Not sure what the Americans have to say about a matter between European countries...? Isn't Ireland big enough to appeal to the WTO?
US Treasury to launch pre-emptive strike on EU's Ireland tax probe
The US Treasury is preparing a pre-emptive strike against a long-awaited probe by the European Commission into Ireland's tax arrangements with tech firms such as Apple. The US Department of the Treasury plans to publish a paper today outlining its views on the EU’s investigations into tax arrangements, sources told The Irish …
COMMENTS
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Wednesday 24th August 2016 15:54 GMT Anonymous Coward
I suspect that there are two problems here. Firstly the EU Commission is allowed to investigate illegal state aid and (if found) punish the offenders and those who have benefited from it. The second problem is the EUC acts as judge, jury and executioner; this will annoy the US gov who claim a monopoly on acting like that.
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Wednesday 24th August 2016 17:08 GMT Destroy All Monsters
I say!
Well, nothing that can be fixed with a bit of hitlerization followed by regime change, really.
(I don't think the EUC can unilaterally demand the monies without ECJ having a say... )
Thumb it down, Hillary voters. Are your ready for Madame Nuland at the head of the State Department doing her pivots wherever they are needed?
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Wednesday 24th August 2016 21:28 GMT Doctor Syntax
"Thumb it down, Hillary voters."
Nothing to do with Hilary voters. This is the EU reviewing the conduct of an EU company (Apple's EU subsidiary) on EU soil (Ireland) and and EU government (Ireland again).
It's reminiscent of US authorities demanding access to data of servers run by another EU company (Microsoft's EU subsidiary) on EU soil (Ireland yet again).
Neither are any of your business. Non-players off the green, please.
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Wednesday 24th August 2016 18:00 GMT bombastic bob
U.S. gummint has its priorities wrong
the U.S. gummint (I'm a 'merkin' FYI) has its priorities wrong. Hopefully a complete regime change (i.e. Pres Trump) next January will rectify this. He wants to bring businesses back by LOWERING tax rates, sort of what Ireland did to ATTRACT multi-national companies there to avoid confiscatory taxes. Should we blame them? I think we ALL would do things personally for our OWN benefit, like that, if we could. but when "only the big boys" can play THAT game, it's perceived as 'unfair'.
(but that's corrupted politics for ya, typical of the Demo-rats and socialists in general, to keep the rich and poor as separated as possible, and make sure 'the rich' get to keep their exclusionary status, while SIMULTANEOUSLY making it LOOK as if they're "soaking the rich" for the benefit of the poor)
anyway, if USA "becomes Ireland" (i.e. low or NO corporate tax) we won't need to step on Ireland's turf. and gummint revenues from OTHER things would INCREASE as a result. It makes you wonder why the higher taxes are there in the FIRST place...
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Thursday 25th August 2016 07:51 GMT maffski
'Not sure what the Americans have to say about a matter between European countries...? Isn't Ireland big enough to appeal to the WTO?'
Because the US taxes the profit of Facebook, Google etc. and a part of their profits come from international operations (often in Ireland). So if the EU starts getting directly involved in tax for those companies in Ireland it directly impacts the tax revenues in the US.
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Saturday 27th August 2016 12:32 GMT organiser
So if the EU starts getting directly involved in tax for those companies in Ireland it directly impacts the tax revenues in the US.
Not quite.
The USA has low personal taxation but high corporate taxation. Most other countries, including virtually all EU countries, do the opposite.
Furthermore, unlike most other countries, the USA taxes dividends received as ordinary revenue at high tax rates, even though they have already been subject to corporation taxes. The taxes in Ireland are not levied on the US part of Apple. They are levied on Apple Europe. If Apple Europe were to pay those taxed (however low) profits to the USA, they would be subject to punitive US corporation taxes on Apple USA. No wonder Apple prefer to not pay dividends to its US parent, but luckily companies can’t be forced to pay dividends. However the USA can always make its tax code even more punitive by begin levying taxes on unpaid dividends.
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Wednesday 24th August 2016 15:54 GMT Anonymous Coward
Apparently, the US already does
rule the world. Their lawmakers seem to assume that the their law applies to every inch of this planet (and beyond).
