While I’m not a fan of his, big Phil gave two fingers to a lot of people and weathered a hell of a storm. I have no reason to believe his arrogance wouldn’t extend to giving two fingers to the whole of Europe

David,

In understanding how the “Double Irish” works and how in conjunction with the fact Ireland has no US Transfer Pricing rules in law or by agreement here you will understand why its US companies that are able to tax plan this way.

You don’t see any other multinational companies tax planning like this to the degree that US companies are.

Apples patent company is based in Bermuda but is Irish Registered. Because it is an Irish registered company it doesn’t have a domicile for tax purposes. I think this is unique to Irish Companies. Apple Cork pays Apple Bermuda a royalty fee (at or above arms length value*) thus reducing tax bill.

*Making an assumption – opinion without facts.

More so the problem here is that the IRS in the US need to change their laws to be more competitive. That also applies for the EU centre countries.

What’s in it the Brussels to push this agenda. Who’s pushing Brussels’ buttons.

I thought Michael Noonan last October said in his budget speech that Irish registered companies would have to pick a place a residence for tax purposes to cut this out. I could be wrong on this.

Your realise the case goes back 20 years. The question is whether those tax deals are illegal state aid. They likely are.

@Ronan,

He gave two fingers to the Irish people, time and time again. Now, as an EU commissioner he will be wined and dined and make decisions to suit corporations and big business, as a good crony usually does.

It certainly would seem to be ‘good tax planning’ to have a team of top corporate accountants working for you.

The Gov. is just lying to us in the face of evidence in the hope that people will not bother to read this report. Every citizen has a responsibility to read this report and judge it on its merits. We can’t trust the gov. to do that.

Without the Irish state’s lax tax policy the accountants would be useless. We pride ourselves as good Europeans with our bank bailout and brutal austerity and yet we give Europe the two fingers for Apple.

Seems our governments kike hitting the small man and making people work for nothing.

Clive:

It’s NOT ok because it means higher income tax on the middle class such as the current 52pc: you’re happy with that? Our corporate tax rate is problematic from the viewpoint it facilitates paying virtually no corporation tax through various anomalies. Roll on the red thumbs, but sooner or later we will have to face up to this problem. Looks like the business lobby groups are active on this article judging by the thumbs.

Phil only f—-s his own; he’ll be a mouse in Europe

Your completely misread the article. It’s saying apple is corrupt for availing of the tax benefits not Ireland for giving them. It’s a free world and you can charge your price. However legally apple can’t avail of this.

Did you just come on to have a simple armchair moan when you were completely and utterly wrong off the point and plainly misunderstood the article Malachi???

Ireland has never been fined for imposing VRT. Such a suggestion is nonsense. Similar taxes have been imposed by Denmark, Finland and the Netherlands.

Note to Europe. Consider this a very modest form of retribution over the screwing of the irish people when we saved the European financial system in 2008.

Makes me sick when Brussels beaurocrats jump up and down over financial irregularities. What about the Irish State paying back bondholders. Any chance of our European “friends” launching an investigation there? Not a hope. They probably won’t even attend our own bank enquiry.

Depressing that people have no interest in seeing the actual issue. This wasn’t corruption involving bribes, nobody in government did anything illegal for money. We offered tax incentives which fall under illegal state aid rules.

Try and actually read the damn FT article.

The interesting thing is what will happen if Apple has to repay the state aid. Without the illegal tax deal they never would have been based in Ireland, but they did base here. If they have to repay the difference in illegal tax incentives we could be talking tens of billions in a lump sum to Ireland.

Have to weight that against the potential lose of FDI but an extra 15 billion to knock off that national debt would be nice.

@David Burke: As I understand it from the radio this morning any monies to be repaid by Apple would go to the EU commission, not to Ireland.

Nah, whoever said that is wrong. It’s not an anti-trust investigation it’s a state aid investigation. Roughly billion a year is repaid in Europe in state aid and there are dozens of cases open at any one time. Most are fairly small though, a few million instead of billions.

