Will Ireland's corporation tax survive?

[yoganmahew]

Depends what they’re doing; the speed of light mounts up quite quickly for some applications, but more importantly the switching delays can be significant since you don’t necessarily have a single unbroken strand of glass from your datacenter to the Norwegian datacenter.

Also datacenter do have more than one input; the connectivity is a crucial component, and Dublin does quite well for that, amazingly.

Still, if a Norwegian soverign wealth fund wanted to build a post-oil economy then this somewhere where they could afford to invest in IT infrastructure and then leverage their competitive advantage of excess hydro-electric capacity and cool climate.

Lots of Nordic countries are trying that (e.g. Iceland). The problem is that you need the exact right magic mix of cheap power, multi-route connectivity, cheap real estate, and tax breaks. Amazingly, Ireland seems to have stumbled on a good combination, probably completely by accident. There’s also a decent industry-funded lobby group (Host In Ireland) that markets Ireland abroad as a datacenter and hosting location.

A big drawback is having multiple fibre landings in order to give true diversity. Ireland has that by accident of geography, so we’re ahead of lots of other countries.

Don’t foget weather. The cheapest form of air conditioning is not having to do any. And no heating either. With a year round temperature in the low teens ( ) we’re well placed even compared to our nearest neighbour with their extremes of mild sunshine and some frost.

[Andy]

Don’t foget weather. The cheapest form of air conditioning is not having to do any. And no heating either. With a year round temperature in the low teens ( ) we’re well placed even compared to our nearest neighbour with their extremes of mild sunshine and some frost.

That is tragically funny. I recall Dylan Moran’s comment the weather in Ireland is “Fierce Mild”

[Andy]

wsj.com/articles/johnson-controls-tyco-to-merge-in-inversion-deal-1453724828

Tyco Johnson Controls merger/inversion.

EDIT TO include Hillary’s reaction

Jan 25 Hillary Clinton called the planned inversion by Johnson Controls and Ireland-based Tyco “outrageous,” and said as president she would block such moves using an “exit tax.”

“These efforts to shirk U.S. tax obligations leave American taxpayers holding the bag while corporations juice more revenues and profits ,” Clinton said in a statement. “I have a detailed and targeted plan to immediately put a stop to inversions and invest in the U.S., block deals like Johnson Controls and Tyco, and place an ‘exit tax’ on corporations that leave the country to lower their tax bill.”

Johnson Controls announced on Monday a plan to buy Tyco for $16.5 billion, which the companies said will save $500 million in taxes in the first three years and an additional $150 million a year through tax synergies

[EuroTom]

irishtimes.com/news/world/eu … -1.2512772
*
“Today’s announcement in Brussels is the latest attempt at a EU-wide approach to the practice of corporate tax planning. The initiative is expected to include proposals to ban companies from shifting profits to subsidiaries in low- tax nations, as well as a proposal to curb the practice of companies using debt interest payments to lower tax bills.
The package will not include details of the revised CCCTB, which is instead expected to be launched in the autumn. What will be significant for Ireland is whether any of the measures go beyond the standards of the OECD rules agreed last year”*

[yoganmahew]

There are a large number of mechanisms that large corporations use to avoid tax that seem to be unjustifiable:

• borrowing to issue dividends so they don’t have to bring money in to their HQ country from the tax haven.
• claiming the interest from borrowing to issue dividends as an expense.
• intra-company IP/licensing. So Motorola pays Apple a licence fee for use of a patent. Fair enough, that’s a cost to Motorola and a gain to Apple. Then Apple Ireland turns that gain into a cost and whips it off to Holland and thence to some tax haven. I don’t believe that IP payments to related companies should be permitted.
• being stateless. In my view, if you’re stateless, you don’t own anything.
• using the laws of one country despite not being resident there. So patent wars in the US despite not being HQ’d in the US.
• averaging out debt and profit (taking on debt to pay costs so the interest counts against profit).
• agreed tax bills - taxation authorities need to grow a pair and start doing their job.