While the deals between the likes of Apple, IBM, Microsoft, Adobe etc and the Irish Goverment are apparently ok in Irish Law the EU could and probably will muddy the waters.
Whatever happens between the Irish and the EU, is nothing to do with the USA and they should told to keep off.
If their land grab succeeds here then where will it stop? Make any company who has even a tenuous link to the US pay US taxes on their whole income?
Then they'll turn their attention to each and everyone of us.
Been on holiday to the US? That will mean that all your income is subject to US Federal Taxes on top of your own tax burden.
Extreme?
I don't think so. The US has a huge debt that they need to address sooner or later.
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Wednesday 24th August 2016 18:19 GMT Anonymous Coward
Re: Apparently, the US already does
"Been on holiday to the US? That will mean that all your income is subject to US Federal Taxes on top of your own tax burden."
Bullshit. Only US citizens and permanent residents are required to pay taxes on incomes earned outside the US prorated based on how much time is spent in the US and waived up to a certain income level in USD. This, of course, is a giant pain for expats such as myself. If you're working in the US, you have to pay taxes on that income, but what are you doing working on "holiday to the US?"
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Saturday 27th August 2016 12:36 GMT organiser
Re: Apparently, the US already does
Most countries use the OECD rule of becoming taxable on worldwide income after having spent more than 182 days in the country in any 365 day period. There are certain exceptions, such as the UK which only requires an average of 90 days over a four year period to become worldwide taxable in the UK.
The USA could quite easily change its tax code so that anybody who set foot on US soil becomes taxable on worldwide income.
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Wednesday 24th August 2016 19:14 GMT katrinab
Re: Apparently, the US already does
It is their business if it is American companies that are avoiding tax.
The way it works is, the company, for example Apple, tells Irish Tax and Customs that the company is resident and conducts its activities in Texas, and therefore is not liable to pay Irish tax. It tells the IRS that the company is registered in Ireland and therefore not liable to pay US or Texas tax. See for example https://www.theguardian.com/technology/2013/may/20/apple-accused-tax-avoidance-billions-scheme
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Wednesday 24th August 2016 20:25 GMT Anonymous Coward
Re: Apparently, the US already does
But US companies don't avoid US tax, they only delay it. The US Treasury has every incentive to allow Apple and every other US company to pay as little tax to other countries as possible, because those taxes are a credit against US taxes.
When Apple brings that overseas money in, it is taxed at 39.4% (less whatever credits there are for overseas taxes already paid) which considering Apple has over $200 billion in cash overseas now, is a pretty hefty pile that has mostly been lightly taxed and will (eventually, when it is brought back someday) mean $60 to $70 billion for the US Treasury. The reason everyone leaves their money overseas now is because of Bush's stupidity for having a tax holiday on bringing money into the US, which offered some special limited time low rate (I think 12.5%?) so now everyone leaves all their money overseas figuring/hoping that someday another tax holiday will be declared. Or that rates will be lowered and they'll be permitted to bring that money in under the new lower rate (if rates are lowered I think the old money should get the full tax so as not to reward all the companies who did this)
There is no way for US companies to permanently avoid US taxes on any income no matter where earned and no matter what tax residency their subsidiaries may claim.
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Wednesday 24th August 2016 20:49 GMT katrinab
Re: Apparently, the US already does
Apple is borrowing money and securing it on their offshore bank deposits. The interest they pay on that borrowing is not much more than the interest they earn tax free offshore, and the interest paid is allowable against the US taxable profits.
That is one way to avoid bringing the money onshore.
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Wednesday 24th August 2016 21:38 GMT Doctor Syntax
Re: Apparently, the US already does
"It is their business if it is American companies that are avoiding tax."
From the Grauniad article you referenced:
"During its investigations, the subcommittee found that Apple considers three key subsidiaries, all based in Ireland, to have no tax jurisdiction at all."
Given that these are subsidiaries based in Ireland that makes them Irish. Ireland is not, as far as I'm aware, a US state. It is, however, part of the EU so they are European companies. The EU should get first dibs at looking into this.
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Thursday 25th August 2016 05:22 GMT katrinab
Re: Apparently, the US already does
In the EU, the rules are that the country where the economic activity takes place gets the first dibs on any tax due. In this case it is Texas/USA. If you earn money in the EU, you pay the same tax regardless of nationality.