Antonov, sorry to burst your bubble but VRT is perfectly legal and Ireland has not been fined by the EU. In circumstances where a Member State ignores an ECJ ruling the ECJ simply keeps increasing the fine until compliance is ensured. Ireland has never persistently ignored an ECJ ruling. Moreover, if the ECJ ruled that VRT was unlawful then this would be enforcible in the Irish Courts. However, the ECJ have never found VRT to be unlawful and is is therefore not enforcible in the Irish Courts. Your comment is complete fantasist rubbish. So the Irish are not continuing the “marauding” as you put in typically overstated fashion. But hey, why let he facts get in the way!

They’re Cork’s biggest employer, and one of Ireland’s biggest. Give them what they want if they’re going to employ nearly 4,000. Call it corrupt if you want, it’s common sense to me. One of Haughey’s few sensible decisions.

Tax the dividends paid to shareholders on all profits declared here.

Sure let them pay no tax, pay minimal wages and pipe in i2′s latest ear-poison on shuffle for 20 hour shifts, while they’re at it…..might want to sling up a few nets though!!

@ John R – whilst not illegal, VRT is against the spirit of the EU treaties. It places a tax on a good because it crosses a border. The problem is that Ireland applied for a derogation in relation to it and the same derogation was granted.

In essence, there’s a bit of truth on both sides – technically, it should be illegal but in reality, we were given a legal license to operate an illegal tax.

Jayo, why must you repeat such patent nonsense? Where did you hear such tripe? Do you believe everything you hear?

*country

The simple fact is that we have to prevent it “crashing down” or we return to an ’80s economy, unemployment and taxes which would make your hair curl. Whether we like it or not, the multinational contingent attracted by Ireland’s 12.5% are a major pillar of our economy – we should defend the 12.5% to the hilt as a small economy on an island removed from the centre of the market requires incentives to attract business – many Irish believe Ireland is attractive to business by simply being Ireland – but let’s be clear, we are Newfoundland.
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The problem with the 12.5% is that successive Governments have risked the future of the entire Irish people by not ensuring the already low 12.5% is adhered to.
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However and putting things into perspective, it has been written about many times in financial journals that MANY EU Countries offer additional incentives to multinationals and for example although Frances headline corporate tax is far higher than Ireland’s, it has been seen that many companies pay next to nothing in tax in France also.

@Sean
None of those companies pay anywhere near 12.5%!

I know we completely depend on the FDI I don’t see anywhere where I’ve said otherwise. I just think we have for years put foreign companies ahead of our own. Eventually our lax tax regime was going to be challenged and this should have been recognised and plans put in place. Now we’ve reached a point where we are completely screwed if they pull out.

@Picasso and Sean,

It’s true that some companies don’t pay the 12.5%, nor do they pay the full whack in other countries. This is because there are tax credits available within this rate, as with any other tax system.

For example, if a company can prove that they are performing R&D here, they can avail of a tax credit. This is good news because it provides an incentive for companies to use our PHD graduates, to form partnerships with our universities, to create and domicile patents in Ireland which will provide the royalties to the company that ensure jobs can stay in Ireland, and limited manufacturing in the case of pharma.

We’re not just selling out to multinationals, this is very much a mutual backscratching that suits both parties.

@Mike, not Sean above

That. I hate that argument so much. the government is trying to raise what it brings in in tax so we can pay back our debt, instead of taking our fare share of Apple’s profits in tax, the government instead seeks it from the poor and and working class. Scaremongering has the likes of you convinced that if we don’t bend over and take it up the arse from these american corporations then the sun would cease to shine. the UK has a corporate tax rate of 25% approx, are they short of foreign investment? No, so I think we can at least afford to enforce 12.5%.

It has nothing to do with enforcement. No-one is (openly) cheating the Irish corporation tax system. They are availing of the credits that are available to them. There may be closer examination required of the activities, but those claims are all audited by a 3rd party (for whatever that’s worth).

