Will Ireland's corporation tax survive?

[Eschatologist]

Competitors were put at a disadvantage, went out of business

Are you really asserting that Apple achieved world dominance (for a time) by avoiding tax on profits? Really? All that avoided Apple tax is just sitting in a massive pile of unspent, undistributed profits.

Maybe Apple were predatory, evil, market-manipulating bastards, I have no idea. But their tax strategy was a consequence of their success, not vice versa.
Yip. They had a huge marketing budget and I was seeing their competitor products everywhere not only in adverts but inserted in to the middle of programming and being supported by famous faces. That all costs money and you can’t be having your income being taxed if you want to steal the market. It was a very unfair playing field.
Just sitting on that untaxed cash pile leaves you being able to commit to component suppliers that you’ll take everything they build but will take a very dim view of them supplying competitors.

Nothing you’re posting makes any sense.

Revenue isn’t taxed, profits are taxed. Marketing is an operating expense.

Apple was selling products at higher price than their competitors, they weren’t “stealing” market share they were winning it.

[dipole]

“Revenue isn’t taxed, profits are taxed. Marketing is an operating expense.”
The point is their profits weren’t being taxed and as far as I can see they weren’t paying dividends at the time which allowed them to store up a nice big war chest allowing them to do things like invest in marketing on their higher priced lower specced product and commit to component suppliers to take as much as they could supply as long as they gave nothing to the competitor.
Unfair tax advantages gave them the breathing space to dominate a market to which they were a late entrant. Their competitors lived quarter to quarter. Apple had the luxury of time courtesy of good profits elsewhere to strategise how to drive competitors out of a market they wanted to be in.

[tinneym]

M$, FB and the others are different only in that they didn’t have the special tax exemption that Apple did

Has anyone got a link to the specific details of the ‘exemption’? Has it been published?

It’s referenced in the EC press release and I believe the docs are somewhere in this thread or the Apple one. Basically, Apple sold all its stuff in Europe through Apple Sales International. So if you bought something in the UK you were actually paying the Irish company and Apple paid no UK corporation tax on it. But when this was being set up, Apple requested comfort from the Revenue that ASI would only be taxed on its Irish revenue. Sales from other countries were “attributed to a head office” that didn’t exist in any real substantive form. Therefore Revenue allowed Apple to pay no tax on most of its sales. Revenue seem to have agree to this to protect a few factory jobs in Cork.

The attribution to a head office is the actual ‘exemption’ but that’s not enough detail. What was the basis of apportionment and more importantly, regardless of whether it reflected economic reality, why was it only allowed to be used by Apple? The latter is a requirement for it to constitute state aid.

I posted the press release - it doesn’t have this information.

[Mantissa]

M$, FB and the others are different only in that they didn’t have the special tax exemption that Apple did

Has anyone got a link to the specific details of the ‘exemption’? Has it been published?

It’s referenced in the EC press release and I believe the docs are somewhere in this thread or the Apple one. Basically, Apple sold all its stuff in Europe through Apple Sales International. So if you bought something in the UK you were actually paying the Irish company and Apple paid no UK corporation tax on it. But when this was being set up, Apple requested comfort from the Revenue that ASI would only be taxed on its Irish revenue. Sales from other countries were “attributed to a head office” that didn’t exist in any real substantive form. Therefore Revenue allowed Apple to pay no tax on most of its sales. Revenue seem to have agree to this to protect a few factory jobs in Cork.

The attribution to a head office is the actual ‘exemption’ but that’s not enough detail. What was the basis of apportionment and more importantly, regardless of whether it reflected economic reality, why was it only allowed to be used by Apple? The latter is a requirement for it to constitute state aid.

I posted the press release - it doesn’t have this information.

Literally, any sales made in Ireland were attributed to the local entity and taxed. Any sales made outside Ireland were attributed to “Head office” and not taxed. Why? The same reason a dog licks his balls – because they can.

Why was it only used by Apple? Well, we don’t know it was only used by Apple. There might be more. What we know is that Apple told the government that it was “re-evaluating” its European operations and wanted comfort on its taxation, so Revenue wrote the letter allowing Apple to do this. It’s a bald exemption from corporation tax for a specific company.

