SBP: US calls time on favourable Irish tax treaty

Taken from The Sunday Business Post, 10th Feb 2008.

sbpost.ie/post/pages/p/story … qqqx=1.asp

Blue Horseshoe

So the pressure on ireland’s tax (haven) status is being racheted up another notch from the US side now. Between the EU tightening on transfer pricing, and this US move, the desirability of putting profits through a high cost country like ireland will drop substantially.

Ouch.
This is going to hurt.

This is very worrysome for the country and I am suprised it is not getting alot of media attention. Does this the loophole of 12% corporation tax or something? Me no business major :frowning:

It’ll not effect the 12.5% - difficult to know exactly what effects though. Maybe turn out to nothing more than a sensationalist journo headline. Treaties get re-negotiated all the time when sometimes it simply appears that they need to be brought up to date. But you never know…

I assume it probably doesnt impact the likes of Intel or Dell or we’d see screaming headlines everywhere. Thank God it doest too, If/when Intel and Dell leave Ireland Inc is truly down the shitter.

Intel are probably gone anyway, so you’re right on that one. Likewise, dell have far too big an operation in ireland to ignore the high and rising cost base.

But the real damage will the smaller operations who route a sizeable amount of profits per employee through fairly small operations in ireland - those jobs exist only to cover the money laundering side, and once it gets squeezed, those jobs are outta here.

I heard last week that Dell had laid off around 1000 people on temporary contracts in Raheen in recent weeks. I have not posted a thread on this as I have not had confirmation of the scale. Laying-off temporary contract staff does not need to be notified to the Dept of Enterprise and Employment.

Yep, you’re absolutely right of course, hadn’t even considered these shenanigans - case in point

H’mm google throws up some rather less than impressed yanks perspective on this too - crookedtimber.org/2007/02/23/tax-competition/

It will be intersting to see what effect any such agreement would have on the GDP figures.

Companies such as those mentioned in the above article will have their ‘reported’ revenues included in the GDP numbers. Certainly they will have paid Irish tax on the repored figures, but if there is no longer a benefit in having 8 virtual employees (AKA accountants and lawyers) in Ireland, then why bother?

GDP could decline rapidly without seeing any significant job losses.

Blue Horseshoe