Ireland. The Tax Haven. And are lies being told?

Today Apple is in the US dock about tax avoidance through Ireland, referred to as a "tax haven", which it clearly is. And lies are being told.

Channel 4 are reporting that the Irish government have done special tax deals with multinationals below the 12.5% corporate tax rate. 

Reuters tonight, via The Irish Independent, reports that 

"According to the congressional report, Ireland had also agreed a special 2pc rate for Apple's Irish taxable profits instead of the normal 12.5pc."
http://www.independent.ie/irish-news/apple-pays-tax-rate-of-less-than-2pc-in-ireland-29285246.html

The Prime Minister Enda Kenny denies this. So too Eamon Gilmore his deputy. RTE News tonight said Revenue have also confirmed that there's "no special deals". 

They'd better be truthful because it looks like they're not. There's too many reports that a special low rate deal was done with multinationals. And if The Prime Minister has misled the House tonight, by saying no deal was done, there will be trouble. 

Because someone here is wrong by definition. The US Congress or The Irish Government.

Where the Irish politicans "dodge" in words may be, by saying that the 12.5% rates does apply on profits "generated in Ireland only".

But that's a dodge. Authoritative sources say a deal was done, they're saying it wasn't. 

Either way too, those profits are deliberately manipulated downwards through licence fees paid offshore by multinationals to places like Bermuda. And we facilitate that.

Secondly, if a profit is brought into Ireland, it's either Irish revenue or it's not. If it's not, as the Government will say, then the tax should have been paid elsewhere - and it hasn't been. 

Because clearly, multinationals are paying even less than 12.5% Irish tax haven rate - nearer 1% - without prosecution in Ireland so if deals aren't done, why then are they not pursued?

And clearly too, if they were paying the 12.5% tax on what we're told is their "Irish revenue", then Ireland would not be in a financial mess. 

US Tax for Apple according to the well regarded Channel 4 News, is 35%. But by transferring their profits to Ireland, they avoid paying that. 

Apple Operations International, between 2009-12, put 30 billion into Ireland as income...but paid no tax on it. No 12.5%.

Apple Sales International similarly transferred a further 22 billion profits to Ireland in 2011 but paid only 10 million in taxes (so not 12.5% either).  

US Senator John McCain today said Apple's 3 Irish operations hold 60% of the companies profits. He also said they negotiated (with the Irish government) a rate of less than 2%.

Now either he's wrong with everyone else - or Enda Kenny has lied. Did Apple do a deal Enda or not?

If Apple alone had paid 12.5% on their "Irish income", this country would not have a budget deficit.

I do get a bit tired blogging about multinational tax "avoidance" and the role of Ireland in facilitating it.

You can search some of my previous tax blogs mainly from last year.

And of course, this week we saw Google defend a regime that their sales are not in the UK, but in Ireland. Here's what I said about them on December 3rd

"Google, with a staff in the UK of 1,300 books most of its revenue to surprise, surprise, Ireland. So it earns money in the UK but funnels it through Ireland. That's Ireland's great tax regime I mean that attracts companies like these in the first place. Actually Google's "Irish" revenue is recorded as 12.4 billion. How ridiculous is that? Gross profit in Ireland in 2011 was recorded at 9 billion!! It's truly ridiculous."

And everytime I blog about tax, I take a hit. Irish people think you're being disloyal, unpatriotic and generally live in fear of google/facebook/zynga/dropbox/microsoft and others, jobs.

What's so wrong about all of this is that the Irish government pursues its own citizens for tax through the courts and cause undue hardship. But they let big corporations (and I was the CEO of one), avoid tax.

Shameful.

This is a dreadful charade and furthermore, if there is lying going on (and I believe there is), it will cause the collapse of the Irish government.

If you're interested here are my previous blogs to search in the search bar:

January 3rd Blog. Facebook and the cayman islands via Ireland. And Zynga.

Google 

Microsoft

Dropbox

Starbucks

Now Dropbox comes to Dublin. For the greatly talented workforce or the highly imaginative tax rates?

 

 

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.

My blog of yesterday follows this blog below, but it's also here  http://streamabout.blogspot.ie/2012/12/starbucks-amazon-google-microsoft-wpp.html


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

Natasha Lomas

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.