Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, CCCTB


#262

The forecast deficit for 2017 is 0.4 per cent of GDP. In absolute terms it’s still a small number, around 1 billion euros, against voted expenditure of 56bn or whatever. So “government expenditure based mostly on borrowing” makes no sense.


#263

A presence in the EU’s Single Market is necessary for all US tech companies.

There is a reason why a lot of these outfits never located in Switzerland or Norway.


#264

The fact that you use GDP means you dont understand any of the numbers. The current GDP/GNP difference is between 20%/25%. Depending on how you slice and dice. In real economies its about 1%/2% max. GNP is what is left after the MNC have moved their loot onwards to the next location. Which is where you should really start when it comes to sovereign debt ratios.

And anyway, since the CSO moved to Eurostat methodologies the official GDP numbers have became completely meaningless. Because such a large element of the Irish economy is little move than massive MNC cash inflows / outflows. Hence “Leprechaun economics” and 26% “growth” in y-on-y GDP…

When I looked at the last real numbers, not estimates, after the gov paid the national debt roll over costs they were still spending about 10B more than they brought in. Given that there are some very interesting national debt balloon payments coming due the next few years that number will not be going down anytime soon. The 7B p.a will be going quite a bit higher. Especially after the ECB stop buying the sovereign debt. Which is what they have been doing since 2012.


#266

No it is not. They were located in Ireland long before the single market directives took force. At least Apple, MS and everyone who was around in the 1980’s and 1990’s was. It has always been about tax and zero interference by regulators. For as long as I’ve been in the business the rule for US hightechs was all EMEA income through the Irish operation, all substantial european R&D work if necessary in UK or Israel, and all Asian income through Singapore. I had my first conversation on this very subject back in 1988 with the CFO of an important US hightech of the time about their fairly substantial Dublin office. The only reason the conversation ever happened was because due to a fluke the Irish operation actually ended up doing non trivial R&D. Which was as unusual then as it is now. Did nt last long. Not long afterwards it was back to been little more than the typical brass plate operation.


#267

So real estate prices in Dublin go down? That’d be terrible :neutral_face:
I don’t think much is invested. Invested money can’t be used to offset borrowings for dividends/share buybacks etc.


#268

The only reason Treasury in M.V would give the go-ahead to buying local real-estate etc (fixed assets) is because there was a very good tax angle. No other. Otherwise if they wanted to buy real-estate (unlikely) it would be R.E.I.T.ed through a holding shell and then repo’ed if they wanted to keep it a nice liquid balance. But these guys have much better ways of holding their cash balances.


#269

Ignoring all the usual smug ad hominems, I would be genuinely interested to see figures that support your assertion that the government spends 10B more than they bring in.

I’m not interested in GDP/GNP arguments, everyone knows those numbers are nonsense. That clearly wasn’t the point I was referring to.


#270

the question would be how quickly the numbers can go from being very positive to unsustainable. according to IT this am 40% of Corporation Tax receipts comes from 10 companies, assuming these are most likely MNC EU income that also inflates GDP you could see a very quick reversal if GDP and Corp. Tax dropped at the same time.

the government also continues to sell assets, increase liabilities (via pay & pensions) and has made no effort to rebuild reserves…


#271

No ad-hominems… just anyone who quotes GDP numbers in an Irish context automatically invalidates whatever follows. Over the last 2 decades all Irish government expenditures estimates have been wrong. Not just a little wrong. But very wrong. We are talking ERSI wrong. What is more interesting is the final expenditure numbers which trickle out a few years later. The last real numbers I looked at were 2015. The final real 2016 numbers wont be out for a while. Or as real as it gets with government account practices…

The last time I looked, a few months ago, after you had unraveled the whole voted / unvoted / other expenditure numbers and first subtracted the cost of servicing the national debt (interesting on its own due to defacto gov ownership of the banks that are first “buyers” of a reasonable chunk of the roll-over debt) you end up with, in round figures 50B in and 60B out. In the end all that matters is how much tax / income comes in and how much cash or cash equivalents goes out. I see it as no different to reading the 10K annual accounts of a dot com that is doing a lot of EBITA hand waving. Think Uber or Tesla. Ignore the hand waving, follow the cash. Because the cash flows will tell you the long term story. Which is always bad in all cases of accounting hand waving.