There’s not much you can do here other than closing the tax credits down, or raising the coporation tax rate. The tax credits incentivise multinationals to create higher net worth business here, the headline rate brings in the lower net worth multiple jobs we need like call centers and the remnants of our manufacturing. For as long as we need FDI based employment here, we cannot be seen to have a worsening environment for business, in either of these examples, as one is providing jobs at home for young graduates, the other providing jobs for the unskilled.

Multinationals are a well performing net contributor to the state in terms of jobs and income taxes. We need to give more incentives to SMEs and indigenous Irish companies, not remove them from the big employers we already have. I’d like to see, for example, a sliding scale in terms of employers PRSI where larger employers pay a bit more and some relief is given to startup/small companies to reduce the cost of employing people, and maybe particularly for graduates (e.g. no employer’s PRSI for a year when you use graduates for a qualifying role).

Darren,

If you earned £50k in this country, do you pay 43% tax?
You would be in the 43% bracket, but you will only pay around 18-22% of your gross pay.

Are you tax dodging or doing anything illegal by only paying that amount?

It’s called the effective tax rate, the actual rate you pay after allowances have been taken away.

It’s the same with the 12.5%.
In France for example, the actual amount of payable corporation tax, the effective tax rate, is around 5% with incentives. Yet they claim ours is too low.

There isn’t one country in the world that makes people or companies pay the full headline tax rate.
Reading the comments on this website, really show how people don’t seem to understand this simple fact.

There is billions in the difference between the 12.5% official rate and the 2% actually being paid. At 12.5 Ireland is still the lowest within Europe therefore will all loopholes closed of these companies will remain here.
Multinationals paying way less than lowest rate while income tax for work force is highest in Europe!!!!

M Bowe,

The headline rate in France is around 35%, yet the effective rate is less than 5%. This is 14% of the headline rate.

Ireland’s is 12.5% and you want that to be the effective rate?
Which is lower 5% or 12.5%?

Just because the headline rate is higher in other countries, the companies don’t pay the headline rate, but an effective rate.

It’s not a hard concept to understand. Have a look at my example above with a PAYE worker.

Incentives are there for a reason, creation of employment for a start.

M Bowe, not that simple.

These ‘loopholes’ (actually they’re the rules, they just work better for some countries in certain instances) allow Ireland to sell services in France, and book the revenue here under lower tax.

If the company is forced to book the revenue in France, as per one proposal, the advantage of bringing French speakers to Ireland over, say, setting up in the south of France (where they can pay less) immediately vanishes.

If we prevent that company from claiming R&D here and charge the full whack 12.5% regardless of what they’re doing, they will go to somewhere else who will let them pay effective tax rates of 5% or less.

There is no scaremongering here. This isn’t a system Ireland uses uniquely. If we don’t someone else will, and the money and jobs will go. The US, UK, French, German (etc) governments like to make noise and rattle cages about these things, knowing full well they are just as corporation friendly as anyone else. It’s all noise to distract people from real monetary problems which exist globally, and for Ireland to put their nose out and actually enact something in this space would be suicidal.

They are not paying 12.5% corporation tax rate.
As TCD economists demonstrated the effective corporate tax rate is 2.2%.

That is why poor citizens are taxed beyond existence and people have to work for free for the corporate sector. Seems corporations own Ireland.

The effective tax rate for multinationals in Ireland is 2.2%. That means some firms are paying even less than that, and I’d say Google, Apple etc are among them.

It is not legal under Irish law if EU law requirement the Irish state must have EU permission for state subsidies to corporations which is what the fact is regarding the level of effective tax rate.

“Subsidy: a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low.”

Incentives are not automatically subsidies. Giving a loss making airline money to stay afloat would be illegal state aid. Giving all airlines a tax break on their profits to stimulate growth in the sector would not. The distinction? One would be enabling a loss making business keep their prices lower than EU competitors on the air routes. The other would be creating an incentive for all airlines to invest in new routes. This is what has certain Ryanair airports in trouble, as regional governments support it through reduced landing charges.

Legal subsidies are different to illegal subsidies under EU law regardless of what the Irish government and Revenue Commissioners may say. If something is crroked, it is crooked and must be changed.

