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

#381

Post by cmurf » Tue, Aug 30, 2016, 8:36 PM UTC

doctorpangloss wrote: post #348

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…

> the result of expert lobbying. You don't need expert lobbying. Look at this forum, full of tax-evasion apologists who conflate pragmatism with pedantry. Pedantry is the one of the most intellectually and emotionally bankrupt moral frameworks. It basically states that if you just think about the rules a lot, then you will find the solution. I mean, obviously all these politicians and normal people, they've just been…

Stiglitz calls what Apple's done a fraud, while also saying it's the tax law that's incentivized that fraud. http://www.bloomberg.com/news/articles/2016-07-28/stiglitz-c...

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

#382

Post by hackerboos » Tue, Aug 30, 2016, 8:37 PM UTC

nodamage wrote: post #378

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…

I posted this in the other thread on the subject but it's worth repeating here: Apple does not actually have any subsidiaries in the British Virgin Islands (or any other Caribbean island), and (despite common belief) it has not actually moved its intellectual property offshore. Apple's international tax structure was thoroughly documented when they were called up to testify before the Senate, which you can read about…

If that's the case, how does Apple have such an effectively low tax rate?

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

#383

Post by twblalock » Tue, Aug 30, 2016, 8:42 PM UTC

tmaly wrote: post #360

tmaly wrote: post #251

Ireland uses lower taxes to attract companies to create jobs. This has worked, but I wonder if the EU is going to cause another country to exit with this ruling? Seriously, what does Ireland gain if it loses a ton a jobs due to this?

Why the down votes? Does a promise of lower taxes not attract jobs?

I suspect you are getting downvoted because the prospect of Ireland leaving the EU over this is farcical.

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

#384

Post by sgift » Tue, Aug 30, 2016, 8:46 PM UTC

haneefmubarak wrote: post #353

doctorpangloss wrote: post #348

Earlier quoted context omitted.

> the result of expert lobbying. You don't need expert lobbying. Look at this forum, full of tax-evasion apologists who conflate pragmatism with pedantry. Pedantry is the one of the most intellectually and emotionally bankrupt moral frameworks. It basically states that if you just think about the rules a lot, then you will find the solution. I mean, obviously all these politicians and normal people, they've just been…

What exactly are the point of rules if you can reinterpret them in your favor as you see fit? It would be perfectly reasonable to rewrite rules going forward, but to retroactively change what the law says invalidates the point of having laws to begin with.

There is no reinterpretation going on here. Apple never asked the EU. Apple went to Ireland "hey, guys, do you think it is okay to do this?" .. Ireland said yes, but Ireland has no authority here. The EU, which has authority, checked it and said "nope, your interpretation is wrong." - Simple as that.

If I ask someone on the street if its okay to steal from the rich, he says "yes" and I steal from the rich, no one would bat an eye if the courts didn't agree with my "interpretation" of the law and put me behind bars. And no one would accept it as a legal defense if I said "but hey, that guy over there said it is okay to do this!" - why should it be different for companies?

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

#385

Post by johnnyhillbilly » Tue, Aug 30, 2016, 8:55 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…

In their ruling, the commision implies that other countries may seek to judge this independently based on their findings. This can still turn into a much larger tax bill than the nominal value in the commission's findings. :)

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

#386

Post by johnnyhillbilly » Tue, Aug 30, 2016, 9:05 PM UTC

sgift wrote: post #384

haneefmubarak wrote: post #353

Earlier quoted context omitted.

What exactly are the point of rules if you can reinterpret them in your favor as you see fit? It would be perfectly reasonable to rewrite rules going forward, but to retroactively change what the law says invalidates the point of having laws to begin with.

There is no reinterpretation going on here. Apple never asked the EU. Apple went to Ireland "hey, guys, do you think it is okay to do this?" .. Ireland said yes, but Ireland has no authority here. The EU, which has authority, checked it and said "nope, your interpretation is wrong." - Simple as that. If I ask someone on the street if its okay to steal from the rich, he says "yes" and I steal from the rich, no one wou…

Ireland does have the authority, but:

1. They have applied their own laws in a way that amounts to subsidies, and

2. The corporate structure turned out to be fictional, and allocations of profits were therefore also fictional. ("Arm's length" and all that.)