The USA has different rules. There, the country/state where it is registered gets first dibs, which in this case is Ireland.
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Thursday 25th August 2016 05:48 GMT Anonymous Coward
@doctor syntax
It isn't that Apple considers those subsidiaries to have NO tax jurisdiction, they are based on Ireland and therefore have an Irish tax jurisdiction as far as US government is concerned. They are managed from the US and therefore have US jurisdiction as far as Ireland is concerned. Totally legal according to the laws of both countries, because they have different rules about how tax jurisdiction is determined.
But like I said, all this structure does is delay taxes, Apple carries a future liability for them on their books because they are owed to the IRS - just not payable until the money is brought into the US.
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Wednesday 24th August 2016 19:20 GMT Alan Mackenzie
> ".... unless the assumption is that The State (or at least one of them ,if not several) owns your goods, your work and your arse."
No, that's not the way it is. All people (and companies) based in a civilised land benefit massively from that civilisation: the infrastructure, the education, the policing, .....
The other side of that is that everybody is bound, both by duty and by law, to give a certain moderate part of their earnings and/or wealth to maintain the civilisation which sustains them. The fact that large international companies and many rich people evade this obligation is a large part of the reason why so many countries have a massive national debt and why so many people are so poor.
I hope the EU authorities are thorough in their investigations, and that if Ireland and Apple have been guilty of transgressing such piffling regulations as do exist, they will both be punished suitably. Some hope!
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Thursday 25th August 2016 12:32 GMT SImon Hobson
The other side of that is that everybody is bound, both by duty and by law, to give a certain moderate part of their earnings and/or wealth to maintain the civilisation which sustains them
And the key point is that the governments get to set the laws that determine what part of your wealth they are entitled to take. As long as you comply with those laws then you have discharged your duty<period>. Now if those laws have loopholes big enough to sail a supertanker through, then that's a problem with the laws, not with the people working within them.
Our own HMRC in UK are very fond of declaring what they think you should owe according to how they want the law to be. Apparently they quite often lose when people stand up to them and tell them to get their shovel out of the pile.*
* That's a reference to a historic judgement by Lord Clyde in 1929 :
"No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue"
https://en.wikipedia.org/wiki/James_Avon_Clyde,_Lord_Clyde
Key is the basic principle that tax avoidance (ie arranging your affairs, within the constraints of the law, so as to minimise your tax) is completely legal. There is no legal or moral issue with avoiding as much tax as you are allowed to.
Tax avoidance (not paying that tax which you are legally required to pay) is a different matter.
Unfortunately, much of the press is illiterate and incapable of understanding the distinction, and "the masses" lap up the accusations that "X isn't paying their tax" - when usually, X is in fact paying all the tax they are legally required to.
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Thursday 25th August 2016 18:35 GMT John Brown (no body)
"paying all the tax they are legally required t"
The point of this investigation is to see if the Irish tax laws are in fact being implemented in a fair and proper way or, possibly, may themselves be in breach of EU law. As per the article, it's been posited that certain companies, Apple being the most prominent, have been offered lower tax rates to locate in Ireland compared to other companies, in particular home grown companies., ie a "sweetheart deal" If this is proven, then the next step (or maybe that's part of the current investigation) will be to find out if Apple "negotiated" that deal in the face of said laws.
TL;DR - Are Apple, IBM, etc paying the same or a lower rate of corporation tax as every other company in Ireland.
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Wednesday 24th August 2016 19:44 GMT Anonymous Coward
The way I read it, the EC is piffling with inter-EU incentives. The US is chasing USian companies who seek shelter in foreign lands. For once, my vote is with Uncle Sam.
Mine isn't, and hasn't been for a long time. If the US wants to do something outside the US it has to follow the same protocols as everyone else, and not resort to the sort of blackmail they usually get up to.
In addition - I'd like to see the reaction if the EU asked access to the US tax havens (Delaware, Nevada etc). Not that anyone sane would park money there as their federal laws pretty much guarantee an open door for all government agencies (which, by the way, suggests the whole Mossack Fonsecca affair was US driven to harm their foreign competition as suspiciously few Americans featured in that famed list).
