Ireland signs up for plan to make Big Tech pay 15 per cent tax everywhere
- Reference: 1633676293
- News link: https://www.theregister.co.uk/2021/10/08/ireland_signs_oecd_digital_tax_plan/
- Source link:
Irish law has allowed the likes of Apple, Google, Amazon, Microsoft, and others to use legal-but cynical arrangements – some known as the "Double Irish Dutch Sandwich" – to considerably reduce their tax bills. The country did so as part of an investment attraction strategy, and it worked – Ireland ended up with big offices and lots of jobs.
Other nations around the world did not like this one bit, as the gourmet accounting practices required to assemble the sandwich saw what little tax was paid end up in jurisdictions other than where consumers actually consume Big Tech's products. Governments therefore felt they were missing out on money.
[1]
A multi-year effort by the OECD sought to stop such practices, through the [2]Base Erosion and Profit Shifting Project [PDF]. The core goal of that Project is to create a global minimum effective corporation tax rate of 15 per cent for multinationals with revenues in excess of €750 million.
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As of August 2021, 140 nations had signed up to that plan. Yesterday, Ireland did too.
[5]G20 finance ministers agree plan to make multinationals pay their 'fair share' of tax
[6]€13bn wings its way back to Apple after Euro court rules Irish tax deal wasn't 'state aid'
[7]Amazon UK business swelled by 50%+ in 2020, and taxes soared. Lol, no, it means those paid by its staff
Ireland's Minister for Finance Paschal Donohoe yesterday [8]hailed the change as "an important step towards resolving the issues brought about by the digitalisation of the economy which resulted in the international tax framework struggling to accommodate the evolving business models of large multinational enterprises".
He added that "56 Irish multinationals employing approximately 100,000 people, and 1500 foreign-owned MNEs based in Ireland employing approximately 400,000 people" will be required to cough up at least 15 per cent as a result of Ireland agreeing to the OECD plan.
And that plan will advance today, at a meeting to address remaining issues and offer a detailed implementation plan.
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The plan is scheduled for completion in October and it's hoped nations can go after their 15 per cent tax from 2023.
In theory that should mean governments have more cash to serve us all – or at least pay off the colossal debts incurred keeping economies afloat during COVID while Big Tech’s profits soared. ®
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[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YWAW7zChwsfOkwq37ai82wAAAII&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://www.oecd.org/tax/beps/brochure-addressing-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-july-2021.pdf
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YWAW7zChwsfOkwq37ai82wAAAII&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YWAW7zChwsfOkwq37ai82wAAAII&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2021/07/12/g20_global_tax_plan/
[6] https://www.theregister.com/2020/07/15/apple_13bn_irish_tax_ruling_overturned/
[7] https://www.theregister.com/2021/09/17/amazon_results/
[8] https://www.gov.ie/en/press-release/59812-ireland-joins-oecd-international-tax-agreement/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YWAW7zChwsfOkwq37ai82wAAAII&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://whitepapers.theregister.com/
Re: €750,000,000
If they did, I doubt the companies would be independant, they would most likely be subsidiaries and therefor the fiscal situation should remain the same.
There is one loophole I would really like to see closed : the bullshit one where one subsidiary holds all the patents and licenses them out to the others for, what a coincidence, exactly the amount of benefits they happen to have made in the quarter.
If you're all part of the mothership, then those licenses should not be tax-deductible.
Re: €750,000,000
I think that UK was totally hoping to be the lowest corporate tax country in Europe that would be raking in taxes by hosting multinational corporations operating all over the EU. They just didn't see Ireland coming.
Re: €750,000,000
Ireland now has a better USP for "big tech" than 3% less tax.
And the decisions that led to Ireland being the only anglophone nation in the EU were not taken by the Irish government.
I think it's less about seeing Ireland coming and more about spectacular own-goals.
Re: €750,000,000
The Maltese get very upset when people claim that Ireland is the only remaining anglophone EU member. Never mind that for most ex-eastern bloc countries, like Estonia, Czech Republic, etc. English is their main business language and they often speak it better than some native English or Irish speakers do.
Re: €750,000,000
That's not much of a USP, The multinational all serve markets that are not anglophone, so they need the ability to operate in different languages, especially in the legal areas. Besides, English is the universal second language within the potential employees for the multinationals. Do you think Google has a language problem operating in Denmark?
Re: €750,000,000
Ireland has long had tax arrangements that were effectively illegal under EU law. However there are other countries with illegal arrangements in other areas, for example illegal state subsidies to ostensibly private companies. So the EU don't actually penalize one country A for breaking the tax rules, because if they did then country A would kick off about country B breaking the state subsidy rules and they would have to penalize them. And then country B would kick off about country C and so on.
The EU has all sorts of laws and rules that are broken daily but the system works on the authorities turning a blind eye. As long as governments promise to abide by the rules then that's enough, just so long as they don't go too far.
All of the above makes a mockery of the EU insisting that the UK maintains a "level playing field" with the EU in order to facilitate fair trading between the UK and the bloc. This would make sense if there actually was a level playing field within europe. For example it has long been the case that the French and Spanish goverments subsidize local companies to bid for work in other EU nations, it's against the rules but the EU turns a blind eye.
It all sounds very well except for the uncomfortable feeling that if a corporation has any US connection, even so much as e staff member on a flight over US territory, the US will claim all of the 15%
15% today
Then 18, then 25, sooner or later someone will break ranks to win a big HQ deal. These grand political gestures never seem to last when faced with economic realities.
€750,000,000
So does that mean a flurry of new sub- companies being registered by the giants, so that the individual rrvenues will fall below the threshhold?
Good cops have to be able to think like a criminal in order to fight them, tax legislators need to be able to think like corporate lawyers and bean counters.
Though, a good proportion of politicians are or have been corpoate laywers or beancounters, perhaps the loopholes are deliberate???