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


#101

It is kind of hard not to get annoyed when looking at the machinations of entities here and the firms that “service” them…

Take Global Pfizer Supply. A not unsubstantial undertaking that is in liquidation. It has been since 2014 by EY with no filings since then. But hey, who cares. It’s Ireland.

Here is the appointment of the liquidator - nothing since

scribd.com/document/323006525/Pfizer-Global-Supply-Notice-of-Appointment-of-Liquidator

Here are the last filed accounts - before they transferred the trade to another Pfizer entity

scribd.com/document/323006526/Pfizer-Global-Supply-Account-Details-2012

They have sales of 887M. Profit of 3,771 and tax of 3,668. What a remarkable endeavour :laughing:

KPMG are the auditors, McCann’s the solicitors.


#102

A former US tax official/tax treaty negotiator on the BBC’s ‘The World Tonight’ mentioned that the Irish Revenue’s practice of issuing secret rulings it the manner they did was flawed. He didn’t accept the EU Commission decision as justifiable, but he seemed to accept that Revenue’s way of doing business was not acceptable.

open.live.bbc.co.uk/mediaselector/5/redir/version/2.0/mediaset/audio-nondrm-download/proto/http/vpid/p046cqm9.mp3

I have to say that I find this practice of issuing secret rulings repulsive. Whereas the identify of the parties should be kept confidential and information which could reveal confidential business strategies should be protected, the information/ruling should be redacted or generalised to make the principle of the ruling accessible to all and open to examination and questioning.

Tax Collectors around the world have a difficult time dealing with tax advisers who try to exploit the system and make money out of the system working in unexpected or unintended ways. The State should not actively assist people seeking to commercialise private knowledge of the tax code provided to them by Revenue. The tax code affects all equally and all are entitled to equal knowledge of how it works. If one company asks how a particular provision works then everybody in the country is entitled to the answer. Our constitution provides that justice must be done in public. We are all entitled to know the rules.

The activities of tax advisers can have a very corrosive affect on our society if their motivations and selling point is their ability to assist people in bending and exploiting the rules to defeat the intention of the law, rather than assisting people to comply with the rules. Revenue should not be an active participant in this negative aspect of the industry.


#103

+1 Negative Covenant.

cognitive dissonance - the ability to hold two conflicting thoughts simultaneously.

  1. The Revenue did massive (global scale type tax avoidance) side deals with US MNCs; and

  2. Michael Martin’s assertion that the Irish Government are completely separate from Irish Revenue.

IRISH INDEPENDENT: Apple in Ireland is a major employer and not just an empty shell, by Michael Martin
independent.ie/opinion/comment/apple-in-ireland-is-a-major-employer-and-not-just-an-empty-shell-35017894.html

If you want any evidence Michael, just give Michael Lowry a call:

If the EU is dumb enough to swallow that, they don’t deserve the tax.


#104

For the hard of remembering, what is the link to Michael Lowry in relation to independence of the Revenue Commissioners?

Micheal Martin’s line is pitiful. He clearly thinks one of 2 things:

  • … that he’s much smarter than he actually is or…
  • … that other people are much dumber than they actually are.
    when in fact he’s forgetting that not everyone is a FF voter.

#105

Being a bit of a data nerd as well as an asshole, I had a good look through the stats today.

11.5B of the increase in GDP was capital expenditure on research and development.

2014 - 9,579
2015 - 20,951

That’s not planes, it is an intangible asset. It also attracts a 25% tax credit here. Now there are no obvious changes elsewhere in the stats that would show that this was any kind of transfer from another category. Nor was there any evidence generally of boffins beavering away to more than double the R&D spend in the country.

I even considered whether Iron Man had done an inversion to re-domicile his labs here.

Interestingly, elements of the data are suppressed for “confidentiality” reasons - the sectoral analysis that would be helpful to identify where the increase was focused.

It is not unreasonable at all to conclude that this is more tax shenanigans by big companies to erode the cost of closure of the “stateless” company and the double Irish.


