My blog of yesterday, regarding the use of Ireland as basically a tax haven and allowing web companies to repatriate profits to Ireland, caused a bit of a stir.
In essence, big companies such as Microsoft, Google, Amazon and others such as Facebook and Twitter, have been accused as using Ireland for "tax avoidance". US lawmakers recently compared us to Belize and Costa Rica.
And then, irony of ironies, on the same day, Taoiseach Enda Kenny (Prime Minister) announces that 'Dropbox' are to be the newest tech company to set up in Dublin. He made it clear that Dropbox's decision was based on the old line about a talented workforce blah blah blah and not tax. Here's what The Irish Independent reported his words as;
"Ireland has many advantages to offer international companies, including our young, passionate and talented workforce, all of which will be a great asset to Dropbox as they make their new home in Dublin."
Not a mention of Tax.
The Irish Independent also reports that "The Government was on alert last night after US lawmakers described the country as a "tax haven" and accused American technology companies operating here of using Ireland to avoid paying corporation tax at home.The US Senate's Permanent Subcommittee on Investigations has begun a probe into how American companies funnel international profits through countries such as Ireland with lower corporation tax rates than the US.Using Microsoft and Hewlett Packard as case studies, the committee chairman Carl Levin said "the tax practices and gimmicks range from egregious to dubious validity".If the US does prevent companies from using Ireland for tax purposes it could have a dire effect on the economy. Numerous companies, including Google, Facebook and Microsoft, who between them employ more than 4,000 people here, are believed to use Ireland for its tax efficiencies.A government spokesman declined to comment, while a spokesman for the IDA, which has attracted most of the firms here, said the agency was studying the report but declined to comment further."
Interesting then to turn onto Techcrunch, which I think it's fair to say, one of the most highly regarded technology publishers to see their take on the Dropbox announcement. Guess what? They reckon it's about Tax. I've reproduced it here.
Dropbox Follows The Tech Crowd, Opens Dublin Office — Says First European Office Will Be Hub For International Ops
Dropbox has become the latest tech company to open an office in Dublin — land of Guinness and low corporate tax rates. Dropbox’s Drew Houston, co-founder and CEO of what is now a 100 million+-user strong service, clearly wasn’t watching the grilling the U.K.’s Public Accounts Select Committee gave Amazon and Google on the issue of corporate tax avoidance last month. Of course it’s the tax rates, not the Guinness, which lure so many tech companies to Ireland’s green and pleasant lands. Last year we reported that setting up a European HQ in Dublin would enable Twitter to lower its tax rate by 16 percentage points — reducing its tax payments by more than 60 percent.
Obviously Dropbox doesn’t make any mention of corporate tax rates in its Dublin announcement. Its release talks effusively about the local talent pool it will be tapping into in Dublin. “We’re delighted to be closer to millions of our European customers. By opening our international headquarters in Dublin and tapping into the large talent pool that exists there, we’re better positioned to serve even more people locally while we continue to grow,” enthused Houston in a canned statement. Ireland’s Taoiseach also chips in a few supporting words, flagging up the country’s “young, passionate and talented workforce”.
Dropbox said the new Dublin office, its first in Europe, will serve as the center of the its international operations — enabling it “to better provide technical support and product acumen” to Dropbox’s millions of European users, and presumably customers in other international markets such as Asia"
In other words, it's about tax.
Interesting too that Techcrunch reckon that Twitter by being "based" in Ireland reduced their tax by 60% - an incentive indeed and yesterday I said that nearly 50% of Irish tax revenues, comes from US multinationals "based" in Ireland.
As Europe's largest tax haven, Ireland is coming more and more under the spotlight for facilitating what is, tax avoidance, technically legal as that might be.
This is going to be damaging as Governments across Europe, notably the UK, are beginning to decide that they won't stand for it anymore. And our friends in the US are onto us too.
And it's wrong that an Irish Government should be facilitating what is, lousy corporate behaviour - legal or not.
Whilst at the same time, terrorising its citizens to pay more tax.
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