Ireland signs up for plan to make Big Tech pay 15 per cent tax everywhere

The Republic of Ireland has signed on to the Organisation for Economic Co-operation and Development's plans to create harmonised tax laws that stop Big Tech companies reducing their bills by officially conducting their business in low-tax jurisdictions. Irish law has allowed the likes of Apple, Google, Amazon, Microsoft, and …

[Chris G]

€750,000,000

So does that mean a flurry of new sub- companies being registered by the giants, so that the individual rrvenues will fall below the threshhold?

Good cops have to be able to think like a criminal in order to fight them, tax legislators need to be able to think like corporate lawyers and bean counters.

Though, a good proportion of politicians are or have been corpoate laywers or beancounters, perhaps the loopholes are deliberate???

[Pascal Monett]

Re: €750,000,000

If they did, I doubt the companies would be independant, they would most likely be subsidiaries and therefor the fiscal situation should remain the same.

There is one loophole I would really like to see closed : the bullshit one where one subsidiary holds all the patents and licenses them out to the others for, what a coincidence, exactly the amount of benefits they happen to have made in the quarter.

If you're all part of the mothership, then those licenses should not be tax-deductible.

[Anonymous Coward]

@Pascal Monett - Re: €750,000,000

Even better than that. If those patents ans licenses are property, bringing them from outside should be considered import and subjected to tax. They import IP so they can conduct business, why should it be different than importing iron or oil ?

[Pascal Monett]

Excellent point.

I will keep that in mind for future arguments.

[Dinanziame]

Re: €750,000,000

I think that UK was totally hoping to be the lowest corporate tax country in Europe that would be raking in taxes by hosting multinational corporations operating all over the EU. They just didn't see Ireland coming.

[Henry Hallan]

Re: €750,000,000

Ireland now has a better USP for "big tech" than 3% less tax.

And the decisions that led to Ireland being the only anglophone nation in the EU were not taken by the Irish government.

I think it's less about seeing Ireland coming and more about spectacular own-goals.

[Phil O'Sophical]

Re: €750,000,000

The Maltese get very upset when people claim that Ireland is the only remaining anglophone EU member. Never mind that for most ex-eastern bloc countries, like Estonia, Czech Republic, etc. English is their main business language and they often speak it better than some native English or Irish speakers do.

[Natalie Gritpants Jr]

Re: €750,000,000

That's not much of a USP, The multinational all serve markets that are not anglophone, so they need the ability to operate in different languages, especially in the legal areas. Besides, English is the universal second language within the potential employees for the multinationals. Do you think Google has a language problem operating in Denmark?

[yoganmahew]

Re: €750,000,000

You'd be surprised at the level of translation required between one culture's english as a second language and another's. With global workforces, part of my job is translating from english to english (both spoken and unspoken meaning). Being able to express the same point in six different ways to find the right way to get the import across is a tradable skill!

[jollyboyspecial]

Re: €750,000,000

Ireland has long had tax arrangements that were effectively illegal under EU law. However there are other countries with illegal arrangements in other areas, for example illegal state subsidies to ostensibly private companies. So the EU don't actually penalize one country A for breaking the tax rules, because if they did then country A would kick off about country B breaking the state subsidy rules and they would have to penalize them. And then country B would kick off about country C and so on.

The EU has all sorts of laws and rules that are broken daily but the system works on the authorities turning a blind eye. As long as governments promise to abide by the rules then that's enough, just so long as they don't go too far.

All of the above makes a mockery of the EU insisting that the UK maintains a "level playing field" with the EU in order to facilitate fair trading between the UK and the bloc. This would make sense if there actually was a level playing field within europe. For example it has long been the case that the French and Spanish goverments subsidize local companies to bid for work in other EU nations, it's against the rules but the EU turns a blind eye.

[Anonymous Coward]

Re: €750,000,000

@jollyboyspecial, that's patently false, EU doesn't regulate tax law at all, its not even within its remit.

This is why they lost in the Apple case:

https://www.irishtimes.com/business/economy/ireland-wins-appeal-in-13-billion-apple-tax-case-1.4305044

"Ireland wins appeal in €13 billion Apple tax case... Europe’s second-highest court ruled on Wednesday that the Republic did not give Apple illegal state aid, overturning a European Commission decision four years ago that the iPhone maker owed Revenue €13.1 billion in back taxes."

This is also ridiculous and false:

"The EU has all sorts of laws and rules that are broken daily but the system works on the authorities turning a blind eye."

