Should Ireland appeal the Apple ruling

Firefly

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It's very easy to come down on the admittedly very low taxes the multinational pay here. It grabs headlines and sells papers. It even brings the loonies on the left out for a bit of grandstanding. The thing is though, they multinationals pay very good wages and support a ton of dependent companies up and down the country who in turn pay shed loads of income tax and VAT on purchases. The multinationals are keeping the lights on in this country and we all know it. The other thing we all know is that the are here because of our low taxes. This is Ireland's unique selling point...sure we're English speaking with so-so educational standards, but do you really think that's why all of these companies are here? It's not - it's because of our taxes. Raise these and the multinationals will fly.

The large EU countries, by and large, have large domestic industries so they would lose an absolute fortune if they reduced their own taxes to 12.5% to simply attract the multinationals we have. Better to get us to raise our rates right?

Now there are moves now to harmonise CT tax across Europe. Great...let's sign up only if the rate is 12.5%!
 

odyssey06

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Ireland is an island on the periphery of Europe. We should be under no obligation to set our rates the same as those of the central european core.
It is an entirely legitimate strategy for peripheral regions to offer such incentives to attract business to their regions. That applies to Croatia and Latvia and Cyprus just as much as Ireland. We can no longer compete through currency devaluation due to the Euro & ERM. Peripheral countries have to have some levers to operate.

A minimum rate rather than a harmonised rate could be agreeable, but with a national veto on any moves to increase it, and, the initial minimum should be set at 12.5%.

Also, let's not forget that some of the business that is coming into Ireland is as a result of global competition rather than internal EU competition. If we didn't have a 12.5% tax rate they wouldn't be basing that operation in the EU at all. Perhaps some differential tax rate recognising international competition versus intra-EU competition would also make sense if practicable.
 

Duke of Marmalade

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The CT rate itself is now more or less accepted as a national competence, same as income taxes, VAT etc. In fact I think it is now accepted that for example the UK could tax corporations in NI at less than on the mainland.

The focus has now turned to where the profits are economically earned. I think that notwithstanding the tremendous productivity of Cork folk even they would admit that they do not make €1m profits p.a. per employee. Or if they do believe that they are suckers for not negotiating huge pay rises:D

No, the profits are mostly earned from intellectual property created in the US, partly earned from sales activity in the EU and to the least extent by whatever Cork folk are doing.

The solution to this has been in the making for some time and this Apple fiasco will hasten its final arrival. It will not be good for Ireland at all. It will involve allocating taxable profits to wherever they are economically earned. Ireland will be allowed to have a zero CT rate if it wants but our CT advantage will be gone.
 

Firefly

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Ireland is an island on the periphery of Europe. We should be under no obligation to set our rates the same as those of the central european core.
I agree and you know what, it could be argued that forcing us to change raise our tax rates, thereby affecting our competitiveness, is anti-competitive in the first place, which would be ironic as this is what this whole Apple affair is about!
 

Purple

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The CT rate itself is now more or less accepted as a national competence, same as income taxes, VAT etc. In fact I think it is now accepted that for example the UK could tax corporations in NI at less than on the mainland.
The UK doesn't get to tax companies on the mainland as they are an island off the mainland, just like us. :p




No, the profits are mostly earned from intellectual property created in the US, partly earned from sales activity in the EU and to the least extent by whatever Cork folk are doing.
Most of the economic activity took place outside the EU.

The solution to this has been in the making for some time and this Apple fiasco will hasten its final arrival. It will not be good for Ireland at all. It will involve allocating taxable profits to wherever they are economically earned. Ireland will be allowed to have a zero CT rate if it wants but our CT advantage will be gone.
Not is that intellectual property is registered here. That's why the whole Knowledge Development Box thingie is such a big deal.
 