#106

The planes were a ‘red herring’.
Their offsetting financing means that their net effect is minor on GDP.
(again, another sign of how desperate Noonan was)
I have had this definitively confirmed that it is Apple.
They worked hard to bury it, but it is all (outside domestic growth), Apple.


#107

Tim Cook arranges to speak to the PrimeMinister of a Country on a Sunday; that’s a fair old estimation of your importance.
independent.ie/business/iris … 11127.html

It is like an unfaithful husband having given the fool of a wife the clap but telling her he still loves her above all others, all the time sensing to see if she believes the bullshit being peddled.

irishtimes.com/business/econ … -1.2728535
He is responsible from the majority of this and at this stage no amount of antibiotics will clear up the infection.

I believe Kenny still believes the bullshit being peddled.
280 million for a 26% increase in GDP and roughly half of the GDP before the revision were due to multi-nationals mostly smoke and mirrors activities in Ireland so what does that add up to 600m, 700m before you start counting the infrastructure that has to be provided for them.
The acronym IDA needs to familiarize itself with the acronym CBA


#108

Designed in California. Manufactured in China. Tax deductible in Ireland. :stuck_out_tongue:


#109


#110

That’s a good IDA slogan there :smiley:


#111

Michael Hennigan on Finfacts deserves a serious HT worthy of the dude for his work on this over the years…

finfacts.ie/irishfinancenews/article_1027802.shtml

MH is a dude who abides…


#112

Ireland Inc. fools itself that it has the power to levy taxes which is central to the sovereignty of a State.
Of course it can. It can set VAT at 23% which is only paid by those captured within the borders of the State and if times get tough it can increase that to 25% and increase income tax to 40 or 50% but multi-nationals are untouchable.


#113

Very true, he has dug some long channels in his day. Stiil at it.

iTunes in Athenry will probably turn over ~$4bn in year one in 2018 (google Luxleaks iTunes for that assumption) and Apple take a 33% gross profit cut out of that turnover minus expenses, or $1.3bn . The Datacenter itself will have cost around $!50m by then and the electric to run it around $25m so that still leaves $1.1bn taxable at 12.5% :slight_smile:

Amazon AWS in Dublin will be bigger. Around $5-6bn turnover by 2018 by my estimates but with a significantly higher power bill. Amazon run on their own diesel generators for part of the time in Dublin by the way. I’d say on average they shave over 1% off official peak grid demand in Ireland and 2%-2.5% in summer. But it is not green so shhhhhhhh. :smiley:


#114

It’d be great to get a list of Apple’s salary breakdown like we have from Google’s here.

assets.documentcloud.org/documents/1236118/201407211148-1.pdf

As you can see on page 18, 212 million euro is spent on the salaries of 1612 Sales staff, 136 Engineering staff, 244 Operations staff and 296 Administration staff. An average of 92,688 euro per member of staff. Of course the Sales staff I know and Engineering/Operations staff I know aren’t paid anything like that. But I do believe there’s an R&D tax credit for staff and indeed overseas staff. So I wonder would Apple have similar statements where we could see if something like that was going on.


#115

In my experience, when clocking up the R&D tax credits some accountant type does does the rounds of the company and says “right lads, what did we do last year that could be construed as R&D”. Apple obviously found quite a lot this year.


#116

Well, last year in fact.

Eurostat are auditing this spanking jump in GDP as we speak, don’t consider it set in stone like. :slight_smile:


#117

The GDP numbers for R&D capex are massive

2010 7.4B
2011 8B
2012 9.9B
2013 7.9B
2014 9.6B
2015 21.3B

The CSO have some fairly detailed stats on R&D activity in the state

cso.ie/en/releasesandpublica … 2013-2014/

Interesting analysis, enterprises, staff, qualifications etc…

It sets out the R&D spend as follows (It’s every two years)

2007 1.6B
2009 1.9B
2011 1.8B
2013 2B

Now I am not a betting man, but if I was I might wager a yoyo that the GDP number is simply artificial tax planning.


