Apple announce Irish expansion today.

Apple announces further expansion today in Cork, Ireland (South West). Tim Cook was there in person this morning.

They've been in Ireland for 30 years and announced a further 1,000 jobs by 2017 on the back of the 5,000 Irish direct employees already. And that's up by 25% this year alone.

It's estimated that Apple's Irish operations support about 18,000 jobs directly and indirectly. Fairly vast.

It makes Apple, one of Ireland's biggest employers/investors.

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

Turning buildings green. A classic piece of marketing for St. Patricks Day.

Accuse me of being biased but I do think the concept behind turning international, iconic buildings green, for St. Patrick's day, is a classic. Just as an idea, forgetting is has anything to do with Ireland.

But green is the Irish colour and internationally recognised as such - so a building lit up in green, means Ireland.

Sydney Opera House, The Burj Al Arab Hotel in Dubai, The Empire state Building (which I actually painted as a teenager, honest guv), The London Eye, Sphinx, Christ the Redeemer statute in Rio, Pyramids....all went green for Patrick's Day. A pretty impressive ad. And that great Irish city Chicago, where I once worked, as usual, turned The Chicago River green.

I have to say, I thought it was a stunning idea as well as all the Government Buildings turning green. At the launch of the idea, Streamabout interviewed Minister Varadkar who said the cost was 36,000 euro in total. That represents pretty good value then.

A lovely idea that actually happened. And yet again, simplistic thinking wins.

Facebook, Zynga, The Cayman Islands and Ireland. Another great day for ethics.

On foot of my blog about the ongoing tax avoidance issues yesterday (which follows below), I was amazed to read the very brilliant Colm Keena's story in today's Irish Times newspaper - http://www.irishtimes.com/newspaper/finance/2013/0102/1224328327411.html

I'm actually getting tired of blogging about what has become a tax avoidance issue but for some reason, the information just keeps coming to me. There's that much of it about. Shocking.

So it was interesting to see changes at Facebook and Zynga's Irish operation. I'm sure they're completely unrelated to the tax avoidance issue.....

Colm reports that Facebook are moving all its non-US revenues to a new Irish subsidiary. 

Facebook Payments International Limited, a new Irish company, will now take on the billing from Facebook Ireland Limited, which showed revenue of 1 billion euro in 2011 - up from 229 million in 2010.

What's interesting too is that it lost 18.7 million on that revenue of 1 billion and why you might ask?  Because largely, of payments it made to its parent Facebook Ireland Holdings Limited owned by Facebook entities in the Cayman Islands.

These are exactly the same type of controversial charges by parent companies to create losses (and thereby, meaning they pay little or no tax) and are very similar to the devices used by Starbucks and others - so highly criticised. 

What's also stunning is that Facebook has a registered company in The Cayman Islands ultimately - one of the great tax shelters of our time after Ireland. Interesting still, is that it's an unlimited company, meaning it can avoid prying eyes from journalists and not be subject to the usual company rigours.

Which is really quite shocking for a PLc.
In fact the whole thing just stinks.

One of the ways Facebook generates these revenues is by way of "game credits" from gaming company Zynga.

And it would seem, Znyga is another Irish company success! 

Zynga Game Ireland Limited (I kid you not) reported a pre-tax profit of a meagre 4.8 million on revenues of 369 million. This small, poor profit is because of.... yes you've guessed it.... payments to other Zynga companies.

Exactly as Facebook/Starbucks and them all, are accused of, in order to avoid tax. By making payments to parent companies elsewhere, they avoid tax when those payments either exceed the income or practically wipe out any profit.

So for example, of that 369 million revenue, a stunning 191 million for example, was paid in "royalties" to another Zynga company with registered offices at Solicitors in Dublin. 

That very company in turn, despite revenues of 191 million and no employees, reported a loss of 35 million! Get the pattern? Because....wait for it....it paid 50 million to its parent company in "royalties" and a further contribution of 174 million in R&D which is 224 million paid out after only generating 191 million.

Funny too that only in November, Znyga's finance chief, David Wehner, left to join...Facebook as vice-president of corporate finance. Doesn't surprise me anyway....

Avoiding tax isn't illegal, just immoral.

And it seems it's widespread. In fact with Google, Facebook, Zynga, Amazon, Starbucks, Microsoft all getting a mention already and so many previously "respected" names, it's hard to imagine that it's just not common practice.

However, it would seem that a lot of other companies with a lot of advisers, are involved in this style of doing business despite being sheltered by an appearance of integrity. On the scale of billions, which these activities are, would require the active involvement of a myriad of professionals.

And yet again, they all have one thing in common, one thing that's bringing these stories to light.

Ireland.

Brand Index Top brands 2012 just out. Google not in top 10 because of tax issue. Europe's "biggest tax haven", Ireland, is going to suffer too.

Well welcome back and indeed I hope your 2013 is as good as I plan mine to be! I think the great thing about Christmastime is that everyone else is off so you don't come back to lots of emails and messages.

