It isn't a total shock. As long as Apole etc are following their laws they can't really do anything about what happens in other countries. Or doesn't happen. As Tim Cook said, 'we follow the laws, if that bothers you then change the laws'
That counts in Europe etc also. If a country like say France doesn't like that their laws allow a company like Apple to have their corporate office in Ireland and avoid paying French corporate taxes then change the law that if they do any business in Franch they have to pay the taxes on that business regardless of where their office is. I don't think Apple would fuss over having to pay taxes to a country for the business that takes place IN THAT COUNTRY if that is the law. Whether its the US, France or wherever. It's taxing money earned elsewhere that they feel is unfair, especially at the same rate as 'local earnings'.
Until they realise that they agreed to be part of the EU, which was set up partly to deal with fragmentation of business by enabling a single EU wide entity rather than one for each country.
Somehow I don't think dismantling the EU would go across too well.
@Marvin it is tax deferal. Apple owes the tax unpaid in Ireland to the US on repatriation
Its only a deferal if they ever repatriated the money, and why would theyd ever do that on any significant scale? Some moral sense of loyalty that means they want to have there money in the US? After all when they spend this money, the companies they want to buy from equally want to avoid paying tax's to, so it doesnt really ever have to go back to the US.
Ireland won the race to the bottom on tax and went bust as a result. It was then the UK and other EU countries who had to bail them out. It's a shame the UK didn't attach more strings to the bailout.
Ireland won the race to the bottom on tax and went bust as a result. It was then the UK and other EU countries who had to bail them out. It's a shame the UK didn't attach more strings to the bailout.
So let’s say your tax resident loophole is “fixed”. The IP loophole (I’m still going to call it a loophole, despite your objections) still exists. The company in question can still find a cheaper corporate tax jurisdiction than the US and avoid paying US taxes by essentially giving away it’s IP to the subsidiary in the lower tax rate jurisdiction and then licensing the IP back to itself and deducting it as a business expense in the US. Ireland’s low tax rate and tax residency laws just magnify the issue by giving them a very, very low tax rate.
Let’s say instead of Ireland Apple sets up shop in some country with a 20% corporate tax rate and without Ireland’s tax residency rules. Every dollar Apple US pays to that subsidiary for licensing is then taxed at 20% instead of the US’s 35%. Still a huge tax savings. Just not as big as today’s setup. Apple US is essentially giving away something of very great value to its subsidiary (or selling it cheap) and thus not paying any taxes on the “profit” of that IP sale in the US, and then claiming as an expense the licensing of that IP. (There's a few similarities to money laundering techniques here, no? All perfectly legal, of course.)
Imagine if it wasn’t IP, but something more tangible. What if Ford made a car in Detroit and then gave it away to an overseas subsidiary to sell back, at a profit, to Ford in the US just so they could record that profit in the subsidiary’s lower tax jurisdiction instead of the US. That’s absurd because of the transportation costs which would be incurred, but that’s essentially what is happening here, is it not? You think people would be raising red flags if Ford could do that?
You are correct in that perhaps it’s not a loophole that can easily be closed without affecting or “normal” (ie, not used for the sole purpose of avoiding paying taxes in a timely fashion) transfers of IP ownership. But I thought I’d bring it up for discussion. Would/could this still be used to avoid paying taxes even if Ireland’s tax residency rules weren’t a factor? ?
As for it being a tax deferral, gosh, I sure wish I could get an interest free loan (which may or may not ever be paid back) from Uncle Sam in the form of deferred taxes and use that money to invest or do with whatever I want. In the meantime, increase everyone else’s taxes to cover the cost of my free loan.
There is no tax avoidance here. If an IP is transferred to Ireland or any country it's the way business has to be conducted. If a British company is bought by a US company for patents clearly the US company will transfer IP to the US to manufacture the items it needs the IP for. And vice versa. Any multinational company does this, if it weren't possible there would be no international capitalism. You couldn't buy or licence IP from any country but your own, for instance. The fact that some of there counties may have higher or lower tax rates is largely irrelevant. You also assume that companies owe tax on all their worldwide income in (either) the higher taxed country or the original country where the company was set up. It doesn't. Toyota pays UK corporate tax in the UK where the UK plant manufactures or resells to Europe. If that weren't the case and IP couldn't be transferred all profits would be taxed in Japan and the UK press would be whining about how Japan steals their tax base.
