14/5/2013: Corporate Tax Haven Ireland Weekly Links Page

Corporate Tax Haven Ireland in the news... again:
http://www.bloomberg.com/news/2013-05-13/europe-eases-corporate-tax-dodge-as-worker-burdens-rise.html

Update: Twitter in the news: http://www.telegraph.co.uk/technology/twitter/10056570/Twitter-CEO-resigns-as-UK-boss-after-accounting-fiasco.html
Note Irish connection.

Keep track of 'Tax Haven' view of Irish economic policies by following the links, starting here:
http://trueeconomics.blogspot.ie/2013/05/352013-not-week-goes-by-without-tax.html

Update 17/5/2013:
Three more stories, both relating to Google operations in Ireland:
http://www.independent.co.uk/news/business/comment/ben-chu-lets-not-get-bamboozled-by-google-in-the-global-tax-avoidance-debate-8620046.html
and
http://www.guardian.co.uk/technology/2013/may/16/google-told-by-mp-you-do-do-evil
and
http://www.independent.ie/business/irish/no-apology-for-low-tax-regime-as-google-debate-drags-on-richard-burton-29274843.html

I find it bizarre that Minister Bruton feels anyone on earth is asking for Ireland's apology. I think the point of this debate about the role of tax havens, like Ireland, is that policymakers around the world are seeking to close the loopholes through which companies engage in aggressive tax optimisation. Minister Bruton should focus on how Ireland can deal with this threat, as well as on how Ireland can develop a business platform (low tax is an important part of this platform) that actually operates on adding value here and not on beggaring our trading partners.

Minister Bruton's point about the need to create jobs in Ireland is nonsensical in the above debate. If we create jobs here on foot of value added in the Irish economy, then there is no problem with our MNCs activities globally, because low tax regime applies only to value added created here. Our trading partners have a problem with Ireland acting as a conduit for tax minimization whereby there is zero value added created in Ireland, but instead value added created elsewhere is booked via Ireland into tax havens. These forms of tax arbitrage do not create any jobs here in Ireland and generate no tax revenue here.

3/5/2013: Not a week goes by without a Tax Haven Ireland story?

More from the 'Tax Haven Island' newsflow, with a second story this week: "US firms paid an average tax rate of 8% profits in Ireland"
http://www.rte.ie/news/business/2013/0503/390280-us-corporations-tax/

I wonder if Michelle Obama's rumoured trip to Ireland will include a visit to such sunny tax haven locations as Barrow St, Dublin 2, or IFSC...


To track my posts on Irish Corporate Tax Haven, follow this link : http://trueeconomics.blogspot.ie/2013/05/252013-news-from-irish-tax-haven.html

Hat tip to:

Updated 08/05/2013: Two new links on the same subject:

http://www.ft.com/intl/cms/s/0/c638f73a-978f-11e2-97e0-00144feabdc0.html#axzz2SjL5Iq3z

and

http://treasureislands.org/the-capture-of-tax-haven-ireland-the-bankers-hedge-funds-got-virtually-everything-they-wanted/

Hat tip to: 

2/5/2013: News from the Irish Tax Haven Central... Barrow St, D2

Given our Manufacturing PMI released today, things have to be looking sour when it comes to Irish GDP and GNP for Q1-Q2 2013. But, as always, never mind. In reality, Irish manufacturing is no longer the core driver of the economy. Instead, making stuff in Ireland (even if it was done for tax purposes with la-la-land accounting for value added) is now surpassed by billing revenues into Ireland by the services exporters, like Google.

Of course, the latter activity is also driven by tax arbitrage. And it is booming. So much so, that we now have a weekly international media instalment labeling Ireland a tax haven for services exporting MNCs.

Here's the latest one http://mobilebeta.reuters.com/special-report-how-google-uk-clouds-its-tax

And should you want to trace more stories on the same subject of Ireland as tax haven, here is the link to start with (keep tracing posted links): http://trueeconomics.blogspot.ie/2013/04/2742013-news-from-irish-corporate-tax.html

27/4/2013: News from Irish Corporate Tax Haven Front

Latest instalment on Irish corporate tax haven: http://www.irishtimes.com/news/politics/oireachtas/irish-corporate-tax-rate-on-agenda-in-berlin-1.1374576

For those who want to read more, here are earlier links on same topic:
http://trueeconomics.blogspot.ie/2013/03/1832013-irish-corporate-tax-haven-in.html
Follow link at the end to more posts.

