Commission says Ireland granted undue tax benefits of up to €13B to Apple • Hacker News Board

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

#281

Post by legulere » Tue, Aug 30, 2016, 3:38 PM UTC

refurb wrote: post #264

legulere wrote: post #250

Earlier quoted context omitted.

Countries are not companies. Also your comparison is pretty bad. The direct cost per unit is pretty high for a car in a car company, the one for a company in a country is negligible. So it's more like a publisher selling digital goods, except that there's no copyright, preventing the others from selling exactly the same for a lower price.

Countries provide a service (infrastructure, social programs, court system) based on a price (taxes). There is a floor for those costs. There is a minimal amount of tax required to provide those services. I think it's a bad idea to tell a country that they can't charge a lower price (taxes) in order to sell more business (have companies move there).

> There is a minimal amount of tax required to provide those services.

And you can go lower than that amount if you attract an abnormal amount of companies through an abnormally low tax.

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

#282

Post by rayiner » Tue, Aug 30, 2016, 3:44 PM UTC

xioxox wrote: post #258

rayiner wrote: post #246

Earlier quoted context omitted.

You're not sovereign if some other entity can micro-manage your tax policies. It's a big stretch to call U.S. states "sovereign" but even they get to decide on how they give tax breaks.

Ireland is still sovereign. They could pull out of the EU and its rules at any time if they wanted to. Is this different to delegating some aspect of trade to WTO rules?

If the U.S. doesn't sign the TPP, it is not bound by it, regardless of how many other countries support it. But, e.g. Massachusetts was bound by the Defense of Marriage Act for ~20 years even though a majority of its Congressmen and both of its Senators voted against it. That's not sovereignty.

EU rules are like U.S. federal laws, not WTO treaties. Member states can be bound by them even if their representatives vote against them.

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

#283

Post by TheOtherHobbes » Tue, Aug 30, 2016, 3:45 PM UTC

toyg wrote: post #256

dogma1138 wrote: post #244

Earlier quoted context omitted.

>That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players. Well it sure helped Deutsche Telecom and PostNL(TNT), everyone else is mostly still locked within their own co…

Dude, can I politely ask you to increase the amount of commas and periods you use? Otherwise you're really hard to follow :) > everyone else is mostly still locked within their own countries That's not really the case. In fact, in a lot of sectors purely-national players are now the exception, not the rule. You have Portuguese building companies winning UK contracts, and French companies outsourcing to Czech companie…

Whatever the nominal point of the EU, the reality is that it massively benefits Germany, France and (formerly) the UK at the expense of the periphery - especially the southern periphery.

The Euro has been an absolute disaster for the PIGS - precisely because it has legitimised nationalist economic policies within a nominally (but disingenuously) open trade zone.

That's bad enough on its own, but the German and French right wing are immensely fond of couching this as a moral failure on the part of the feckless, lazy southerners who don't work hard enough to pay their bills.

That's criminally offensive to the economic reality, which is that the Euro has mostly become an excuse for loan sharking and economic exploitation.

Tax policy is a confused footnote. Juncker, who is so very very ashamed of Ireland, was in charge of putting in place very similar sweetheart deals in Luxembourg - a fact which he seems to be trying hard to deny.

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

#284

Post by wonder_er » Tue, Aug 30, 2016, 3:49 PM UTC

quantgenius wrote: post #267

germanier wrote: post #239

Earlier quoted context omitted.

EU governments, including the Irish one, are free to set different tax rates for different industries. (They are not free to set tariffs but that is because tariffs are a core EU competency as defined in the treaties.) Member states are not free to set different tax rates for different companies . This is part of the deal of joining the EU and has been part of the treaties since the beginning. The only surprising thi…

Ireland did NOT set a different tax rate for Apple or for a specific industry that was basically just Apple. Apple simply structured itself to minimize taxes taking into account the laws at the time. Any company was free to do the same and many did. The structure is so common that there are even two terms that are in standard use to describe this structure, the Double Irish and the Double Dutch. The EU did not sudden…

The honest answer! Thank you.

>The EU simply wants to get its grubby little hands on Apple's money so they can use it for more dole-outs to friends of the bureaucrats...

I'm not sure why so many people think this was a move about fairness.

It's just a grab of money and power from politicians, as expected. I wish this money/power grab were not so widely defended by so many people.

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

#285

Post by wonder_er » Tue, Aug 30, 2016, 3:53 PM UTC

phab wrote: post #200

phab wrote: post #142

Earlier quoted context omitted.

You have missed the point - this is about different companies within one state being charged different rates of corporation tax, not different states across the EU charging different rates of tax. > if the EU successfully forces countries to pick a single corporation tax rate across the bloc The EU is forcing no such thing. It is forcing countries within the bloc to not give any one company special treatment. The dis…

In-reply-to: ZigZigZag: Once again, it comes down to a question of fairness; you describe Apple's tax deal as if it is a conventional part of fiscal policy where clearly it cannot be treated as such (indeed, if it were, and such tax deals were cut fairly across all corporations in this sector, Ireland would have quite some budgetary problems). The argument is that the deal that Apple brokered would not have been avai…

Ironically, "Fairness for everyone" is the same as "forcing bad outcomes on the individual".

