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What Makes a Country a Tax Haven? An Assessment of International Standards Shows Why Ireland Is Not a Tax Haven
Gary Tobin, Keith Walsh


This paper explores the issue of tax havens and tax competition. The recent intensified debate on tax havens is summarised, as is the important work of the OECD, the EU and the G-20 in this area and the ongoing research on the economic effects of tax havens. Ireland does not meet any of the OECD criteria for being a tax haven but because of its 12.5 per cent corporation tax rate and the open nature of the Irish economy, Ireland has on a few occasions been labelled a tax haven. There are three primary reasons for this identified, each addressed in the paper: a failure to distinguish between legitimate and abusive transfer pricing; a misunderstanding of the role and regulation of IFSC; and a dated but influential academic paper from 1994 that incorrectly included Ireland in a list of tax havens, based on a reason that has long since lost any validity.

The Tobin/Walsh paper is another echo of the official line which focuses on changing the attention on massive tax avoidance to repeating claims that do not stand up to scrutiny or are beside the point.

Frank Luntz, the US Republican pollster, would surely be impressed with the framing.

The FT on Monday:

Richard Bruton, Ireland’s business minister, said on Monday he was not concerned that the latest accounts filed by Google would turn the spotlight on Ireland’s role in multinational tax avoidance.

“The Irish tax regime is a statute based, transparent and clear system,” he said. “Ireland remains and will make no apologies for seeking to be competitive in this area.”

Google Ireland’s net income as a ratio of sales was 0.8% in 2012, Google Inc.’s was 30%.

Bruton frames the issue as centring on the 12.5% headline rate not booking 41% of global revenues in Ireland.

Google’s foreign tax rate in 2012 was 4.4% and it said last January: “Substantially all of the income from foreign operations was earned by an Irish subsidiary” – –  Google Ireland Holdings, the Irish-registered non-tax resident company located in Bermuda, which owns the intellectual property that Google Ireland Ltd is licensed to sell. It is a letter box company with no Google employees.

Google US had income of $5bn in 2012 and foreign income of $8bn technically passed from Ireland to the letter box company.

Ireland is due €17m from $358m due to be paid to foreign governments.

Google apparently invested €5m in a conference centre in Dublin, called an innovation centre — it’s like those rich Americans who hate paying taxes but get some attention for giving some money away.

1) Effective rate of tax close to the headline rate. Only true for MNCs when tax-free profit transfers are made to minimise net income.

2) The claim that the tax system is ‘transparent’ is laughable.

3) As for Ireland being a tax haven or engaged in tax haven activities, wonder what rationalisation would be given for this:

Google Ireland Holdings is owned by Google Bermuda Unlimited and where does it file its accounts? Nowhere!

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