1/2/2013: The Innocence of Double-Irish

Irish corporate tax policies issues have now penetrated (agt last) into the RTE newsflow - link here.  Of course, the most priceless reaction is, surprise, surprise, via our Minister Noonan:

"In the Dáil in recent weeks, Finance Minister Michael Noonan said: “The problem with the so-called ‘Double Irish’ from Ireland’s point of view is that it has that name. People think that something we do here gives rise to it. That is not the case.” Mr Noonan blamed tax codes elsewhere, including the way the US government treats certain tax arrangements."

Yep, folks, that's right, Irish law allowing dodgy entities set up off-shore to be tax exempt is, apparently, not Irish problem. Serves those Americans right, then...

I'd love to see him repeat this comes St Patricks Day in Washington. Should be the joke of the dinner.

Yes, US tax codes are to be blamed. And so are the UK, German, French, etc Governments' inability to tackle what is rampant tax optimisation. But in the end, Double-Irish is Double-Irish. Not a Double-Japanese or a Tripple-Mongolian.

Note: here are some lists of recent literature on Irish corporate tax heaven.

19/11/2012: Links on Irish Corporate Tax Haven

Due to page loading restriction on post links, I am moving this list to a new location.

Here is the original page with a number of links on the topic of Ireland as a Corporate Tax Haven. And here's a link to the Irish Government 'defense' of the same.

Updated 19/11/2012: And a new article on US Multinationals facing tax demands / pressures in Europe with explicit referencing of Ireland: http://www.nytimes.com/2012/11/19/technology/19iht-tax19.html

Updated 20/11/2012: No country named, but you know who they are talking about here: http://www.ft.com/intl/cms/s/0/798f30d2-3242-11e2-916a-00144feabdc0.html#axzz2CaviTlTt

Updated 9/12/2012: And more on Google using Ireland as a conduit for tax minimization: http://www.independent.ie/business/irish/google-pays-just-014-tax-in-seven-years-3319796.html
The core problem highlighted here is not the headline 0.14% tax rate, but €47 billion worth of revenues booked via Ireland - an exemplification of Ireland's beggar-thy-neighbor economic policies.

Updated 20/12/2012: Here's The Economist article on Starbucks UK case, mentioning Google use of Irish tax system: http://www.economist.com/news/business/21568432-starbuckss-tax-troubles-are-sign-things-come-multinationals-wake-up-and-smell?fsrc=scn/tw/te/tr/wakeupandsmellthecoffee

13/10/2012: Irish corporate tax haven in the news flow

Some links I collected over time on the case of irish corporate tax haven:

Here's a list of recent articles on 'Tax Haven' Ireland:

Facebook case in the UK: link here http://www.guardian.co.uk/technology/2012/oct/10/facebook-uk-taxes

Google case : link here http://www.irishcentral.com/news/Google-pays-just-10-million-Irish-tax-bill-by-routing-9-billion-profits-abroad-173020581.html

Microsoft case: link here http://www.irishtimes.com/newspaper/finance/2012/0922/1224324270335.html

EU noticing that our manufacturing is largely a 'fake' : link here http://www.irishexaminer.com/business/eu-irish-output-is-distorted-210505.html

Canada's estimated tax exhales via Ireland = CAD23.5bn in 2011, 3rd largest : link here http://www.huffingtonpost.ca/2012/08/17/tax-havens-canadian-banks_n_1797331.html

Apple case : link here http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html

And priceless non-Ireland related (so far…) case of HuffPo hypocrisy : link here http://order-order.com/2012/10/12/introducing-huffpo-luxembourg/

Though do keep in mind that AOL is in Ireland too.

And some more from earlier dates:

Here's Financial Secrecy Rankings from 2011 referencing Ireland's lack of transfer pricing regulations as the core driver for turning "Ireland into a source of loopholes in international tax": link here http://www.secrecyjurisdictions.com/PDF/Ireland.pdf

Forest case : link here http://www.bloomberg.com/news/2010-05-13/american-companies-dodge-60-billion-in-taxes-even-tea-party-would-condemn.html

A note on US imports from Ireland and the effects of transfer pricing: link here http://www.taxresearch.org.uk/Blog/2012/08/10/could-our-trade-deficit-be-down-to-intra-group-pricing-profit-shifting-and-transfer-mispricing-it-is-in-the-usa/

Why ireland is an EU Corporate Tax Haven post (search the page for February 21st, 2011 post) : link here http://treasureislands.org/progressive-tax-blog-reloaded/

Our own Revenue Commissioners' research on the topic : link here http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/feb/22/ireland-corporate-tax-rate-revealed?INTCMP=SRCH

