks there’s a rational call for further liberalisation of the employment market to retain competitive advantage.

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