With spotlight on it & Apple, Ireland calls for worldwide tax crackdown
Ireland is in the spotlight following the U.S. Senate's investigation of Apple's alleged tax avoidance, and the low-tax nation is now calling for an international crackdown on tax dodging by multinational corporations.
Irish ministers are doing double duty in the wake of Apple's appearance before the Senate, looking both to deflect blame from Ireland's multinational-friendly tax structure and to encourage other countries to close loopholes that allow large corporations to skirt the tax laws of the countries they operate in. The minister in charge of attracting foreign companies to Ireland is now saying that those companies need to be brought under control, according to Reuters.
"They play the tax codes one against the other," Richard Bruton told Irish state broadcaster RTE, "and I think we do need international cooperation through the [Organization for Economic Cooperation and Development] to deal with the aggressive nature of that."
Ireland has long drawn criticism from other European nations for its low corporate tax rate of 12.5 percent. That tax rate encourages companies to locate at least some operations in Ireland for tax purposes, which is what Apple does, along with Google and Yahoo, Pfizer, and Intel, as well as many others. Of Ireland's two million-strong labor force, about 150,000 work for foreign companies headquartered there for tax purposes.
The criticism has grown as countries across Europe are tightening their fiscal belts in light of the soft economy. The potential tax revenue lost to Ireland has led to more grumbling from the country's neighbors, though Ireland has so far turned back any attacks. Now, though, thanks to scrutiny from the U.S. Congress, Ireland is closer to pushing for tighter rules on multinationals. The United States wields more economic and political power than does any individual European nation and could unilaterally start making things more difficult for those foreign countries headquartered in Ireland.
"The U.S. Congress, if they wanted to, could wipe out those 150,000 real jobs," Irish think-tanker John FitzGerald told Reuters.
The U.S. congressional investigation found that Apple had paid just two percent tax on $74 billion in income made outside the United States. Those funds were also made largely outside of Ireland, but Irish tax law says that a company can be incorporated within the country without being a tax resident.
Apple maintains that it has broken no law, and CEO Tim Cook has continually maintained that Apple pays "all of the taxes we owe ?every single dollar."
Cook further asserted that he has no plans to have Apple repatriate its more than $100 billion in cash holdings until the United States lowers the tax rate on earnings made overseas.
"It would be very expensive to bring that cash back to the United States," Cook told the subcommittee. "Unfortunately, the tax code has not kept up with the digital age."
The U.S. isn't the only nation interested in Apple's dealings with Ireland. The relationship between the two has come under scrutiny from both Britain and Spain in the recent past. A British report last year said that Apple pays about half the taxes it should by basing its operations out of Ireland.
A similar report from Spain's El Pa?s showed Apple routing 99 percent of its Spanish sales through Apple Operations International, its Irish subsidiary. That arrangement allowed Apple to pay only 2.6 million euros in taxes for 2012, even though its Apple Store sales were up 86 percent.
It's unclear what specific action Ireland will call for in the coming weeks, but the issue is likely to be raised at a summit of European leaders in Brussels.
Irish ministers are doing double duty in the wake of Apple's appearance before the Senate, looking both to deflect blame from Ireland's multinational-friendly tax structure and to encourage other countries to close loopholes that allow large corporations to skirt the tax laws of the countries they operate in. The minister in charge of attracting foreign companies to Ireland is now saying that those companies need to be brought under control, according to Reuters.
"They play the tax codes one against the other," Richard Bruton told Irish state broadcaster RTE, "and I think we do need international cooperation through the [Organization for Economic Cooperation and Development] to deal with the aggressive nature of that."
Ireland has long drawn criticism from other European nations for its low corporate tax rate of 12.5 percent. That tax rate encourages companies to locate at least some operations in Ireland for tax purposes, which is what Apple does, along with Google and Yahoo, Pfizer, and Intel, as well as many others. Of Ireland's two million-strong labor force, about 150,000 work for foreign companies headquartered there for tax purposes.
