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Commission says Ireland granted undue tax benefits of up to €13B to Apple

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Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#111

Post by coldtea »

rdslw wrote: post #37
eru wrote: post #13

Earlier quoted context omitted.

Apple paid taxes according to Irish laws. Is it Apple's problem that Irish law disagrees with EC agreements? (Seems to be Ireland's problem.) If people want companies to pay certain taxes, they should vote for politicians that pass laws that require companies to pay those taxes.. In any case, we should be taxing land value. That's harder to avoid: you can't hide land.

What actually happened between IE and AAPL is on the verge of extortion and bribery - the only difference is not on personal level but on Gov vs Bus. We should heavily penalise this, as AAPL literally stole money from both US and EU people. Because of this arrangement: Apple paid less taxes in US, hence US people have worse roads, healthcare etc. To the same in EU (but here by bad IE decision). Money taken is on AAPL…

>Questions: 1. how far is this from extortion?

As you put it, it doesn't sound like extortion at all.

It sounds like a business negotiation.

Like negotiating for a place you want to rent or whatever. If they don't accept your terms, you take your business elsewhere.

Extortion necessitates an actual threat of harm.

"I'll take my business elsewhere" is not that, since Apple's business wasn't Ireland's in the first place.

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#112

Post by MrBuddyCasino »

_delirium wrote: post #51
jdimov10 wrote: post #43

Time for Ireland to leave the EU too, I think.

Ireland's entire strategy when it comes to attracting foreign businesses to domicile there depends on being both 1) in the EU, but 2) lower-tax than most of the rest of the EU (excluding a few micronations). They're selling a tax arbitrage within the EU common market, which doesn't work if they aren't in it! Ireland's domestic market in itself isn't large enough to really attract major international companies to set…

This seems like the right way to look at it. If the EU wants to scare off multinationals and signal that this tax haven's days are numbered, why punish Ireland? Its unnecessary.

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#113

Post by celticninja »

felipeerias wrote: post #103
onion2k wrote: post #38

Earlier quoted context omitted.

Is it Apple's problem that Irish law disagrees with EC agreements? Yes. To the tune of €13bn. At the scale Apple operates their legal team should be considering whether the deals they negotiate are legal in all the applicable jurisdictions, not just the local one. The Irish government should also have done a better job, so part of the blame lies with them, but that doesn't free Apple of all responsibility. In any cas…

The Irish government were doing their job very well. It just so happens that their job, as they understand it, is attracting multinational corporations by having much lower taxes than their neighbours.

Lower taxes for specific companies is the issue though, not lower tax rates across the board.

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#114

Post by satysin »

I am not too sure how I feel about this. On the one hand I do think Apple (and many other companies) should pay more taxes.

However on the other hand Ireland enticed many big companies to their country on the promise of lower tax. You can't blame Apple for taking advantage of such an offer. They followed the letter of the [Irish] law as far as I can tell (unless someone can correct me?).

I think this could end up being terrible for Ireland in the longer term. Then again perhaps the EU knows that they can't really go anywhere else now so will just have to put up with the new rates or not do business?

It is far from a cut and dry situation IMHO.

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#115

Post by pjc50 »

onion2k wrote: post #38
eru wrote: post #13

Earlier quoted context omitted.

Apple paid taxes according to Irish laws. Is it Apple's problem that Irish law disagrees with EC agreements? (Seems to be Ireland's problem.) If people want companies to pay certain taxes, they should vote for politicians that pass laws that require companies to pay those taxes.. In any case, we should be taxing land value. That's harder to avoid: you can't hide land.

Is it Apple's problem that Irish law disagrees with EC agreements? Yes. To the tune of €13bn. At the scale Apple operates their legal team should be considering whether the deals they negotiate are legal in all the applicable jurisdictions, not just the local one. The Irish government should also have done a better job, so part of the blame lies with them, but that doesn't free Apple of all responsibility. In any cas…

However, the nice thing about land taxation is that hiding the ownership doesn't matter: you can see from the land registry that it's owned by Shady Cayman LLC, but you don't care who they really are so long as you have a corresponding payment to the tax authorities. If they fail to pay that becomes a lien and ultimately reposession.

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#116

Post by zigzigzag »

friendzis wrote: post #109
zigzigzag wrote: post #96

Earlier quoted context omitted.

But no taxes were due, according to the tax collectors themselves. Meanwhile the EU is not a tax collection body, it does not set tax policy and it does not issue tax rulings. It has no power to do this and I'm unaware of any countries that want it to have this power.