There is no such competency, EU does not regulate tax.

[Lars]

Re: €750,000,000

That link is one year old and who knows how that will end. You find this in that article too - "Case likely to be appealed again up to Europe’s highest court".

And it's indeed funny how some claim the EU sticks it's hands in things they should not bother with and then again complain if they don't.

It should by now be clear to everyone that EU countries define their taxation and a hell of a lot of things all by themselves.

[Jimmy2Cows]

Re: €750,000,000

jollyboyspecial wasn't specifically talking about tax, but about other things the EU does regulate, such as the moritorium on state subsidies.

[Lars]

Re: €750,000,000

State subsidies are allowed and often strongly needed but there are also rules agreed upon regarding them.

To quote the Wikipedia:

"Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates).

Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical. ".

https://en.wikipedia.org/wiki/Subsidy

[Anonymous Coward]

Re: €750,000,000

Or simply license their IP rights from outside of OECD countries.

15% seems to be chosen, because there aren't many countries with lower corporation tax that wouldn't succumb to pressure/attack from OECD countries. So Isle of Man for example, 0% corporation tax, yet they'd fold like paper if put under pressure. Switzerland is 8.5%, but its a tiny landlocked country surrounded by high tax neighbours.

Non-OECD Hong Kong's is 16.5% just higher, so they probably don't fear a flight of capital into any Chinese controlled entity in HK.... short sighted at best. HK could drop corp tax to 10% for non-Chinese businesses and pull in most of that fleeing capital.

I think this is more dumb OECD suicidal crap. These OECD countries stab themselves in the back, then whine about the blood loss.

If they want more tax, they could slap higher rates of tax on luxury goods. Since profits in companies in just a number in a financial report, till its paid out as dividend, or taken as capital gains for spending. And spending is easy to target because it is physical goods and physical goods are easy to tax and easy to seize at the borders. Yacht's costing $100 million? Well now it costs $150 million.

[jmch]

Re: €750,000,000

"If they want more tax, they could slap higher rates of tax on luxury goods"

A trifling %age of wealthy people's wealth is spent on luxury goods. The vast majority is spent on acquiring other paper assets, companies and real estate.

If you're going to decide to not tax company profits at company level, it has to be done at the level when it exits the company and enters private individuals' pockets - for example dividend payments, capital gains from share sales etc which are now taxed at a far lower rate than employment income.

[nijam]

Re: €750,000,000

> they could slap higher rates of tax on luxury goods

Surprisingly little tax would be garnered by taxing things that are only sold in small quantites.

[DS999]

Re: €750,000,000

HK could drop corp tax to 10% for non-Chinese businesses and pull in most of that fleeing capital.

And be subject to the whims of China's dictator? Ask big Chinese companies how that's been working out for them so far this year!

HK could drop their corp tax to 0% and they still wouldn't see any western corps move there.

[katrinab]

Re: €750,000,000

Switzerland's federal tax rate is 8.5%, but once you add on the canton and municipal tax, the overall rate you pay is broadly similar to the UK.

[John Brown (no body)]

Re: €750,000,000

"Or simply license their IP rights from outside of OECD countries."

According to the article, 140 countries have signed up to this agreement. That leaves only 55 countries to choose from. No doubt a number of those countries will not be the place you want to be setting up in. Others will probably be under pressure to sign up too, and most likely will eventually. That'll probably only leave the likes of small island nations, Nth Korea, China, etc. Not ideal options.

[Doctor Syntax]

It all sounds very well except for the uncomfortable feeling that if a corporation has any US connection, even so much as e staff member on a flight over US territory, the US will claim all of the 15%

[Anonymous Coward]

15% today

Then 18, then 25, sooner or later someone will break ranks to win a big HQ deal. These grand political gestures never seem to last when faced with economic realities.

[Wellyboot]

Corps to pay 15% in Ireland...

I'll believe it when I see it !

[wolfetone]

"some known as the "Double Irish Dutch Sandwich""

Yeah but it's never as good as the jumbo breakfast roll.

[Lars]

For a while I had the feeling this article was simply deleted.

[John Doe 12]

Major Fail..

..by the author of the article.

"will be required to cough up at least 15 per cent"

The reason Ireland signed up was that the words "at least" were removed from the agreement.

"The proposed minimum effective tax rate of ‘at least 15%’, which was an open issue, has been set to a precise rate of 15% and Minister Donohoe noted the importance to Ireland of this development"