[tinneym]

Literally, any sales made in Ireland were attributed to the local entity and taxed. Any sales made outside Ireland were attributed to “Head office” and not taxed. Why? The same reason a dog licks his balls – because they can.

Why was it only used by Apple? Well, we don’t know it was only used by Apple.

Unless the commission have evidence that permission to do this was only granted to Apple, they have no proof of illegal state aid, and their ruling is groundless.

This is the very heart of the case, not the transfer pricing arrangements or our residency rules. The press release is silent on it. Why?

[slasher]

Literally, any sales made in Ireland were attributed to the local entity and taxed. Any sales made outside Ireland were attributed to “Head office” and not taxed. Why? The same reason a dog licks his balls – because they can.

Why was it only used by Apple? Well, we don’t know it was only used by Apple.

Unless the commission have evidence that permission to do this was only granted to Apple, they have no proof of illegal state aid, and their ruling is groundless.

This is the very heart of the case, not the transfer pricing arrangements or our residency rules. The press release is silent on it. Why?

“Give us an exemption or we’ll move our factories out of your country” - why does it matter if Apple was the only one?

[Mantissa]

Literally, any sales made in Ireland were attributed to the local entity and taxed. Any sales made outside Ireland were attributed to “Head office” and not taxed. Why? The same reason a dog licks his balls – because they can.

Why was it only used by Apple? Well, we don’t know it was only used by Apple.

Unless the commission have evidence that permission to do this was only granted to Apple, they have no proof of illegal state aid, and their ruling is groundless.

This is the very heart of the case, not the transfer pricing arrangements or our residency rules. The press release is silent on it. Why?

Well I never got that exemption

It’s blatant favouratism. They threw out the corporate tax code for them. If everyone could do it they wouldn’t have needed a letter.

[sorehead]

Unfair tax advantages gave them the breathing space to dominate a market to which they were a late entrant. Their competitors lived quarter to quarter. Apple had the luxury of time courtesy of good profits elsewhere to strategise how to drive competitors out of a market they wanted to be in.

The iphone came in 2007 for Apple off the back of around 3B profit over the entire previous 10 years combined.

In the mid 2000’s Nokia was earning 4B profit a year.

The vast Apple cash pile is due to the iphone, it’s not the reason Apple were able to make the original iphone.

[dipole]

not talking about iphone. a lot happened before the phone and with an emerging market being a mid sized company means you get pushed out by a large company like Apple. You just need to be the best resourced in to the pond that you are jumping in to.

[Mantissa]

Unfair tax advantages gave them the breathing space to dominate a market to which they were a late entrant. Their competitors lived quarter to quarter. Apple had the luxury of time courtesy of good profits elsewhere to strategise how to drive competitors out of a market they wanted to be in.

The iphone came in 2007 for Apple off the back of around 3B profit over the entire previous 10 years combined.

In the mid 2000’s Nokia was earning 4B profit a year.

The vast Apple cash pile is due to the iphone, it’s not the reason Apple were able to make the original iphone.

Nope. Apple had $15bn cash in 2007 already.

[Mossy_Heneberry]

Didn’t Lisbon II guarantee that the EU could not interfere in Ireland’s tax affairs?

[tinneym]

“Give us an exemption or we’ll move our factories out of your country” - why does it matter if Apple was the only one?

If other companies allocated profits to non-resident companies on a similar basis, it’s not state aid and the case is groundless.

Given that the commission appears to be silent about this, but very loud about transfer pricing and is literally encouraging other EU members to try to grab a share of the fine - I have my doubts. The press release is rabble-rousing stuff.

[Mantissa]

Didn’t Lisbon II guarantee that the EU could not interfere in Ireland’s tax affairs?

It’s not. It’s insisting that Ireland applies our own tax law equally to all. Failing to do so leads to distortions in the internal market.

[Skippy_3]

Unless the commission have evidence that permission to do this was only granted to Apple, they have no proof of illegal state aid, and their ruling is groundless.

This is the very heart of the case, not the transfer pricing arrangements or our residency rules. The press release is silent on it. Why?

The whole decision hinges on this issue.

I am looking forward to a more detailed decision in due course which should have more clarity on this.