The criticism has grown as countries across Europe are tightening their fiscal belts in light of the soft economy. The potential tax revenue lost to Ireland has led to more grumbling from the country's neighbors, though Ireland has so far turned back any attacks. Now, though, thanks to scrutiny from the U.S. Congress, Ireland is closer to pushing for tighter rules on multinationals. The United States wields more economic and political power than does any individual European nation and could unilaterally start making things more difficult for those foreign countries headquartered in Ireland.
"The U.S. Congress, if they wanted to, could wipe out those 150,000 real jobs," Irish think-tanker John FitzGerald told Reuters.
The U.S. congressional investigation found that Apple had paid just two percent tax on $74 billion in income made outside the United States. Those funds were also made largely outside of Ireland, but Irish tax law says that a company can be incorporated within the country without being a tax resident.
Apple maintains that it has broken no law, and CEO Tim Cook has continually maintained that Apple pays "all of the taxes we owe ?every single dollar."
Cook further asserted that he has no plans to have Apple repatriate its more than $100 billion in cash holdings until the United States lowers the tax rate on earnings made overseas.
"It would be very expensive to bring that cash back to the United States," Cook told the subcommittee. "Unfortunately, the tax code has not kept up with the digital age."
The U.S. isn't the only nation interested in Apple's dealings with Ireland. The relationship between the two has come under scrutiny from both Britain and Spain in the recent past. A British report last year said that Apple pays about half the taxes it should by basing its operations out of Ireland.
A similar report from Spain's El Pa?s showed Apple routing 99 percent of its Spanish sales through Apple Operations International, its Irish subsidiary. That arrangement allowed Apple to pay only 2.6 million euros in taxes for 2012, even though its Apple Store sales were up 86 percent.
It's unclear what specific action Ireland will call for in the coming weeks, but the issue is likely to be raised at a summit of European leaders in Brussels.
Comments
That's so typically Irish.
When caught, smile and be agreeable with the police.
Learn from US politicians how to screw their own US Businesses, small or big! Even if Apple along with other companies gives all of its cash to US government, still this country is in huge mess so its better that companies hide the money out of US!
Good that guys like Ben are printing their @ss out to keep the markets higher which helps the sentiment lol
Quote:
Originally Posted by Gazoobee
That's so typically Irish.
When caught, smile and be agreeable with the police.
That's collectivist nonsense.
More than likely these positions that are making the headlines don't reflect the views of the people who live there. They are the beneficiaries of policies that attract businesses. I'd be surprised if politicians siding with the tax-grabbers aren't voted out come next election.
Going to enjoy a Guinness while I watch this thread.
Apple is doing nothing illegal! Our politicians have just FAILED on cutting the budget and are now looking to blame others for their mess.
Quote:
Originally Posted by Irving Muller
The tax law makes it impossible for Apple to compete with companies such as Samsung. Apple is already taxed on their profits overseas and then the US asks that if those profits are brought back home that they pay an additional 35%. Samsung typically pays nothing close to this. If you dropped the ridiculously high tax then maybe that cash would be brought back state side and would possibly help our economy.
Apple is doing nothing illegal! Our politicians have just FAILED on cutting the budget and are now looking to blame others for their mess.
Quite right. Just look at how economic "incentives" have gutted our economy. There are always unintended consequences that go hand in hand with short-sighted laws.
Nonsense.
If other countries impose more taxes and more effectively enforce their tax code, it simply makes Ireland's low tax rates look even better. This is clearly a self-serving position.
Quote:
Originally Posted by Irving Muller
The tax law makes it impossible for Apple to compete with companies such as Samsung. Apple is already taxed on their profits overseas and then the US asks that if those profits are brought back home that they pay an additional 35%. Samsung typically pays nothing close to this. If you dropped the ridiculously high tax then maybe that cash would be brought back state side and would possibly help our economy.