Please stop talking sense Eoin. Those sort of comments aren’t welcome here!

It’s really quite simple, rather than the EU asking “why is Ireland’s economy growing again and we are stagnant?”, the EU is reverting to recent form and would be happier to see Ireland stagnant also rather than perhaps learn some lessons.
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Do these “Police” not realise that companies can move completely out of the developed/western world and move to India or China. Wait until unemployment reaches 20% throughout Europe! what will be the reaction then? We are happier because we maintained our principles? I don’t think so.

Who is this ‘upper class’ you speak of?
As far as I can recall we don’t have aristocrats/royalty in this country???

I *think* (and please correct me if I’m wrong), if there was an (official) Apple Store here, it would upset whatever they have going on in Ireland. I remember reading something along those lines when the story first broke.

Inb4 imitation Apple stores, I’m talking about official Apple retail stores, and not the ones that look like Apple stores, “compuserve” I think is their name.

What is the percentage of these jobs within the work force? I was a large computer factory in Cork the other day, a factory that I have been going to for 20 years the staff on the floor told me the working conditions & pay have gone down. Admittedly I didn’t speak to any engineers but a good judge of a job is the workers on the floor. I stand by first comment because I meet these people every day.

Well mjhint you couldn’t be more wrong. You are obviously just trying to mislead. Workers in Intel, Google etc earn really good salaries which they spend in our economy on resturants, hairdressers etc therefore creating and maintaining jobs in those sectors. Also the tax they pay into the exchequer goes towards paying for health, education etc for us all.

Mcbab friends of mine have worked in intel & they were reasonably well educated & qualified but their wages were only ok. 2 of them have since left & gone onto better paying jobs as they told me that there was no prospect of moving up in intel. Maybe my version of good pay differs from others. I know my own pay used to be at least twice theirs at the time. As for contractors working in these places their pay was shockingly bad.

Mjhint. Tradesman contractors are paid well above the going rate, contract office staff are also paid a very good hourly rate plus exceptional working conditions. Staff are paid very good salaries and have additional benefits like bonuses,stock options, health insurance etc. These are the facts. Talent and work ethic are always recognised and rewarded. There will always be those who are disconnected no matter where they work. Ambition is fostered within these companies and I know of many who have progressed up the career ladder.

Mcbab a very good indicator is the transport sector. Normally if this is badly paid it follows a trend so im unsure of intel. Maybe you could shed some light on it. Most but not all of my friends working in intel were very motivated people interested in furthering their careers & as I have already said 2 of them have gone on to better things.

mjhint, the factory floor is a minor piece of most hi-tech industry in Ireland in this day and age. Nothing but a skeleton crew is kept in most of these companies now, with the majority of positions (all, in some cases) now being 40K + jobs requiring a degree.

Sure its regrettable that we don’t have a stronger manufacturing base to provide unskilled labour, but we can’t compete on that front anymore. What remains of the manufacturing sector in tech is hi-tech fabrication (which is ever lower in labour requirements) and some small final assembly and/or some rework where it suits from a business perspective to have speed and agility for repairs and late orders.

The fact that there’s a couple of thousand agency workers knocking around on lower pay is a symptom of globalization, and these companies are right not to overpay for casual labour. I’ve worked in that environment myself in the past, getting 10 weeks work with lots of over time at the end of quarter, then laid off for 3 weeks and rehired on another contract next quarter. It’s not great having to take a 10-11 euro per hour job with no security, but it’s a stop gap and I was damned glad of the hours at the time. In reality there was only about 4-5 hours of real work to do per 12 hour shift so we were lucky to have the hours we had in there – we were capacity in case of order spikes.

These companies don’t owe us high-paid manufacturing jobs, they provide enough high-paid jobs across other fields, and the numbers are growing. Broadly speaking we’re overpaid in this country, and I count myself in that, which means we make up a lot of that lost corporation tax revenue through income tax.