So what gives? Why is this permitted?

[Mantissa]

The problem is that a lot of those rules actually make sense on their own, on a small scale. They can and are abused though. Take this one:

• using the laws of one country despite not being resident there. So patent wars in the US despite not being HQ’d in the US.

But then how do I obtain a worldwide patent on my widget? I can’t be HQed in every country in the world, but I would like to sell it globally, or at least have global patent protection against copy-cats. There is a legitimate reason to allow global IP rights.

[Mossy_Heneberry]

How can we (Ireland) be forced to adopt their new corporate tax rules when we have an opt out under Lisbon treaty II?

[TheJackal]

Ireland signs up to tackle tax avoidance by multinationals with 30 other OECD countries

independent.ie/business/worl … 03966.html

[yoganmahew]

The problem is that a lot of those rules actually make sense on their own, on a small scale. They can and are abused though. Take this one:

• using the laws of one country despite not being resident there. So patent wars in the US despite not being HQ’d in the US.

But then how do I obtain a worldwide patent on my widget? I can’t be HQed in every country in the world, but I would like to sell it globally, or at least have global patent protection against copy-cats. There is a legitimate reason to allow global IP rights.

Right, but there has to be a better mechanism. Perhaps a central patent resolution mechanism? I know it’s pipe-dreamy, but that’s one of the things government is for. They should all get off their pot filling holes and do some work.

[tulip]

The problem is that a lot of those rules actually make sense on their own, on a small scale. They can and are abused though. Take this one:

• using the laws of one country despite not being resident there. So patent wars in the US despite not being HQ’d in the US.

But then how do I obtain a worldwide patent on my widget? I can’t be HQed in every country in the world, but I would like to sell it globally, or at least have global patent protection against copy-cats. There is a legitimate reason to allow global IP rights.
Right, but there has to be a better mechanism. Perhaps a central patent resolution mechanism? I know it’s pipe-dreamy, but that’s one of the things government is for. They should all get off their pot filling holes and do some work.

If the politicians got up off their holes and stopped all this where would they make all their money after they retired. Topaz can’t run without the Biff. Middle Eastern peace can’t be obtained if Tony doesn’t have a big office, how can Wall St. make money without the consulting of Greenspan associates…

[bedsit]

Apple may owe Ireland $19 billion, but Ireland doesn’t want the money. Here’s why - Washington Post

Depending on the outcome of an official investigation, Apple may face a bill that is estimated at between $8 billion and $19 billion for underpaid taxes to the Irish government. The Irish government really, really doesn’t want to get this money and is fighting as hard as it can to avoid receiving it. That may sound weird to ordinary people, who assume that governments want to squeeze individuals and businesses for as much taxes as they can get. But if you understand the politics of international corporation tax, it all makes sense.
…

[BoyRacer]

EU announces corporate tax anti-avoidance package - -> out-law.com/en/articles/2016 … -package-/

The measures, which were revealed last week to the Financial Times include an anti–tax avoidance directive which would require all EU member states to introduce restrictions on interest deductibility, controlled foreign company (CFC) rules and an exit charge to prevent companies shifting assets or company residence to low tax jurisdictions. CFC rules are designed to prevent groups from diverting profits to low tax territories to avoid tax.

Countries would also need to implement a general anti-abuse rule (GAAR) to counteract aggressive tax planning when other rules do not apply.

there is more

[yoganmahew]

EU announces corporate tax anti-avoidance package - -> out-law.com/en/articles/2016 … -package-/

The measures, which were revealed last week to the Financial Times include an anti–tax avoidance directive which would require all EU member states to introduce restrictions on interest deductibility, controlled foreign company (CFC) rules and an exit charge to prevent companies shifting assets or company residence to low tax jurisdictions. CFC rules are designed to prevent groups from diverting profits to low tax territories to avoid tax.