Meanwhile the UK has partial jurisdiction over any number of tax havens - like Bermuda. It could cut out the tax problems it thinks it has with Apple Ireland - in fact the UK isn't owed any corporate tax - by forcing Bermuda to increase taxes to the UK level. And then Jersey, Isle of Man etc.
If only we had even one Apple Store! Sadly, the only one on the island is in Belfast, which is, of course, in the UK and not the Republic of Ireland. (I had the pleasure of attending the opening, by the way). It's still hard to believe that Dublin didn't get one during the Celtic Boom (maybe Apple really saw it for what it was!!!). Anyway, I do hope we the real thing sometime soon, although the almost-Apple Stores are quite decent in the interim.
The other countries have no claims on Apple's corporate tax same as Ireland has no claim on BMW's.
??? The corporate taxes being dodged are from sales originating in those "other countries" within the EU that you say "have no claims on Apple's corporate tax same as Ireland has no claim on BMW's."
Side question: How's that whole EU thing working out for you guys?
Quote:
Originally Posted by asdasd
As for a holiday - if that happens and it's a gain to the treasury if it does - the rate will be lower than 35% but not 0%. If it was 12.5% or lower than were full tax paid in Ireland nothing would be owed in the US. Apple paying no tax in Ireland means it is likely to pay more on repatriation.
Where did you get that Apple was paying 12.5% tax to Ireland? More like +/- 2%.
Sales originating is meaningless gobblegook. The apple plant in Ireland sells at wholesale prices to Europe and thus sales originate there. BMW sells wholesale to Europe and thus sales originate there. And so on. I can't really teach remedial corporation tax here.
I didn't say that Apple paid 12.5% to Ireland. I said if it did it would owe less to the US on repatriation, if any happens.
Ireland in the EU is going ok. Bit of a bump in the road these days but better than the last genocidal union we are part of. Best to look on the bright side.
"The apple plant in Ireland sells at wholesale prices to Europe and thus sales originate there." No they don't Apple gets to originate most of them 'nowhere'. Near zero Irish corporate tax is paid.
Comments
Quote:
Originally Posted by Phone-UI-Guy
Tired of this being called tax dodging. Tax deferral is more appropriate. Even a pro Apple site like AI cannot resist the idiocy.
Tax avoidance as opposed to tax evasion.
The first is legal, the second is not.
Quote:
Originally Posted by charlituna
It isn't a total shock. As long as Apole etc are following their laws they can't really do anything about what happens in other countries. Or doesn't happen. As Tim Cook said, 'we follow the laws, if that bothers you then change the laws'
That counts in Europe etc also. If a country like say France doesn't like that their laws allow a company like Apple to have their corporate office in Ireland and avoid paying French corporate taxes then change the law that if they do any business in Franch they have to pay the taxes on that business regardless of where their office is. I don't think Apple would fuss over having to pay taxes to a country for the business that takes place IN THAT COUNTRY if that is the law. Whether its the US, France or wherever. It's taxing money earned elsewhere that they feel is unfair, especially at the same rate as 'local earnings'.
Until they realise that they agreed to be part of the EU, which was set up partly to deal with fragmentation of business by enabling a single EU wide entity rather than one for each country.
Somehow I don't think dismantling the EU would go across too well.
Quote:
Originally Posted by RichL
Ireland won the race to the bottom on tax and went bust as a result. It was then the UK and other EU countries who had to bail them out. It's a shame the UK didn't attach more strings to the bailout.