[slasher]

“Give us an exemption or we’ll move our factories out of your country” - why does it matter if Apple was the only one?

If other companies allocated profits to non-resident companies on a similar basis, it’s not state aid and the case is groundless.

So companies can just “allocate” profits to non-resident entities?

No. They can’t. If revenue made a series of secret exemption of favoured companies they’re exemptions because standard tax treatment say you can’t “allocate” profits like this. Are ordinary non-favoured companies entitled to this? Are they fuck!

Why did they need the comfort letter from Revenue? Because they were interpreting tax policy in ridiculous way.

on.ft.com/2bTnC68

At issue in the EU inquiry is the favourable tax treatment in Dublin of two Apple subsidiaries and whether the advantages they received were available to any other business.
One subsidiary is Apple Sales International (ASI). It was structured so that all the profits on the sale of the iPhone and other Apple products in Europe, the Middle East, Africa and India were recorded in Ireland. The other subsidiary is Apple Operations Europe, which manufactured certain computer lines.

When it came to tax, each operated in much the same way.** The rulings of 1991 and 2007 meant that almost all profit was allocated to a “head office” which had no employees or premises and existed only on paper.**

Officials examined “head office” board minutes which suggested teleconference meetings went on for no more than 20 minutes and that nothing more than cash management and the allocation of dividends was discussed.** The particular advantage of the structure was that the head office was considered “stateless” for tax purposes, with no tax to be paid anywhere on profits attributed to it.**

They are simply pretending that all the value of the Apple products are generated in [the Irish city of] Cork

• Luca Maestri, Apple’s chief financial officer

Citing figures released by the US Senate, the commission said ASI recorded a €16bn profit in 2011. All but €50m of the profit was allocated to the head office, and Apple paid €10m tax in Dublin on that. The effective tax rate on the €16bn profit was 0.05 per cent in 2011 and the effective declined to 0.005 per cent in 2014 even as profits grew.

Ms Vestager’s ruling on this is unambiguous, although it has been challenged in strident terms by Apple and by Ireland. In her view the arrangement allowed an “artificial” allocation of profit to enable Apple, in defiance of EU law, to pay substantially less tax than other companies.

ironic that this came to light because of a US Senate committee investigation

[Mantissa]

WWN hits it on the head
waterfordwhispersnews.com/2016/0 … -to-apple/

They’ve taken our farms, our turf, our water, our fish and our oil, and now they’re trying to take the only thing we’ve got left, our disregard for financial affairs.

[dipole]

share price of apple isn’t suffering. Banana Republics don’t dictate terms to multi-nationals so I’d guess the market doesn’t expect Ireland will ever come looking for the tax owed.

[Mantissa]

share price of apple isn’t suffering. Banana Republics don’t dictate terms to multi-nationals so I’d guess the market doesn’t expect Ireland will ever come looking for the tax owed.

I suspect it’s been priced in for a while.

[Luan]

M$, FB and the others are different only in that they didn’t have the special tax exemption that Apple did, but it doesn’t mean they paid any tax here ; many of them used the double Irish until 2014 when it was abolished. I remember when every Windows 95 license in EMEA was “sold from Ireland”.

and I remember duplicating the W.95 floppy diskettes as a temp worker for a contractor in Sandyford in the times before minimum wage on a three shift cycle earning not much more than dole. People keep saying they deliver jobs but the jobs these companies deliver are mostly low paying; if they were high paying then the balance of taxes in the national accounts would look dramatically different.

Was the contractor Irish or foreign owned?

[dipole]

M$, FB and the others are different only in that they didn’t have the special tax exemption that Apple did, but it doesn’t mean they paid any tax here ; many of them used the double Irish until 2014 when it was abolished. I remember when every Windows 95 license in EMEA was “sold from Ireland”.

and I remember duplicating the W.95 floppy diskettes as a temp worker for a contractor in Sandyford in the times before minimum wage on a three shift cycle earning not much more than dole. People keep saying they deliver jobs but the jobs these companies deliver are mostly low paying; if they were high paying then the balance of taxes in the national accounts would look dramatically different.
Was the contractor Irish or foreign owned?

The contractor wasn’t available in the middle of the night to ask.