Countries would also need to implement a general anti-abuse rule (GAAR) to counteract aggressive tax planning when other rules do not apply.

there is more

Wow, excellent; that sounds way stricter than I hoped, particuarly the GAAR. It already exists for individuals, so why companies have been able to get away with it for so long, well, I guess we all know the answer to that one

[Mossy_Heneberry]

America will be calling soon for their taxes back.

It was about time the other shoe dropped in this story of the American tech giants, the Google, Facebook, Apple tax dodging stuff, not paying their righteous and just tithe to the governments of Europe. Because over here the shouting is all about how those companies don’t pay tax anywhere. Which is true in the here and now but cannot possibly be true off into the future. The way that the international corporate taxation system works, is supposed to work, is that corporate taxation is applied where the economic value is created and failing that, in the tax jurisdiction of residence of the main or holding company. And that’s how it does work. That currently tax rates are low is simply a quirk of American tax law, not European. And the US is entirely conscious of this: at some point, if those profits are to be paid out to investors, something which is the point and purpose of a company, then US corporate income tax will be paid on those profits. And any amount that Europe manages to snaffle before that will simply lead to a diminution of the amount paid to Uncle Sam.

Taxes will be paid but on a deferred date.

The important underlying economic and public policy point here is that for large corporations all this offshore stuff doesn’t actually allow the non-payment of taxes. All it does is allow the delay of the payment of taxes. The Man will indeed get his bite at some point in the future. Meaning that all of the arguments currently going on are not in fact about payment of the dues to The Man, but rather about which version of The Man gets to spend the loot.

And I couldn’t agree more…

As ever, better by far to simply stop this entire charade and abolish corporate taxation. Just tax investors on their incomes from their investments and be done with it.

forbes.com/sites/timworstall … 72c31a79e3

[TheJackal]

Just 10 firms paid 50% of record Irish corporation tax in 2015

finfacts.ie/Irish_finance_ne … n-2015-514

[Mantissa]

SBP reports that Italian authorities have opened a criminal investigation into 5 executives in Google Ireland for illegally shifting sales out of Italy and into Ireland.

[BoyRacer]

Arab Fiscal Forum: Fiscal Policy and Growth - -> imf.org/external/np/seminars … scalforum/

Revenue Mobilization and International Taxation: Key Ingredients of 21st-Century Economies - Christine Lagarde -> imf.org/external/np/speeches/2016/022216.htm

Before we engage in these discussions, let me conclude by returning to Adam Smith, who wrote in the Wealth of Nations:

“Political economy…proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people…and secondly, to supply the state or commonwealth with a revenue sufficient for the public services.”

My main message today is this: creating successful 21st-century economies requires robust government revenues and an international tax system that works for everybody. These ingredients are essential for growth, fairness, and development.

They provide the fertile ground for the prosperity of nations. And we at the IMF are ready to play our part for the benefit of our membership.

Now you know why she was re-anointed head of the IMF.

[Mantissa]

Exactly as I predicted, Facebook to stop booking their UK sales through Ireland. Expect a loss in sales and CSR positions here as well as reduction in GDP (however small).

irishtimes.com/business/tech … -1.2559941

[EuroTom]

Exactly as I predicted, Facebook to stop booking their UK sales through Ireland. Expect a loss in sales and CSR positions here as well as reduction in GDP (however small).

irishtimes.com/business/tech … -1.2559941

Long term is this bad for Ireland?

[Mantissa]

Exactly as I predicted, Facebook to stop booking their UK sales through Ireland. Expect a loss in sales and CSR positions here as well as reduction in GDP (however small).

irishtimes.com/business/tech … -1.2559941

Long term is this bad for Ireland?

It removes some of the fake GDP and reduces PAYI/PRSI. In the short and medium term it’s bad. You could argue that it’s good in the long term because it makes us stop pretending we have a world-class knowledge economy.