They even open the door for national tax authorities to use their findings and evaluate for profit shifting.

This is an inspirational moment - too long have tax treaties favoured those willing to break the spirit of the law and weigh down the little man with the consequences!

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

#387

Post by throw2016 » Tue, Aug 30, 2016, 9:20 PM UTC

I don't see why commentators here are so divided, presuming they are not beneficiaries of this system.

The government gets revenue from taxes to provide services. If everyone were to do what Ireland is doing then goverments either have to raise money by increasing other taxes or reducing services.

Either way individuals and society lose. Nobody wins from this race to the bottom.

The bigger question is the presence of these convenient loopholes in the global financial system that benefit the wealthy and privileged but leave everyone else facing clear cut laws that cannot be evaded without serious consequences.

Questioning the legitimacy of taxes, or even society, and getting pedantic about laws in this context seems little more than a self serving tactic to avoid admitting this is obviously wrong. Especially when everyone else without exception is paying their fair share. Here is a better idea, pay your share and then start a debate about taxes and society if you want.

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

#388

Post by nodamage » Tue, Aug 30, 2016, 9:22 PM UTC

hackerboos wrote: post #382

nodamage wrote: post #378

Earlier quoted context omitted.

I posted this in the other thread on the subject but it's worth repeating here: Apple does not actually have any subsidiaries in the British Virgin Islands (or any other Caribbean island), and (despite common belief) it has not actually moved its intellectual property offshore. Apple's international tax structure was thoroughly documented when they were called up to testify before the Senate, which you can read about…

If that's the case, how does Apple have such an effectively low tax rate?

They have a specially negotiated rate with Ireland. (The crux of this issue is whether Ireland granting them a special rate was legal under EU law.)

Edit: Actually, "special rate" is a bit misleading, as it implies Apple went to Ireland and said "hey, we'd only like to pay .05% instead of 12.5%" and Ireland said okay. The way it actually works (as described in the previously mentioned Senate memo) is that ASI (the Irish subsidiary) buys an iPhone from its manufacturer in China at cost for $200, marks it up to $600, and then sells the iPhone to Apple Italy for $600. Apple Italy sells the iPhone to a customer for $600 and recognizes $0 in profit, while ASI records $400 in profit. But ASI claims to not be a tax resident of Ireland and therefore when it buys an iPhone from China and sells it to Italy, that transaction shouldn't be subject to Irish taxes since no economic activity actually occurred in Ireland.

Therefore, the only taxes that ASI pays Ireland are from transactions where they actually sold products in Ireland itself. In 2011 ASI recognized profits of $22 billion, of which $50 million occurred in Ireland, and so they only paid ~$10 million in Irish taxes on that $50 million, leading to an effective tax rate of .05%.

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

#389

Post by speleding » Tue, Aug 30, 2016, 9:22 PM UTC

haneefmubarak wrote: post #355

speleding wrote: post #341

Earlier quoted context omitted.

The only relationship between slavery and corporate profit tax is that both should be abolished. There are hundreds of different ways to tax. Taxing corporate profit is controversial because it's very hard to determine what exactly constitutes profit and for multinational firms like Apple deciding in what jurisdiction profit occurs is highly arbitrary (your iPhone has parts from half a dozen countries). The most logi…

I agree with you to an extent, but I've often heard the argument that in that case wealthy individuals would just place all of their finances in a corporation and never have to pay any taxes whatsoever. How would you address this?

Storing money inside a corporation is actually something that happens a lot already. I'm not sure that's a problem, because eventually the money has got to come out of the corporation if you want to do anything useful with it, and it will be taxable then. There are countries that have a flat yearly tax on capital, which would be one way of getting at it, but anything you do would make money flee the country. In my opinion it's more fair, and easier, to tax a flow (labour, sales, pollution) instead of a stock (bank account).

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

#390

Post by cmurf » Tue, Aug 30, 2016, 9:28 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…

If IP is really property, subject it to property tax. The valuation is of course an estimate, but if it were ever sold, there'd be a tax credit or debit, in arrears, without penalty but with sane interest. The only way to really get out of it is upon the expiration of the property's government granted monopoly status, i.e. turned over to the public.