Ireland plays defense as overhaul to global corporate tax rate looms
The Irish government is on the defensive because of a new global tax plan could threaten its status as a tax haven for multinational corporations like Apple.
Credit: Apple
Earlier in 2021, the G7 group of nations agreed to close tax loopholes leveraged by global companies by enforcing a minimum corporate tax rate of at least 15%. Now, The New York Times reports that Ireland plans to put up a fight.
The New York Times reports that Ireland is "hunkering down" to battle what could be a significant threat to its livelihood. Ireland has long lured major companies like Apple, Google, Facebook, and Twitter by offering low corporate tax rates. The country's economic boom from foreign investment since the 1990s has even gained a term, the "Celtic Tiger."
"Ireland is very much a tax haven operating in Europe, so it makes sense that Ireland will resist this as hard as they can. The Celtic Tiger is something to be proud of, and if the model is breaking they need to look like they are defending it as much as possible," said Alex Cobham, chief executive of the Tax Justice Network.
Currently, Ireland has an official corporate tax of 12.5% and a tax regime that helps multinational companies based in the country avoid paying taxes to other nations where they make a profit. This has helped Ireland garner billions of euros and create hundreds of thousands of local jobs.
Ireland has pushed back against the proposed tax overhaul. The country was among nine that did not sign on to the sweeping tax reform earlier in July, joining other low-tax nations like Barbados.
Although both tax revenue and jobs are at stake for the Irish government, the optics of fighting back could be difficult. The New York Times reports that Ireland risks looking like it wants to deprive other countries of their fair share of tax revenue.
An overhauled global tax system could cost Ireland 2 billion to 3 billion euros each year. Much of that would go to other countries. Ireland brought in roughly 12 billion euros in corporate taxes in 2020.
Ireland's finance minister declined interview requests and the opportunity to answer written questions. Major multinational corporations that have benefitted from Ireland's tax policies also declined comment to The New York Times.
If the tax overhaul is implemented, major corporations who have set up shop in Ireland aren't likely to leave right away, given the time and resources they spent making the country their European base.
For Apple, analysts believe that the proposed tax rules could "almost completely" erase benefits of prior tax reductions. However, back in January, Apple CEO Tim Cook voiced his support of a tax overhaul.
"I think logically everybody knows it needs to be rehauled, I would certainly be the last person to say that the current system or the past system was the perfect system," Cook at the time. "I'm hopeful and optimistic that they (OECD) will find something."
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.
Credit: Apple
Earlier in 2021, the G7 group of nations agreed to close tax loopholes leveraged by global companies by enforcing a minimum corporate tax rate of at least 15%. Now, The New York Times reports that Ireland plans to put up a fight.
The New York Times reports that Ireland is "hunkering down" to battle what could be a significant threat to its livelihood. Ireland has long lured major companies like Apple, Google, Facebook, and Twitter by offering low corporate tax rates. The country's economic boom from foreign investment since the 1990s has even gained a term, the "Celtic Tiger."
"Ireland is very much a tax haven operating in Europe, so it makes sense that Ireland will resist this as hard as they can. The Celtic Tiger is something to be proud of, and if the model is breaking they need to look like they are defending it as much as possible," said Alex Cobham, chief executive of the Tax Justice Network.
Currently, Ireland has an official corporate tax of 12.5% and a tax regime that helps multinational companies based in the country avoid paying taxes to other nations where they make a profit. This has helped Ireland garner billions of euros and create hundreds of thousands of local jobs.
Ireland has pushed back against the proposed tax overhaul. The country was among nine that did not sign on to the sweeping tax reform earlier in July, joining other low-tax nations like Barbados.
Although both tax revenue and jobs are at stake for the Irish government, the optics of fighting back could be difficult. The New York Times reports that Ireland risks looking like it wants to deprive other countries of their fair share of tax revenue.
An overhauled global tax system could cost Ireland 2 billion to 3 billion euros each year. Much of that would go to other countries. Ireland brought in roughly 12 billion euros in corporate taxes in 2020.
Ireland's finance minister declined interview requests and the opportunity to answer written questions. Major multinational corporations that have benefitted from Ireland's tax policies also declined comment to The New York Times.