The link above also mentions Boston Scientific case

The case if WPP group: link here (search the site page for "Don't be fooled by WPP's" phrase http://treasureislands.org/progressive-tax-blog-reloaded/

Updated:
Another link on the latest MNCs effective tax rates: http://www.independent.ie/business/irish/dell-pays-just-15m-tax-despite-sales-of-96bn-3276711.html

Yet more on the story of Google in Ireland:
http://www.irishtimes.com/newspaper/world/2012/1101/1224325978868.html

Updated 05/11/2012: Now it's Apple's turn: http://www.businessinsider.com/apple-tax-rate-2012-11

And more today - this one on Bain Capital: http://www.businessinsider.com/bain-capitals-dutch-tax-plan-2012-11

Updated 06/11/2012: More on Apple: http://www.independent.ie/business/irish/apple-used-ireland-to-pay-just-2pc-tax-on-nonus-profits-3285168.html

And latest idea of UK-German cooperation on cracking down on MNCs tax avoidance: http://www.guardian.co.uk/business/2012/nov/05/uk-germany-tax-loopholes-multinationals

Updated 12/11/2012: Telegraph on US trio of UK tax 'optimizers': http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9673358/Starbucks-Amazon-and-Google-admit-using-favourable-tax-jurisdictions.html

Updated 16/11/2012: Two items both via Michael Taft:
Article on Irish corporate tax rate and budgetary policy:
http://www.thejournal.ie/readme/corporation-tax-budget-674461-Nov2012/?utm_source=shortlink

Statement from the EU Congress identifying Ireland as one of tax havens (from 2004):
http://www.gpo.gov/fdsys/pkg/CPRT-112SPRT70710/pdf/CPRT-112SPRT70710.pdf
see bottom of page 30.

Updated 18/11/2012: Dutch Sandwich Tax Scheme and google: http://arstechnica.com/business/2012/11/dutch-sandwich-with-a-side-of-tax-relief-may-soon-be-off-googles-menu/

13/09/2011: Latest research on Tax Havens & Safe Havens

A recent CEPR research paper (CEPR Discussion Paper No. 8570, "TAX HAVENS OR SAFE HAVENS" by Patrice Pieretti, Jacques-François Thisse and Skerdilajda Zanaj, from September 2011) attempts to explain -at least in theory - the policy choices of a small open economy (SOE) that wants to be a viable international banking center (IBC).

The basic dilemma faced by such an economy is that to attract IBC activity, the economy needs to choose between either becoming a tax haven, a safety haven or both for investors from large economy. In other words, the SOE is required to establish a competitive advantage relative to a large economy in terms of two possible instruments: taxation and institutional infrastructure.

The problem is that in reality, the same SOE will not be able to provide both - quality institutions and tax haven protection, since the latter contradicts the former. One can argue that in the past some tax havens were institutionally extremely robust, but in the current globalization-altered world, good institutions require compliance across the borders, not just within the country.

What the paper shows is that in such a setting, the tax haven can act as a catalyst to induce institutional reforms despite the fact that it cannot create institutional competitive advantage. The reason is that competition amongst tax havens drives institutional improvements in these IBCs.

As surveyed in the paper, a recent study by Dharmapala and Hines (2009) "investigated 209 countries and territories to determine which jurisdictions become tax havens and why. They found that successful jurisdictions are overwhelmingly small, but that they are especially well governed, with sound legal institutions and low levels of corruption. Poorly run jurisdictions fail to attract or retain foreign capital, and many do not even try. Thus, the quality of governance seems to matter for the existence of tax havens. According to Gonzalez and Schipke (2011), there is some empirical evidence that countries that apply stronger regulation rules have benefited from higher portfolio investments."

The CEPR study largely confirms this. The core conclusions are:

• "...whether the small country becomes a tax haven depends on the integration of financial markets and the intensity of the small country's comparative advantage."
• "The nature of government matters too to the extent that benevolent governments never build a tax haven. They prefer to erect an IBC through the provision of better institutional infrastructure."
• "By contrast, tax havens may emerge under Leviathan governments. This may explain why tax havens are developed in microstates where there is almost no conflict between social welfare and tax revenues because the local population benefits from the taxes which are mainly levied on foreign investors."
• "Our analysis also reveals that the presence of heterogeneous investors matters for the viability of the IBC and the nature of the policy mix."
• "IBCs need not be as bad as claimed in the media because they foster institutional competition which is beneficial to all investors."
• "Our results provide evidence that safe havens have a place in the global financial environment and provide benefits to governments, firms and households."