It’s a good business model, to offer lower taxes for jobs, in the absence of major innovation coming from Ireland. The IDA and revenue do a lot to promote R&D here, with further tax credits, which encourages the real innovation in pharma, IT, Telco etc which can avail of those credits. It would be great if indigenous startups replaced some of these multinationals, so we could wean ourself off them, but Irish capital doesn’t like risk, so innovators move to silicon valley. The Collison brothers, for exmaple, would never have got the capital they needed here, because neither Paddy, nor Paddy’s bank will invest in something he can’t see out of his bedroom window i.e. it must be property.

The government invests in multinational jobs through tax incentives. You can moan all you like about these companies not sharing their wealth by overpaying factory floor workers, but if they were gone I can assure things would be a hell of a lot worse around here.

Tunnel vision among those against Corporate Incentives in Ireland needs to stop.
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Join the dots, if a large chunk of the Private Sector was to vanish over the next 18 months, its not simply the case of “I’m ok, I work in the Passport Office or am a Guard, Teacher etc”, the impact would be devastating and felt by all – especially those completing their education at the moment.
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If there was ever something we should be donning the green jersey for then this is it as any decision made on Corporate Tax will impact every man, woman and child in the country (and future generations).

Ask yourself why Dell moved from Ireland to Poland recently if Irelands tax rate is so good – don’t tell me other countries are not offering incentives.

It’s appalling that you think giving workers a fair wage would be tantamount to “overpaying” them.

Wages in the US for workers have gone down enormously relative to inflation as corporations have got greedier and greedier…I read that workers in GM during the 50′s were paid $45/hour in today’s prices, more than double what they get paid today…and I don’t imagine anyone was complaining that workers were overpaid or that GM were making insufficient profits at that time.

Are you really that narrowly pro-corporate in your beliefs? When do you think Apple, Amazon and co. will have enough money?

@Fifty Shades – your example is a good one, $45 ph working for GM, no doubt in Detroit at a time when the US car industry dominated the western worlds auto market. Now look at the present day and see what has happened in terms of competition etc.

I don’t want to sound patronising, but in several industries the rise of Asian companies (and recently Chinese corporations) is a factor in driving down wages – if you look at the European jobs market for certain skillsets, many of the Asian companies (and specifically Chinese) are each year chopping a little off the rates they are offering – we can only hope that the average income in China/India starts to rise faster than ours are falling.

That said, most Americans and Europeans would prefer to be on $25 an hour than on welfare.

Or corporations could stop outsourcing labour to China and make slightly less profit…if they were really as benign as many of the posters here seem to think they are that’s what would happen.

It would be far more sustainable to lower the levels of income income tax so that companies don’t have to pay such ridiculous high wages. Corporation tax is simply a tax on corporate net profits.

Ronan, there are plenty of jobs in this country requiring unskilled labour if the County Councils would get off their arses and start cleaning up this country.

Fifty shades, assuming you were addressing me, I count myself among the overpaid – not relative to my peers but on a global scale. Our wages are unjustifiably high in this country, making us uncompetitive in terms of labour costs. This is offset by low corporation tax, which provides incentives for companies to continue to overpay us due to the overall low cost base. If we pull away the incentives, then wages will have to come way down in the export sector or jobs will be lost. If that happens, there’ll be massive holes in the tax base, and every other salary will have to come down with it.

Whatever the ethics involved, every salary in this country is falsely propped up, be it a public sector, private multinational, someone in the arts, self-regulating professionals, or agricultural workers subvented directly from Europe. If we don’t keep this inflated self of self worth (be it through salaries, dumb house prices etc), we will ultimately have another crash and this time we’d have nothing to keep our banks and their balance sheets – falsely propped up on the promise of these high wages – afloat.

I’m not overtly pro-corporation. I merely see the reality that Corporations are pan-national, can go where they want, and ultimately taking a principled stand against them isolates countries from the rest of the world – as we have seen time and time again. I therefore support the continuation of the business model that keeps our country afloat.