Group fairness doesn't trump individual liberties, as long as that individual doesn't harm someone else.

What Ireland did with Apple is the same as a company hiring away developers from its competition by paying them more.

Does it hurt them? Sure, they lost a talented developer. Is the proper response wage controls? Dear god no.

Do you think that bureaucrats and politicians "play by the rules"?

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

#286

Post by Hermel » Tue, Aug 30, 2016, 3:54 PM UTC

madeofpalk wrote: post #157

noir-york wrote: post #139

Apple engage(ds) in aggressive tax planning - and they, along with FBK, Google, etc - deserve to be smacked down with a heavy bill. An effective tax rate of 0.005% - when your next door business neighbour is paying 20% - is morally wrong and damaging to society and the common good.

Morals are irrelevant in this story. Tax law is a system of rules. There should be no second arbitrary standard people (and companies) should be expected to follow.

Morals are very relevant when deciding what's right and what's wrong. In this particular case, I fully support the European Commission. Note that there are laws against setting up artificial corporate structures with the sole purpose of circumventing taxes, and that's exactly what Apple did (with the help of the Irish tax bureau). The only problematic thing here is that Apple is being made an example of. There are many other companies that are doing the same. But it makes sense to handle the largest cases first.

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

#287

Post by heisenbit » Tue, Aug 30, 2016, 3:57 PM UTC

shaqbert wrote: post #118

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 payi…

While this sandwich structure is in principle highly problematic it is legal.

Reading the complaint there is a lot in it about valuation of the intra-company transfers and arms length principle in establishing valuation numbers. I suspect it is there where Ireland and Apple colluded to enable Apple to avoid paying taxed in other EU states. Apple may be saying it is legal but they must know that the deal they got from the Irish Government was too good to be true.

While the volume was small it did not raise alarm bells but the volume Apple is doing it eventually pushed the envelope too far.

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

#288

Post by wonder_er » Tue, Aug 30, 2016, 3:58 PM UTC

belorn wrote: post #141

satysin wrote: post #114

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 bei…

If you make a deal with a government to pay 0.005% taxes where all other corporations in the same country pays 12.5%, you might want to suspect that something is wrong. Even if you are not paying bribes, it does not pass the smell test.

It passes the "business at scale" test.

How much do you pay when you buy an iPhone?

How much do you think a business that gives iPhones to its employees pays per iPhone?

If they pay half of what you pay, per phone, is it unfair?

Sure. maybe there's a 50% spread between those price points.

But they still pay orders of magnitude more money to Apple than you do.

.00005% of $big_pile_of_money is a better deal to Ireland than 10% of $0, because Apple HQ'd elsewhere.

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

#289

Post by IMTDb » Tue, Aug 30, 2016, 4:00 PM UTC

shaqbert wrote: post #148

shaqbert wrote: post #118

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 payi…

How to counter this: Just regulated the transfer of IP rights. If you sell say a patent portfolio for $50m to your British Virgin Island subsidiary, and then make $20bn in profits in the decade thereafter on that BVI sub, it appears the IP transfer was waaaaay below market value. And should retroactively be taxed in the US where we engineers had developed that stuff in the first place. Problem solved. US tax base res…

Let's imagine an honest tech company that buys a 100 patents each year for 10 years. As usual : 90% of them and up being useless. 9.9% of them allow to make a good product that sell well and keeps them afloat. And one of those ends up being ground breaking pushing the company forward, allowing major innovation in their product line.

In the current situation, the company placed a bet on those patents. They took risks, every year, for 10 years. And ended up being rewarded for it after some struggle and a lot of research. In your proposed situation, the company would put as much risk in buying the patents. Would still struggle for 10 years. Then, once the ground breaking product comes along and starts generating sales, authorities come in and ask for retroactive taxation because their crown jewel was "clearly under market value"

That honest company would probably not stay in business for very long. Or would not even exist if the founders knew that would be the outcome.

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

#290

Post by FilterSweep » Tue, Aug 30, 2016, 4:01 PM UTC

creshal wrote: post #240

patrickaljord wrote: post #208

Earlier quoted context omitted.

> Ireland is cutting taxes far below the EU average to attract all companies they can. That's a dick move Allowing people and their companies to keep more of their money while creating tons of jobs in a high unemployment country. What a dick move indeed. /s

> people and their companies Oh? Apple, Google and other US-based multinationals are owned by their European employees? > creating tons of jobs in a high unemployment country Less creating, more shifting them from other countries. It benefits Ireland at the expense of the rest of the Union.

I'd also argue there's very little "Creating" OR "Shifting" going on from Apple in this tax haven.

They can keep the vast "majority" of the (read: "well paid") jobs in Cupertino with Stanford, UCBerkeley, CalTech, etc grads. All the while reaping the tax haven benefits abroad.[0]

[0] Found a better source, 6.5K employees in Ireland: http://www.independent.ie/business/irish/25pc-of-apples-euro... , with 1000 to be added by 2017.

Their center in Cork, Ireland is a distribution base, which is different than the product design, R&D, and development that goes on in America. Compared to the amount, in billions, of taxes avoided, the "Tons of jobs" grandparent is claiming doesn't seem to be true.