It was exactly the same back in the 1980’s. The gov were spending more than they were taking in and the CB and kiddies in Dept of Finance were pissing around in circles for over a decade until they stopped fucking about, set up the NTMA, and brought in some professionals to run the show. Expenditure was reined in, the debt was professionally managed, and within a few years the debt started going down and economy was back on an even keel again.

So why not cut back gov expenditure to match income? Most of the excess expenditure is due to bubble era inflation of wage bills and payments. People were not exactly starving on the pre-bubble level wages and payments. Its not just the political outcry from all the usual suspect that prevents this. As Joan Burton blurted out soon after she saw the real books - without all this extra government expenditure the general consumption economy would collapse. Greek levels of contraction. Because thats what happens when you have a tax haven economy and not much of a wider economy. Gov expenditure has a disproportionate effect on the general consumption economy.

So as you walk around the Grand Canal Basin and the IFSC what you see is a reasonable chunk of the Irish GDP. What you dont see is a well rounded, deeply based, foundation of a national economy. Think of it as purely hot-desked GDP. Which is all it is, really.


#272

no need to create an artificial holding shell when you are a holding shell already surely?

more likely they’ve just gotten tired of dealing with the locals…


#273

They will have hundreds / thousands of shell companies. Most are single purpose vehicles. It makes the accounts a lot “simpler”. Back in the day of 50% plus corp tax rates in Ireland pretty much every non-manufacturing company beyond a few employees was little more than a large collection of shell companies that traded among themselves. Thats how you got your tax rates down to levels that would not put you out of business very quickly. So nothing new here.

Plus the Googles of the world will be well used to dealing with world class property sharks. Who would leave the Irish sub-species in the tuppenny-ha’penny seats when it comes to mobius strip corkscrew business practices.


#274

i doubt they ever needed to bring their a-game, but sometimes dealing with stupid can be just as wearying.


#275

As I understand it, the “general government balance” includes debt servicing costs but also includes temporary and one-off measures.

According to the NTMA, the most recent non-forecasted GGB was -4.8bn in 2015.

The forecasts are:
2016: -2.4
2017: -1.2
2018: -0.9
2019: 0.5

Source: ntma.ie/business-areas/fundi … ndicators/

The NTMA recognises and draws attention to the GDP distortions, for instance here:

ntma.ie/business-areas/fundi … h-economy/
“Given the presence of such large distortions, GDP and GNP have little information content in regards to Ireland’s economic activity.”

There’s no conspiracy or cover up here.

Anyway, you can choose to ignore the forecasts if you want, but your 10bn deficit estimate is way off, even for 2015, and that’s nothing to do with GDP distortions.

If the govt succeeds in bring it down to around 1.2bn at end 2017, that’s not a big number.

In 2016 the govt took €47.86bn in taxes, of which €7.35 bn was corp tax, 80% of which was from foreign firms.

So the 2017 deficit will be under 3% of the 42bn tax take excluding corp. tax from foreign firms.

If all of that foreign corp. tax goes, the deficit will rise to 7bn, or 17% of the tax take. That would be bad.

However, by way of comparison, the US takes in 3.3tn in taxes against $3.9 tn of expenditure, which is shortfall of 18%. And Trump is looking to cut taxes.

So judged purely on deficits as a proportion of tax take, Ireland without foreign firms’ corp tax will still be in a marginally better position than the US before Trump does his thing.

And yes, I know the US prints its own currency.


#276

Revenue’s Annual Report 2016 is out

revenue.ie/en/about/publicat … ports.html


#277

OK, so according to “Account of the Receipt of Revenue of the State collected by the Revenue Commissioners in the year ended 31 December 2016 (PDF, 4.78MB)”
revenue.ie/en/about/publicat … t-2016.pdf

Total Net Receipts of Revenue Collected: 58.6bn
…which includes 10.7bn Receipts collected on behalf of other Departments/Agencies/EU Member States, most of which is PRSI and Health Levy (9.6bn) and Health Insurance Levy (640m).

I don’t really understand “gross cumulative voted spending”, but the projection for 2017 is 58bn, which suggests that the budget is more or less balanced at the moment.


#278

Let’s keep it that way


#279

rte.ie/news/business/2017/1 … ommission/


#280

Didn’t we get certain guarantees before we went and voted for the Lisbon treaty second time round?


#281

Yes, cast iron assurances :angry:


#282

For clarity I’m not totally clear here on the above implication. Are you implying the Irish Gov agreed to bend the rules as only they know how to run the 2nd referendum once EU agreed to ignore any of these historical Apple-type deals with an array of US multi-nationals.