If the tax overhaul is implemented, major corporations who have set up shop in Ireland aren't likely to leave right away, given the time and resources they spent making the country their European base.
For Apple, analysts believe that the proposed tax rules could "almost completely" erase benefits of prior tax reductions. However, back in January, Apple CEO Tim Cook voiced his support of a tax overhaul.
"I think logically everybody knows it needs to be rehauled, I would certainly be the last person to say that the current system or the past system was the perfect system," Cook at the time. "I'm hopeful and optimistic that they (OECD) will find something."
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.
Comments
What’s not a good look is much larger countries with significantly more resources whining about Ireland’s lower tax rate being unfair. These larger European nations have significant advantages over Ireland, which they conveniently overlook. Ireland’s only and legitimate way to compensate for that is lower tax rates and that’s good for international competition. Tax rate harmonization only helps the already larger countries maintain and extend their dominance.
Accusations of “unfair” and “tax evasion” emanate from the much larger EU countries that have more lavish government social expenditures. That is their sovereign choice. But Ireland must also be permitted it’s own choices, otherwise, what is the point of being in the EU at all?
Taxation based on local economic activity is the only fair approach. For Apple or any other company to make money and spend money in other countries, and allow those numbers to be used in another country is unfair to everyone -- it's exploitation otherwise.
"We'll be trying to do that, but I should emphasise it's not essential that every country be on board," she said.
"This agreement contains a kind of enforcement mechanism that can be used to make sure that countries that are holdouts are not able to undermine - to use tax havens that undermine the operation of this global agreement."
The G20 members account for more than 80% of world gross domestic product, 75% of global trade and 60% of the population of the planet, including big-hitters the United States, Japan, Britain, France, Germany and India.
In addition to European Union holdouts Ireland, Estonia and Hungary, other countries that have not signed on include Kenya, Nigeria, Sri Lanka, Barbados and St. Vincent and Grenadines."
In other words: Ireland is welcome to take their football and go home. Bye-bye.
Putting aside your that rather long winded diatribe to repudiate something I did not say, “All taxes are bad,” the government of Ireland is ethically and morally bound to do what is best for its people, regardless of what outsiders might insist. Sadly, I am unable to address your lack of economic acumen as you are entirely unprepared to hear it nor accept it from me.
I do have a moderate libertarian bent, but I certainly acknowledge that taxes always will (must) have their place in a cohesive society. But reasonable people can disagree about how much Government should dominate a society. I believe it is within each nation’s sovereign right to decide what that level of Government should be, and tax it’s citizens accordingly.
And, according to the AP, Yellen has again attacked the tax havens telling them they'll have to compete instead of cheat:
"“This deal will end the race to the bottom,” she said at a news conference after the end of the meeting in Venice.
“Instead of asking the question: ‘Who can offer the lowest tax rate?,’ it will allow all of our countries to compete on the basis of economic fundamentals – on the skill of our workforces, our capacity to innovate, and the strength of our legal and economic institutions.”
“And this deal will give our nations the ability to raise the necessary funding for important public goods like infrastructure, R&D, and education.”
Isn't that the essence of capitalism? Where the best do best?
“Immoral refers to a violation of certain standards that govern human behaviour and conduct.
Unethical, on the other hand, involves the non-conformity to certain standards that guide a particular role, group or profession.
Immoral is deeper, in the sense that is based on an individual’s personal and/or spiritual beliefs and what he/she considers to be moral/immoral.
Unethical, however, traditionally governs the conduct or behaviour of individuals belonging to a particular group or profession.”
Yes, pigs do fly!
Governments do not have morals because they aren't people. As a group of people their morals will have flex and variation, and do not necessarily confer a need to do "what is best for its people" so the concept is meaningless.
Governments only have definitive professional ethics in the form of whatever oath their members swear, which has variation across jurisdictions and does not confer a necessary ethical responsibility to do "what is best for its people" unless that is in the text of the oath (it often isn't). Codes Of Conduct may have some influence, but are unlikely to stipulate that the member will do what is best for its people because such a concept is so nebulous. You might argue that political norms confer some other responsibility, but that is very debateable, and almost certainly unenforceable.
And coming back to the principal context, this is about corporate taxation. There are no ethics or morals that have any reasonable sway over this area. Libertarianism is not an ethical framework, it's a political ideology.