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Wednesday 24th August 2016 17:28 GMT Anonymous Coward
The Intentional Revenue Scum
Are probably fed up with 30++ years of Ireland.gov.ie giving HUGE (and I mean, H-U-G-E) tax abatements & or $0 bills to USA registered companies, the IRS is just hopping on the bus hoping for some free money. Money no doubt they'll claim all the credit for hunting companies to the ends of the Earth when they should be taxing Ireland's goods inbound to the USA in retaliation.
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Wednesday 24th August 2016 17:28 GMT Dan 55
"This shift in approach appears to expand the role of the [competition directorate] beyond enforcement of competition and state aid law . . . into that of a supranational tax authority that reviews member state” decisions on corporate tax, it says.
They're a bit slow on the uptake, the PIGS have had their budgets reviewed very carefully for years now and can be told to go back and do it again bettwer. The same goes for the other countries including the UK but they seem to have more leeway. It's called the Stability and Growth Pact.
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Wednesday 24th August 2016 17:38 GMT Dave 15
Yanks beating the world up again
But what do you expect?
They spend more on their military than the whole of the rest of the world so they think they can tell everyone what to do because no one can argue back.
It just amazes me when they fine British companies for breaking American rules... just the way we can't
But then, 'no taxation without representation' is all well and good but work over there, get taxed and find you can't even vote for the local council...
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Wednesday 24th August 2016 22:09 GMT Anonymous Coward
Re: Yanks beating the world up again
Hit the nail on the head. Every presidential election since 1968 has utilized the bait and switch to erode voter turnout, riding the enthusiasm and momentum of the populist candidates to the conventions, then swapping them out for centrists at the last minute to appease the donors. The disenfranchised voters stay home and the centrists use fear to entice voters to their side.
Some people might label this kind of fear-based control as "terrorism". Ergo, if you stay home and don't vote third party, then the terrorists definitely win.
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Thursday 25th August 2016 10:08 GMT phuzz
Re: Yanks beating the world up again
"They spend more on their military than the whole of the rest of the world"
They still spend more than any other country, but it's dipped a bit in recent years, so they're no longer spending more than the rest of the world put together.
Now they just spend more than the next seven biggest military budgets put together.
I suppose from a US point of view, every penny they spend on their military is a penny that's not being spent of killing or imprisoning it's own citizens, so a net gain?
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Wednesday 24th August 2016 21:53 GMT Doctor Syntax
It seems fairly common for tax authorities to forget that there are multiple countries in the world, each setting their own tax rates. Entity with an option to trade in different countries are essentially buyers in a competitive market. HMG found itself in competition with France in regard to duties on alcohol and tobacco for private purchasers. The US is obviously in competition with other countries for corporation taxes. In both cases we have authorities charging more than the market rate and bleating about it being so unfair when they have no takers.
This is not to say that the Apple situation is right but this is business which they have chosen to take to Ireland because of the market in taxation rates. If, above and beyond that, they're taking the piss then it's a matter for the EU, not the US and the EU are indeed looking at the situation.
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Wednesday 24th August 2016 22:44 GMT GrumpyKiwi
EU Irony
Complaints about "Illegal State Aid" from the EU - home of the worst aspects of state aid in the western world. How's those farm subsidies going. The ones that make EU citizens pay more for food because of higher minimum prices, more taxes to pay for wasteful/uneconomic farming practices, more taxes for state aid to other parts of the world that can't export their food to the EU and more taxes to pay for the EU to administer it.
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Thursday 25th August 2016 06:59 GMT GcdJ
Apple has a get out of jail free card!!!
To some extent the discussion re Apple pre 2014 is academic.
When Apple was discussing the setting up of its European base in Ireland and the tax structure that it wanted way-back-when, it had the fortitude to ask the Irish government to confirm that the tax structure was fully legal. This lead to the Irish government providing a written legal assurance to Apple that it was legal - and to confirm that the letter was worth more than the paper it was written on, the letter included a full indemnity by the Irish government. So if, at any point in the future, the tax structure was found to be illegal and penalties/back tax was to be paid then the Irish government would pay the bills on behalf of Apple.
Suddenly it makes sense why Irish government is being so slow assisting the EC. It also means it is right for the US to be concerned as the EC may choose restitution that helps to protect the Irish government.