Apple is doing nothing illegal! Our politicians have just FAILED on cutting the budget and are now looking to blame others for their mess.
You must be unaware of foreign tax credit. There are some complexities to it. You don't mention anywhere what Samsung pays or why it matters for a company that isn't short on funds to reinvest.
Quote:
Originally Posted by digitalclips
Tax incentives are now seen as bad? ... Meanwhile States here in the USA do exactly the same thing to attract business. I always thought it was seen as the free market at work and an advantage to the overall economy in the long run. So I expect we will start seeing MI called out for all those ads on TV now touting business incentives to relocate there (and other States that do the same thing).
While competition among governments is good (better than none anyway). I'm not sure it can be characterized as the free market at work. It's more akin to "come to our neighborhood, the property crime rate is lower."
I'll agree that Apple have done nothing illegal and that our politicians have failed. They've let big multinationals get away with this for far too long. But...
You call a tax rate of less than 2% enough??? I saw one report that said it was even lower than that!
Also, is it fair that Apple and other multinationals divert sales and profits from products sold to other countries so they can pay much lower taxes? That's exactly what Apple are doing. Whenever you order online or buy in an Apple shop Apple are saying you bought that item through a foreign subsidiary so they can pay very low rates of tax, and not even in the country where it was sold and the profit made.
That is nothing short of an attack by corporations on a nation's financial sovereignty. If I buy a Mac in my country I want the profits Apple earns from that sale to be taxed in my country not funnelled through various subsidiaries in tax havens overseas so shareholders can get bigger dividends than they deserve.
Just because you (and I) have pathetic governments that mismanage their budgets and make dubious choices like spending a trillion dollars on a foreign war with no end in sight doesn't make what Apple and these corporations do any less immoral. Remember we are only talking about taxes on profits here, small profits mean small taxes.
The problem is not Apple, they are simply doing everything they can to minimise tax like you or I would. The problem is with incompetent governments and politicians for letting them get away with it for so long.
Why doesn't the US encourage all these companies holding almost 2 trillion dollars abroad to repatriate the money with a one time tax break. The reason is simple these guys in Congress are greedy and stupid and think that they're going to hold Apple and all the test of the companies hostage. WAKE up !!!!
Apple Pfizer Merck Google IBM couldn't care less!!!
Quote:
Originally Posted by s.metcalf
I'll agree that Apple have done nothing illegal and that our politicians have failed. They've let big multinationals get away with this for far too long. But...
You call a tax rate of less than 2% enough??? I saw one report that said it was even lower than that!
Also, is it fair that Apple and other multinationals divert sales and profits from products sold to other countries so they can pay much lower taxes? That's exactly what Apple are doing. Whenever you order online or buy in an Apple shop Apple are saying you bought that item through a foreign subsidiary so they can pay very low rates of tax, and not even in the country where it was sold and the profit made.
That is nothing short of an attack by corporations on a nation's financial sovereignty. If I buy a Mac in my country I want the profits Apple earns from that sale to be taxed in my country not funnelled through various subsidiaries in tax havens overseas so shareholders can get bigger dividends than they deserve.
Just because you (and I) have pathetic governments that mismanage their budgets and make dubious choices like spending a trillion dollars on a foreign war with no end in sight doesn't make what Apple and these corporations do any less immoral.
The problem is not Apple, they are simply doing everything they can to minimise tax like you or I would. The problem is with incompetent governments and politicians for letting them get away with it for so long.
By what standard have you arrived at these conclusions of "unfairness" what is "deserved" and the "immorality" of what they are doing?
I also find it interesting that you call Apple immoral for what it is doing (legally minimizing taxes) but then say they are doing what we all do (legally minimize taxes.)
Do you not have one funny bone in your body? I was being facetious.
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Good that guys like Ben are printing their @ss out to keep the markets higher which helps the sentiment lol''
Spoken like a Randian.