Threats to Irish low corpo tax regime

[superman]

From True Economics:
trueeconomics.blogspot.com/2010/ … bamas.html
Under the Obama proposal, a US corporation will have to compute its foreign tax credit on an aggregated basis – taking all foreign earnings and profits of all its foreign subsidiaries and subtracting total foreign taxes paid. If that isn’t bad enough, subsidiaries in higher tax countries will face a ceiling on how much credit they can claim against their earnings for the purpose of the Federal tax liability
The thing is – India and China and many other locations will probably be ok, because they provide high productivity relative to low cost base. Ireland doesn’t do either. So what will keep the MNCs here if Obama gets his wish? For the next 5 years – the capital already sunk here. But after that? Not much. No, really, not much…
Any comments?

[jabaar]

Companies Dodge $60 Billion in Taxes Even Tea Party Condemns
bloomberg.com/apps/news?pid= … EeI&pos=10

That transaction is at the heart of transfer pricing: With each tablet Forest buys from the Irish unit, it shifts profits to Ireland, where corporate income is taxed at rates between 10 percent and 12.5 percent, compared with 35 percent in the U.S.

Overall, Forest’s Irish operations, which employ about 5 percent of its 5,200 workers, reported $2.5 billion in sales during fiscal 2009, the most recent year for which figures are available. That equals about 70 percent of the parent company’s $3.6 billion in net sales.

International tax planners have a nickname for the type of structure the drugmaker adopted: the Double Irish.
The change helped the Irish subsidiary cut its effective tax rate to 2.4 percent from 10.3 percent the year before the reorganization, according to its annual reports. It did so by deducting from its taxable income the fees that went to Bermuda, which has no corporate income tax.

This kind of publicity will not help.

[Coles2]

The threat to our corporation tax revenue could come from closer to home. On Morning Ireland today the new Northern Ireland Secretary Owen Patterson revealed that it’s on the agenda for the North to decide it’s own corporation tax rates. Everyone wants a slice of the pie.

Link to RTE player yoke. 3:30 into the segment.

[jabaar]

Bloomberg are on a roll, another story today.

Profit Exports Import U.S. Tax Cuts for Pfizer, Lilly, Oracle
bloomberg.com/apps/news?pid= … CBQ&pos=12

“All our transactions satisfy all arm’s-length requirements,” Campion said. Charges related to cost-cutting and mergers helped lower Pfizer’s U.S. income, she said. The company manufactures Lipitor in Ireland, among other countries.

An Irish subsidiary of Oracle that has no employees and paid no income tax in 2006 and 2007 was responsible for roughly a quarter of the parent’s pretax income of $10.8 billion in those years, according to Irish records and Oracle’s U.S. securities filings. The unit distributes products “primarily in the European market” that were developed by the Redwood City, California-based company and “jointly funded under a cost sharing arrangement,” according to its annual report from 2007, the most recent year available.

In each of the past seven years, Lilly has reported more than half its sales in the U.S. yet more than half its profits overseas. In 2007, a Swiss subsidiary booked pretax income of $3.2 billion – more than 80 percent of the $3.9 billion the parent company reported that year.

The Swiss holding company has an Irish manufacturing branch that produces drugs and sells them to affiliated companies, according to its annual report.

And the defence

Ken Glueck, a senior vice president for Oracle, declined to answer questions about the company’s use of transfer pricing. In an e-mail, he compared transfer pricing to the mortgage-interest deduction that individuals can claim.

“Can someone please explain to me how following the tax laws of the United States became a reportable issue for Bloomberg News?” Glueck wrote.