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Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

theguardian.com

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Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#241

Post by jeroenhd »

sbennettmcleish wrote: post #7

220bn profit? Really? Surely they mean "revenue"

Many corporate tax evasion systems operate by setting up subsidiaries in countries where profit is taxed and licensing their own IP from a "company" in a country where you can cut nice tax deals. Because there's no good way to rate the value of IP, you can basically charge any amount to your other "companies" so that they don't make a dime of profit.

It figures that the "company" licensing all of this IP has very little in the way of operating costs. Maybe they need to pay the rent of the local mailbox that they've registered themselves to, or maybe they even need to rent an office in an office complex somewhere, but the entire operating exists purely to redirect the flow of money.

This approach is evil, nothing less. Companies benefit from government infrastructure all around the world and pay nothing back. The bookies that set up these schemes will tell you that they're perfectly ethical because they're totally legal, but their moral compass has stopped functioning years ago. It's not just Big Tech either, most companies operating worldwide use tactics like these.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#242

Post by Grustaf »

rorykoehler wrote: post #87
thorin1 wrote: post #84

Earlier quoted context omitted.

They are surely talking about Europe. Not US.

I live in Germany and pay between 20-25% of my income in income tax depending on how much I bill. I easily support a family of 4 on this. Rent, car, holidays, the lot.

According to Wikipedia, if you pay 25% income tax in Germany you make €50 k, which doesn't sound like a very comfortable family income, unless you live in the country side perhaps.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#243

Post by pimterry »

roenxi wrote: post #70
breakfastduck wrote: post #36

Earlier quoted context omitted.

The revenue is only the same because we dont actually collect corporation tax because we let people avoid it. To act like there's no additional benefit on taxing literally billions in revenue is absolutely nonsensical.

Say you redirect $100 million away from Microsoft's research into artificial intelligence and redirect it to a government project promoting artificial intelligence research + junkets for government employees. It is certainly plausible that a tax will provide no additional benefit. Microsoft is one of the great value creators of the late 20th/early 21st century. it is not immediately obvious why redirecting money away…

> you redirect $100 million away from Microsoft's research into artificial intelligence

This confuses the issue - corporation tax has the opposite effect to this, because it only applies to profits. When profits are heavily taxed, there's a strong incentive to invest more money in R&D and longer-term internal investment (thereby avoiding corporation tax on that spending entirely) rather than reporting it as profit that's immediately distributed it to shareholders today.

There's interesting arguments about how this affects shareholders and whether it discourages external investment, but it's certainly not a drain on R&D.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#244

Post by PKop »

cheph wrote: post #238
m12k wrote: post #83

Earlier quoted context omitted.

Yep, the current corporate tax laws basically punish single-nation companies, while giving multinationals a free pass. International tax laws desperately need an overhaul.

Is Ireland not a democracy? Can't they vote to change their own tax laws if they have a problem with them?

This is you assuming "democracy" actually works to empower average people to make these types of changes, instead of being co-opted or controlled by these same corporate behemoths.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#245

Post by G3rn0ti »

There shouldn’t be „corporate taxes“. They tend to be difficult to collect, troublesome to declare and actually can not contribute much to national budgets.

Think about it:

Employees of multinational companies pay billions of income tax.

Customers buying products and services from multinational pay billions in VAT.

Shareholders of multinationals receiving dividends pay billions of capital gains tax.

So what exactly is left for a corporate tax to collect?

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#246

Post by gbear605 »

cheph wrote: post #238
m12k wrote: post #83

Earlier quoted context omitted.

Yep, the current corporate tax laws basically punish single-nation companies, while giving multinationals a free pass. International tax laws desperately need an overhaul.

Is Ireland not a democracy? Can't they vote to change their own tax laws if they have a problem with them?

The problem is not that Ireland gives a good deal to companies in Ireland, the problem is that Microsoft can falsely pretend that their Irish branch is the one making all the profit and then not having to pay any tax elsewhere.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#247

Post by wwtrv »

rorykoehler wrote: post #143
jefftk wrote: post #101

Earlier quoted context omitted.

The idea is that the government prints money to cover expenses. If you could somehow force everyone to hold all their wealth in cash, this would act as a wealth tax. This doesn't work, however, because with very high planned inflation no one wants to use your currency, and without taxation there's no reason they have to.

They use your currency because they get paid in it. Government spending doesn't disappear into a black hole never to be seen again. [FALSE]>>> Also it's illegal to use other currencies as tender in (probably?) all countries in the world (Zimbabwe uses/used(?) the US dollar but I'm not aware of any other instances).

I’m not sure this true in most countries which don’t have strict capital controls. In most (all?) European (and I assume other developed countries) you’re free to use any currency you want as long as both parties agree on. iirc in the UK the pound is only legal tender when settling debts and merchants are not even legally required to accept payment in pounds and can demand any other currency they want.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#248

Post by TimPC »

dalbasal wrote: post #231
TimPC wrote: post #196

Most economists around the world support eliminating the corporate tax and raising capital gains to compensate. In addition to vastly reducing the amount of accounting needed it would make structures like this pointless. Perhaps governments should get on this as a priority. It seems like early movers would attract a lot of investment.

It's extremely easy to speculate about this stuff academically. Economists tend to delight in theory-adjacent discussions. These have very little bearing on the real world. TRW, in this case, is a cascading infinity of corporate law, tax law, accounting practices, jurisdictions, lobbyists, parliaments and special interests. None of these exist in economist's models, unless they're modeling public choice theory or som…

Taxing wealth is a terrible idea because it requires government to get balance sheets from the masses. If you miscalibrate earnings minus inflation it’s also punitive. Lastly for many families most of their wealth is their home which isn’t exactly liquid even if it grows in value. Wealth taxes would force many to sell their houses.

Re: Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

#249

Post by __alexs »

cheph wrote: post #238
m12k wrote: post #83

Earlier quoted context omitted.

Yep, the current corporate tax laws basically punish single-nation companies, while giving multinationals a free pass. International tax laws desperately need an overhaul.

Is Ireland not a democracy? Can't they vote to change their own tax laws if they have a problem with them?

They don't want to. These companies employ thousands and thousands of people in Ireland and pay them pretty well. In the bigger picture it's probably in their collective interest to tax them more but there's a pretty strong individual incentive to maintain the attractive tax environment.
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