We can harp on about a fair wage all we want, but a “fair wage”, based on local salaries, must be supported by global realities. A unit of manual labour does not scale in the way that intellectual property does. Globalization therefore means that manual labour continues to devalue in technologically advanced countries, as it cannot compete with manual labour costs in developing countries.

As a result, developed countries must protect the bottom line with measures such as minimum wages – however that minimum wage can have an inflationary effect. If we give a living wage of 11 euro per hour tomorrow, those currently getting 11/hour for a more physically/mentally job are going to think “why bother? I can do something easier for the same money”, and so employers in that category have to raise wages to differentiate. That’s before we even begin to examine the increased prices for everything, and the effect that will have on wage demands across the economy.

It’s a very precarious balance, and I’m actually supportive of an increase in minimum wage, but I don’t think we can just pay people whatever they think is the minimum to live on, if we cannot possible see a productive gain as part of that process

@ Chris, I was specifically referring to unskilled labour in our multinational tech industry – the profile of which has switched away from labour-intensive manufacturing almost completely.

Unskilled labour always has a place in any economy. But it needs to adapt and move where it’s required. It’s a fools errand to cling to happier times of well-paid tech manufacturing jobs, just as we could not keep the Fruit of The Looms and Waterford Crystals we once relied.

We’re a country that has moved relatively well with technology in more recent years, and measures like the R&D tax credits help to ensure we stay relevant in the absence of any indigenous innovators.

As a matter of interest Chris, where do you think the money comes from which would allow the County Councils employ more unskilled people cleaning up the country (and I agree with your sentiment).

At the end of the day the only money circulating in Ireland is from either indigenous or foreign private sector business, the money goes round and round the private sector to the smaller SMEs servicing the larger companies, for every transaction there is a tax (income, corporate, VAT etc) – this then funds the Public Sector (who again pay taxes on transactions) and slowly like the TV programme “Million Pound Drop” this continues until there is nothing left.

Without the multinationals the country is nothing – indigenous industry couldn’t come close to employing the full private sector workforce.

There is something obscene when one reads about Dublin being a dirty city, particularly when the councils can vote to reduce property tax. Would it not be beneficial to create more jobs to clean up the place.

Chris, Dublin isn’t a particularly dirty city. Parts of it are dirty; some parts very dirty. Usually in areas of social deprivation. As for the property tax in Dublin City I would rather have seen the rate retained and the extra used to tackle our appalling homelessness problem.

I was talking to you, Ronán, and you do make a few reasonable points, but the reality that corporations can move to where wages are lower doesn’t have to be that way…it will be extremely hard to get the genie of free trade back into the bottle but it’ll have to happen if China isn’t to be the world’s overlord by the end of this century.

I agree that people in the West have too much money overall, but how is having an effective 2% rate of tax for an obscenely rich company like Apple solving this problem?

The majority of jobs in Ireland are low paid. With Jobsbridge etc they are free. You are the voice of ignorance in this debate.

Ronan, if you have a copy of last Saturday’s IT then what you are referring to as the scale comparison between manual labour and that of intellectual labour is absolutely not true. I know this from my own family experience that intellect is a false premiss in the Irish job market otherwise why are so many of our graduates seeking employment abroad.
The fact is that so called ‘globalisation’ of the job market is centred around world class companies, whereas the majoriity of Irish companies are SME’s and not competing globally in niche markets. What is killing these companies and making them un-competitive is the high level of income tax.
If the government were to freeze wage increases and lower income tax then there might be some room to manouver regarding the countries international competitiveness. While they are at it they should cap rent increases and encourage the building of affordable houses and apartments to help people get on the property ladder.

Intellectual property as I’m referring to is not about the individual, I’m talking about analysis, design, patents, techniques developed by a collaboration between individuals. It scales in a way that manual labour cannot.

For example, tiler can only lay so many tiles in a day, and a good one might earn more, but a good architectural design might be reused for 100s or 1000s of houses, with the license earning money each time. This is why the job market generally (not in every case) values those who create intellectual property over those who do a days labour. It’s as simple fact of scale, because the impact of the work in terms of sales for the company is potentially much much higher