Nonsense
Quote:
Originally Posted by Wiggin
So let’s say your tax resident loophole is “fixed”. The IP loophole (I’m still going to call it a loophole, despite your objections) still exists. The company in question can still find a cheaper corporate tax jurisdiction than the US and avoid paying US taxes by essentially giving away it’s IP to the subsidiary in the lower tax rate jurisdiction and then licensing the IP back to itself and deducting it as a business expense in the US. Ireland’s low tax rate and tax residency laws just magnify the issue by giving them a very, very low tax rate.Let’s say instead of Ireland Apple sets up shop in some country with a 20% corporate tax rate and without Ireland’s tax residency rules. Every dollar Apple US pays to that subsidiary for licensing is then taxed at 20% instead of the US’s 35%. Still a huge tax savings. Just not as big as today’s setup. Apple US is essentially giving away something of very great value to its subsidiary (or selling it cheap) and thus not paying any taxes on the “profit” of that IP sale in the US, and then claiming as an expense the licensing of that IP. (There's a few similarities to money laundering techniques here, no? All perfectly legal, of course.)
Imagine if it wasn’t IP, but something more tangible. What if Ford made a car in Detroit and then gave it away to an overseas subsidiary to sell back, at a profit, to Ford in the US just so they could record that profit in the subsidiary’s lower tax jurisdiction instead of the US. That’s absurd because of the transportation costs which would be incurred, but that’s essentially what is happening here, is it not? You think people would be raising red flags if Ford could do that?
You are correct in that perhaps it’s not a loophole that can easily be closed without affecting or “normal” (ie, not used for the sole purpose of avoiding paying taxes in a timely fashion) transfers of IP ownership. But I thought I’d bring it up for discussion. Would/could this still be used to avoid paying taxes even if Ireland’s tax residency rules weren’t a factor? ?
As for it being a tax deferral, gosh, I sure wish I could get an interest free loan (which may or may not ever be paid back) from Uncle Sam in the form of deferred taxes and use that money to invest or do with whatever I want. In the meantime, increase everyone else’s taxes to cover the cost of my free loan.
There is no tax avoidance here. If an IP is transferred to Ireland or any country it's the way business has to be conducted. If a British company is bought by a US company for patents clearly the US company will transfer IP to the US to manufacture the items it needs the IP for. And vice versa. Any multinational company does this, if it weren't possible there would be no international capitalism. You couldn't buy or licence IP from any country but your own, for instance. The fact that some of there counties may have higher or lower tax rates is largely irrelevant. You also assume that companies owe tax on all their worldwide income in (either) the higher taxed country or the original country where the company was set up. It doesn't. Toyota pays UK corporate tax in the UK where the UK plant manufactures or resells to Europe. If that weren't the case and IP couldn't be transferred all profits would be taxed in Japan and the UK press would be whining about how Japan steals their tax base.
Meanwhile the UK has partial jurisdiction over any number of tax havens - like Bermuda. It could cut out the tax problems it thinks it has with Apple Ireland - in fact the UK isn't owed any corporate tax - by forcing Bermuda to increase taxes to the UK level. And then Jersey, Isle of Man etc.
If only we had even one Apple Store! Sadly, the only one on the island is in Belfast, which is, of course, in the UK and not the Republic of Ireland. (I had the pleasure of attending the opening, by the way). It's still hard to believe that Dublin didn't get one during the Celtic Boom (maybe Apple really saw it for what it was!!!). Anyway, I do hope we the real thing sometime soon, although the almost-Apple Stores are quite decent in the interim.
Quote:
Originally Posted by asdasd
The other countries have no claims on Apple's corporate tax same as Ireland has no claim on BMW's.
??? The corporate taxes being dodged are from sales originating in those "other countries" within the EU that you say "have no claims on Apple's corporate tax same as Ireland has no claim on BMW's."
Side question: How's that whole EU thing working out for you guys?
Quote:
Originally Posted by asdasd
As for a holiday - if that happens and it's a gain to the treasury if it does - the rate will be lower than 35% but not 0%. If it was 12.5% or lower than were full tax paid in Ireland nothing would be owed in the US. Apple paying no tax in Ireland means it is likely to pay more on repatriation.
Where did you get that Apple was paying 12.5% tax to Ireland? More like +/- 2%.
I didn't say that Apple paid 12.5% to Ireland. I said if it did it would owe less to the US on repatriation, if any happens.
Ireland in the EU is going ok. Bit of a bump in the road these days but better than the last genocidal union we are part of. Best to look on the bright side.
No they don't Apple gets to originate most of them 'nowhere'. Near zero Irish corporate tax is paid.
Not 2%, almost ZERO percent!