There are two things to keep in mind: * Tax laws are (not theoretically) changed retroactively, i.e. even if no taxes were due at the time of filling, that may change. * Law interpretation and/or leading acts may change (again retroactively), i.e. taxable amount, various exemptions, etc.. Some countries may pat you on the back for finding loopholes in the law while other may simply order one to pay hopefully without…

It is well understood that retroactive changes to the law are one of the worst things a legal system can do, which is why so many constitutions ban it and why other countries (like the UK) have a strong convention not to do it. The US Constitution bans them explicitly. Yes, of course countries routinely do bad things and ignore convention and constitutional principles, but that doesn't make it suddenly OK.

The low rate of corporation tax in Ireland is not really a loophole, it is a specific strategy to attract employers to a country that might otherwise not have much to offer, and it has worked fantastically well for them. This policy has been in place for decades and it is (or was) popular - the Irish prefer the jobs to the corporation taxes.

What is the EU is doing here is trying to ban tax competition between countries on the grounds that if you don't charge much tax, you're offering illegal "aid". Beyond a strange interpretation of the word "aid" this is really a very serious problem - if the EU successfully forces countries to pick a single corporation tax rate across the bloc under the doctrine of illegal "aid", despite having no mandate to set tax policies, then what comes next? What if the French start arguing that countries with laxer worker rights than France are providing illegal state aid to their corporations?

Zero-rating corporation tax is a perfectly reasonable policy for a country to have, there are plenty of economic arguments for it, and even if other countries might feel the outcome is unfair, well, so what? Competition is about different people making different tradeoffs and seeing what happens: if the Irish prefer to prioritise employment over collecting corporation tax (one of the hardest taxes to collect anyway), why should they be prevented from doing so?

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#117

Post by edwinjm »

zigzigzag wrote: post #95
icebraining wrote: post #71

Earlier quoted context omitted.

Fiscal State Aid was declared illegal almost two decades ago; Apple was trying to walk a fine line here.

But low tax rates are not "state aid", "aid" is an English word meaning giving something to somebody. "Tax" means the opposite: taking it away. The EU Commission is now engaged in a rather grotesque power grab in which despite having no mandate to interfere with member tax policies they are attempting to gain control anyway, without treaty change, by redefining low tax rates as a kind of subsidy. There is no real pre…

You're only talking semantics now. The net effect of normal taxes minus subsidy is the same as lower taxes. Draw your conclusions.

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#118

Post by shaqbert »

What Apple, Amazon, Google, Microsoft, and most other big US company do is the so called "double Irish"[1]. Essentially is a clever way of using two quirks of some EU countries loopholes in tax laws, from treating IP licensing fees (of course the brand and intellectual IP is owned by a British virgin island tax haven, where else could this stuff be created/invented), and the net result is that Apple et al end up paying single digit cents on the dollar in EU profits.

And with another quirk - this time in US tax laws - the do not even have to pay taxed in the US on those earnings, as they have not repatriated the funds.

How to pay dividends/fund buybacks, without repatriating those funds? Easy: Just issue debt (which your own subsidiary in the British Virgin islands making a killing on IP licensing might want to buy) or have your BVI IP trust fund buy those shares.

Now why would other EU countries let Ireland and the Netherlands get away with these accepted loopholes is a mystery to me, especially since Ireland had to ask for a bailout lifeline, and was in no position to negotiate firmly.

Why the US would allow their truffle pigs to not pay taxes on oversea earnings is clearly the result of expert lobbying.

[1]: https://en.wikipedia.org/wiki/Double_Irish_arrangement

Re: Commission says Ireland granted undue tax benefits of up to €13B to Apple

#120

Post by k-mcgrady »

gambiting wrote: post #61
Oletros wrote: post #39

Earlier quoted context omitted.

Why they won't collect all the due taxes?

Imagine you had an agreement with your local tax authority that they agree for you to pay X in taxes. Then few years later tell you that actually, they were wrong and you have to pay more - you would fight this for as long as possible, wouldn't you?

You can try, you'll probably lose. When the figure is so low it should be blatantly obvious it is wrong you won't get far arguing that you did what you were told and didn't realise something was wrong. When you pay 0.005% tax over a year when the corporate tax rate in the country is 12.5% who can you argue you thought you were paying what you were required? They will try of course and I think Ireland and Apple have both said they will appeal to the European Court but I don't think they'll get very far.
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