#118

Right, just had this at where I work (for US tax credits).


#119

and remember the great AOL trick of capitalizing marketing costs just like R&D…

AOL never made a cent profit before acquisition by TimeWarner. In fact they lost immense amounts of money. Which is why TimeWarner ended up loosing $30B on the deal.

Amazon uses a different financial engineering trick to hide their immense cumulative losses over the last 20 years. Never made a cent profit. Never will. But this does not stop Bezo et al extracting many many billions per year from cash flow though.


#120

Where as there was utter silence from the Dublin law and accounting community on the Section 110 Vulture Fund scandal (we all know why, as profiled on this thread thepropertypin.com/viewtopic.php?p=886770#p886770), we are getting much better input on the Apple case (especially the smaller ISFC law tax law firms who were not involved in the insane (and naive) tax structuring that Apple tried to pull off in Ireland.

This article is essential reading for Apple tax “anoraks”, as it highlights an issue at the core of the Apple Case:

COMMON LAW: It is by no accident that many of the world’s great tax-havens, are rooted in Common Law (as handed to them by the UK, one of the biggest tax-havens). Common Law is a key part of the tax avoidance tool kit. Common Law (as it pertains to tax) is all about getting the ruling, pouring over the wording and finding the cracks. It is also great for situations where the Taxing Revenue (i.e. Irish Revenue in Apple’s case), wants to HELP your avoidance (like Apple), as their input can be more focused / directed to letters which only give clarification on specific words (i.e. the Taxing Revenue’s support for your tax avoidance is not so blatant). Tax avoidance in Common Law is all about “loopholes”.

CIVIL LAW: The EU’s Civil Law approach is more like that you would expect the rules to be. There is a long pre-amble to each set of leglislation explaining what the goal of the leglislation is. Therefore, if a clever lawyer finds a hole in the wording, the judge can just rely on the pre-amble to still catch you. The critism of Civil Law is that it can be more “political” as judges have far more power to assert them selves in situations (I laugh when I hear commentators protesting against the notion that the ECJ is political, which it is). This is why Margrethe Vestager’s work almost feels like its is from “first principles”. i.e. if Apple created a structure to avoid all EU taxes and Irish taxes, then it must be wrong, as neither EU or Ireland has 0% tax rates.

In Irish Common Law, Apple is a “loophole” to be closed. In EU Civil Law, Apple is tax evasion.

IRISH TIMES: Could Brexit stymie the Apple tax appeal?
There may well be no judge with the requisite experience to hear the case
irishtimes.com/opinion/could-brexit-stymie-the-apple-tax-appeal-1.2781738

The irony is that Irish Revenue’s anti-avoidance rules are a kind of quasi-Civil Law approach (i.e. if the Common Law tax rules produce perverse tax outcomes, then Revenue’s anti-avoidance over-rules them). It is not accident that Ireland’s Common Law Courts System, being so culturally hostile to Civil Law, makes it almost impossible for Revenue to use anti-avoidance prosecution (and have almost never done so).

As an example, we have Michael Noonan’s amendment to Section 110 this morning to shut down the “loophole”. It is not a bad effort (although only focuses on property; all unsecured loans are left out), but the Dublin IFSC law firms will pour over this amendment to find the cracks.

GOVERNMENT: Section 110 of the Principal Act is amended by inserting the following after subsection (5):
finance.gov.ie/sites/default/files/Section%20110%20draft%20amendment%20.pdf

(And the second last paragraph of the amendment is where the “crack” probably is, when OakTree start charging Mars Capital Ireland 15% per annum for its capital (an arm’s length mezzanine financing rate), which will undo most of the amendment).

However, an EU Civil Law to this amendment, would start with a pre-amble which would say that “Section 110 is not to be used by any entity to avoid Irish taxes on profits that were generated from the Irish domestic economy” etc.