Social media and Business shuts down too - I think this year more than most because things have been so tough, everyone needed the break from it. Equally of course, there was little point in staying open given the general lack of activity.

So although I was keeping an eye, not a lot happened during the break you can be assured....although the march over The Fiscal Cliff in the USA, is pretty scary in itself.

One of the more major issues that I blogged many times towards the end of 2012 was the tax avoidance issue and where Ireland now facilitates widespread European tax avoidance. 

The Google Story is here http://streamabout.blogspot.ie/2012/12/the-tax-controversy-continues-now.html.

Microsoft's shameful governance and use of Luxembourg and Ireland's help in doing it is here http://streamabout.blogspot.ie/2012/12/starbucks-try-to-sort-it-microsoft-now.html

Starbucks story here  http://streamabout.blogspot.ie/2012/12/starbucks-are-we-seeing-death-of-brand.html

US senate view of Ireland as a tax haven along with Costa Rica/Belize is here 
http://streamabout.blogspot.ie/2012/12/now-dropbox-comes-to-dublin-for-greatly.html

Amazon, WPP and others appalling tax behaviour is here http://streamabout.blogspot.ie/2012/12/starbucks-amazon-google-microsoft-wpp.html 

In particular, Ireland has become Europe's "biggest tax haven" in the view of the US Government no less and gets mentioned in the same breath as Costa Rica and Belize. Imagine.

Although this tax avoidance controversy was sparked by the poor corporate behaviour of Starbucks, it quickly extended to Facebook, Amazon, Dropbox, LinkedIn and most notably Google with most having their European HQ in Dublin - largely to facilitate the tax avoidance through the infamous "transfer pricing". It's a story that is so bad it's not going away any day soon and I did wonder if the bad publicity would reflect on the brands themselves. 

And it has.

Clearly it has nearly destroyed Starbucks and no bad thing either. They behaved badly in doing what they did but worse following a "faux" PR attempt to make amends by offering to pay tax. And in doing so, cut into their staff incomes to achieve it. A company that's being exposed for what it really is rather than what we thought it was.

Google has also come out thus far, as being pretty poor too and therefore I was interested to see the annual 'Brandindex Table' by YouGov in the UK which asks 2,000 different people a day about good/bad things about brands, that Google has itself fallen off a brand cliff. Google have dropped out of the top 10 altogether. It has dropped from a 26.7 rating to 11.7 which is about as dramatic it can be in the short time and largely, according to BrandIndex, because of the tax issue.

Another avoider to also feel the wrath on the same issue is Amazon. 

Amazon dropped from first to third - 32.1 rating down to 24.1 and again it's been late to the controversy so it will suffer more.

Here is the Top 10-

The top brand was The BBC Iplayer (remember this is a UK survey); John Lewis (big Department store with terrific advertising); Amazon; Money Saving expert; Marks & Spencer; Ipad/Apple; Sainsburys (retail grocery); BBC.co.uk; Samsung and lastly, Cathedral City (a cheese I think).

So there's no doubt, brands that have been involved (and there's a lot) in this tax avoidance 2012 issue, will see damage in 2013 unless they put it right. However, countries that are associated with it and that actually contribute to it, will feel the damage too. 

Most notably those countries that terrorise their citizens into paying tax and at the same duplicitous time, help large corporates shamefully avoid it.

Ireland beware.

The Tax controversy continues. Now Google is in the frame. And Ireland is still in the dock.

Google now enters the frame regarding the ongoing tax controversy in the UK, Europe and Ireland.

According to The Sunday Independent, it has paid less that 70 million euro tax between 2005 and 2011 on sales of 47 billion through its Irish operations. That's 0.14% tax.

It keeps tax bills low through royalty payments filtered through Ireland, the Netherlands and then eventually....Bermuda. Tax research UK said that Ireland has the "laxest transfer pricing rules of anywhere in Europe" and "Ireland doesn't ask questions of companies that are located there". It would seem we want them so badly, we let them off all the hooks.

France has raided their offices many times and slapped Google with a 1.68 billion tax bill on the other hand. Italy are doing something similar and have told parliament that they have found millions in undeclared income and unpaid tax.

A British parliamentary body have dubbed Google's tax practices, with notable reference to Ireland as "utterly immoral" because tax avoidance is not illegal per se.

Google is shifting income from where they do business to tax shelters - Ireland being Europe's biggest. The Starbucks issue is really bringing all this into focus and will lead to changes in international law.

Google Inc., the holding company for example was able to only pay 2.5 billion tax on 26 billion of profits in 2011. Not bad eh?

There's no doubt Google do comply with all Irish tax regulation but this is what is being called into question. Ireland and a tax regime that helps large multinationals avoid tax elsewhere.

The whole saga is unravelling and Ireland is starting to look like the con of Europe. Our European partners will not let us away with this any longer.

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.