TheBigShort

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It's not - it's because of our taxes. Raise these and the multinationals will fly.
Where will they go? It would appear anywhere else in the EU is out, the US is out (why did they move operations in the first place?). The UK is out because of the uncertainty about Brexit.
And while we are at it, isnt the reason they are here is because of our 12.5% CT or because its actually anything from 0.005% to 12.5%
 

TheBigShort

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Ireland is an island on the periphery of Europe. We should be under no obligation to set our rates the same as those of the central european core.
This is an important point. Throughout the history of the EU (EEC) the move towards further integration has only been possible on the basis that member countries retain their sovereignty.
Its only when we are required to vote a second time that its for our interest to remain at the "heart of Europe", otherwise we are always on the periphery.
I would argue that these companies would be in Europe regardless of our CT. Europe is a lucrative market with 400m pop. Having a presence in the EU, I would imagine, facilitates not having to negotiate a trade agreement.
I should add that in Apples case, the option of paying 12.5% on all there profits is still more desirable than alternatives in the rest of EU or US.
 
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Delboy

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I don't think most people here have an issue with the 12.5% rate.
It's the 0.005% rates that we're not told about whilst paying 52% ourselves on anything over 33k thats the killer.

We either have a 12.5% rate or we don't. Right now, we don't.
Noonan made a fool of himself today out in Europe. The Dail committee yesterday that raised this at the end of business with a EU Commissioner here on a different matter....again, they sounded like right eejits defending our so called 12.5% corporation tax rate.
 

Protocol

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There is no 0.05% or 0.005% rate.

We have a 12.5% main rate of CT, that's it.

How they arrived at the 0.05% effective rate:

Example:

ASI has 36 bn USD in profits, of which, say 50m euro profits are attributed to the Irish branch.

Irish CT = 50m * 12.5% = 6.25m euro

Then, divide 6.25m euro into 30 bn euro approx profits, and you get 0.002%.
 

TheBigShort

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There is no 0.05% or 0.005% rate.

We have a 12.5% main rate of CT, that's it.

How they arrived at the 0.05% effective rate:

Example:

ASI has 36 bn USD in profits, of which, say 50m euro profits are attributed to the Irish branch.

Irish CT = 50m * 12.5% = 6.25m euro

Then, divide 6.25m euro into 30 bn euro approx profits, and you get 0.002%.
And the issue is, is that the Irish tax system facilitates the other €35.950 bn to sit in 'the cloud' or wherever.
That is, as far as I can see it, is the issue. The Irish tax system can, in certain circumstances, facilitate a corporation to effectively park its profits in 'no mans land', and the Commission has ruled that this amounts to effective state aid.
 

Delboy

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There is no 0.05% or 0.005% rate.

We have a 12.5% main rate of CT, that's it.

How they arrived at the 0.05% effective rate:

Example:

ASI has 36 bn USD in profits, of which, say 50m euro profits are attributed to the Irish branch.

Irish CT = 50m * 12.5% = 6.25m euro

Then, divide 6.25m euro into 30 bn euro approx profits, and you get 0.002%.
So what your saying is that there's a 12.5% rate for the small bits
And a non-existent rate for the big money that we all pretend is just 'resting' in Ireland!
 

odyssey06

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And the issue is, is that the Irish tax system facilitates the other €35.950 bn to sit in 'the cloud' or wherever.
That is, as far as I can see it, is the issue. The Irish tax system can, in certain circumstances, facilitate a corporation to effectively park its profits in 'no mans land', and the Commission has ruled that this amounts to effective state aid.
Not exactly. If other corporations can use the cloud also, its not state aid without a selectivity aspect ... also what goes up into the cloud must come down at some point...
 

Protocol

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Protocol

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So what your saying is that there's a 12.5% rate for the small bits
And a non-existent rate for the big money that we all pretend is just 'resting' in Ireland!
The balance of ASI profits are to be taxed in the USA, where the activity happens that leads to the profits.

The Irish branch, with very little R&D, does not generate the huge profits.

Many hundreds, thousands, of engineers in California generate those profits.
 
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