Ireland is claiming today that it is not reposnible for Apple paying low rates of tax.
Quite emphatically that is not true. Ireland is completely complicit in this low tax rate and in the process is guilty of deliberately undermining the tax revenues of states around the world and of destroying fair competition in international markets.
It does that in several ways.
First it offers a low tax rate, although I would stress that this is a long way from being the main issue. This is actually little more than an advertising hoarding for the fact that what Ireland really offers now is a virtual "no tax" regime.
Second, it does this not by offering a low tax rate but by offering businesses who locate in Ireland, whether in reality or by way of an internet file server or two, the chance to record no taxable profits in Ireland. That's its real crime.
It achieves this in turn in two ways. First it does not have any effective transfer pricing rules, so goods, services, asset, royalties, management fees and other "costs" that reduce Irish profits to next to nothing can all move out of Ireland to tax havens without questions being asked. Second, it has no controlled foreign company rules to challenge tax haven abuse.
But, most important of all is Ireland's national policy of turning a blind eye to corporate tax abuse. It has no choice by do that because if you use tax to lure companies in to your state - as Ireland does - you can't then question the tax affairs of those companies once they have arrived or they'll leave again. You know they're tax transient: that's the only reason why these companies are in Ireland. At the hint of a tax investigation they'll leave.
The result is that Ireland is a 'doormat state' - a place where large companies can wipe the stain of their tax avoidance from their feet via the local tax system, leave the dirt behind for a modest fee and move their cleaned up money on to wherever they want.
And that's by choice. It may be the result of historical legacy but that does not matter. No one is changing it, and that;s the choice now. And for that they deserve all the criticism they're getting.
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Correct – all built upon the Irish/American relationship.
I agree. As an irishman I am embarrassed at naked opportunism of irish govt. No abortion-whatever circumstances- but whoring is fine!
Apple employs 4,000 people in Ireland, and has had a presence there for 30 years, a choice presumably made by the company when it first decided to market it’s products in the EU. I’m sorry that you don’t like the fact that those jobs are not headquartered in England, but that’s the price you pay for being part of the EU – companies are perfectly entitled under freedom of services to do this. If Ireland has been able to exploit this to create and retain jobs at a time when they are badly needed here, then good on Ireland. Would you prefer it retrenches to the US, taking Irish jobs with it?
Yes
How much help did Ireland get from the in the form of EU aid, regional development programs and so on, when it became an EU member? A lot, as far as I know. And Ireland repays the rest of the EU by enabling tax avoidance on a grand scale.
Secondly, exactly where has this economic model got them? The Irish economy isn’t exactly in the best of health is it? You don’t hear any talk of the ‘Celtic Tiger’ now do you? All this ultra Thatcherite neoliberal ideology has done is enable freebooting corporations and corrupt financiers to fleece ordinary Irish and other EU people whilst enriching themselves in the process.
Ireland is a perfect example of what happens when the cowardly state is in operation, as Richard has tirelessly pointed out.
Indeed
Freeborn Man – This is the usual response – ‘as long as it creates some jobs who cares what the social consequences are elsewhere.’
What would the social consequence be in Ireland if those jobs were pulled?
They’d have to incentivise real jobs, not abuse
Very good
What would be the social consequences be if those jobs pulled out of Ireland?
What does Ireland gain? Their unemployment is about 14% – and these ‘virtual’ companies don’t create too many jobs?
Contrary to the received message, MLC’s are huge employers in Ireland,approx 200,000. For a country with a population of 4 million people that’s huge. That would be the equivalent of about 3 milion people in the UK.
Even more reason why they should pay tax
Jim Davis
Would love know where you got your ‘approx’ 200k figure. Unless there has been a net increase of 60k odd direct jobs of since the Irish economy collapsed in 2008. Which there hasn’t and probably wont be. Being generous we are only creeping back towards 2002 levels and you are still talking national policy with international consequences all for 5% of the Irish workforce.
Best lay of the received messages yourself.
Keep up the good work Richard
doctorfive
It is not 5% of the workforce, it’s 5% of the population.
Unfair to pick on Ireland – Luxembourg also has a case to answer. The other members of the EU really need to get a handle on these rogue states, as well as the UK which uses its offshore islands in a similar manner.
Do you also argue we should never tackle a benefit fraud as we can’t tackle them all?
No – I would pick on them all and I believe that the EU should take the lead rule in dealing with the problem – two birds with one stone and all that.
I’ll say it again – 4,000 jobs in Dublin – 4,000 high value jobs. And that’s just one company. Richard why do you carry an Irish passport? I would hazard a guess because your parents or grandparents were forced to leave Ireland, just like many of us have had to do. You have been fortunate enough not to have had to do the same. It is a fact that multi nationals only need to choose one member state in which to base themselves to do business throughout Europe – if Ireland has had the foresight to attract them for the sake of keeping talented irish people in jobs at home, then good on them.
I note your comment is made from the Isle of Man, which is a touch ironic
Not really ironic. Both have a common history of emigration, and domination by your island to their own cost. If both can forge a niche to create employment locally then I say good on them – not tax evasion by the way – that I do agree with you on.
Tax is an artificial factor of production creating an unsustainable an temporary come tive advantage that can never deliver secure employment
It is and has always delivered a fool’s paradise for a shot period, which is the best that could ever be said of it in Ireland
There is no such thing as secure employment.
Nonsense
It was known for a long time
Neoliberalism destroyed it
Exactly, “secure employment” no longer exists.
It could
It is choice it does not
“Second, it does this not by offering a low tax rate but by offering businesses who locate in Ireland, whether in reality or by way of an internet file server or two, the chance to record no taxable profits in Ireland.”
Richard, stupid question, but what is the Irish government hoping to gain by enticing companies to use Ireland, in those circumstances where they don’t create any jobs, but use Ireland as simply a “door-mat”?
Is it a form of corporate welfare, i.e. helping their buddies in the Irish financial industry – brokers, fund managers and bankers – who might accrue a few fees from the money that’s transit through?
Anthony, The message being circulated that multinationals existence in Ireland are that of brass plaque companies is simply wrong. Multinational’s have a huge presence in Ireland employing about 5% of the population or 10% of the workforce, that would be the equivalent of about 3 million people in the UK which is also more than the amount of people unemployed in the UK at the moment.
Btw, there are other countries in the EU that have less transparent tax regimes and lower CT rates than Ireland yet Multinationals have chose to stay in Ireland.
And very respectfully, the evidence hat companies are indeed brass plaques in Ireland is very strong indeed
You forget the employing company may not be the avoiding brass plaque one
In complex groups why on earth should they be the same?