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corporate tax avoidance and why do we shoot ourselves in the foot


dancl2000

Well-known member
Joined
Sep 17, 2011
Messages
517
good documentary here on how corporations pay little or no taxes on their profits
The Tax Free Tour (VPRO, Marije Meerman) - YouTube
Double Irish arrangement - Wikipedia, the free encyclopedia

i know we're all used to the we need to protect our low corporation tax rate because it brings companies in and those companies employ people. in reality we've made ourselves part of global tax avoidance strategies, companies dont need to employ anyone to take advantage of ireland as a tax haven, and the exchequer makes about eur4bn in corporation tax a year (about 10% of total tax receipts).

So these companies arent paying 12.5% corporation tax in ireland, we're neither the first nor last step in corporate tax avoidance. Profits move from where they are filtered through fictitious cost structures which brings the money through ireland briefly before it is further filtered further fictitious cost structures before finally finishing in some jurisdiction with 0% tax such as virgin islands.

The evidence is that there is are estimated trillions in multinational cash flows engaged in tax avoidance schemes. How much of it comes through ireland I dont know, but it's clear that the amount is much more than the eur32bn profits which would generate eur4bn of corporation tax.

So why do people defend our participation in this global tax avoidance ? Why dont we make these companies pay a fair contribution to society ?
 


Analyzer

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Feb 14, 2011
Messages
46,187
sounds like a right load of bonox....
 

A view from England

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Joined
Apr 14, 2010
Messages
2,077
good documentary here on how corporations pay little or no taxes on their profits
The Tax Free Tour (VPRO, Marije Meerman) - YouTube
Double Irish arrangement - Wikipedia, the free encyclopedia

i know we're all used to the we need to protect our low corporation tax rate because it brings companies in and those companies employ people. in reality we've made ourselves part of global tax avoidance strategies, companies dont need to employ anyone to take advantage of ireland as a tax haven, and the exchequer makes about eur4bn in corporation tax a year (about 10% of total tax receipts).

So these companies arent paying 12.5% corporation tax in ireland, we're neither the first nor last step in corporate tax avoidance. Profits move from where they are filtered through fictitious cost structures which brings the money through ireland briefly before it is further filtered further fictitious cost structures before finally finishing in some jurisdiction with 0% tax such as virgin islands.

The evidence is that there is are estimated trillions in multinational cash flows engaged in tax avoidance schemes. How much of it comes through ireland I dont know, but it's clear that the amount is much more than the eur32bn profits which would generate eur4bn of corporation tax.

So why do people defend our participation in this global tax avoidance ? Why dont we make these companies pay a fair contribution to society ?



Don't worry about it. They are all heading to the UK anyway.
Firms rush to relocate in low-tax Britain - Telegraph
 

Analyzer

Well-known member
Joined
Feb 14, 2011
Messages
46,187
Fly to Malta.

You only pay taxes.
 

Tea Party Patriot

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Oct 31, 2010
Messages
11,557

Howya

Well-known member
Joined
Feb 29, 2012
Messages
1,690
good documentary here on how corporations pay little or no taxes on their profits
The Tax Free Tour (VPRO, Marije Meerman) - YouTube
Double Irish arrangement - Wikipedia, the free encyclopedia

i know we're all used to the we need to protect our low corporation tax rate because it brings companies in and those companies employ people. in reality we've made ourselves part of global tax avoidance strategies, companies dont need to employ anyone to take advantage of ireland as a tax haven, and the exchequer makes about eur4bn in corporation tax a year (about 10% of total tax receipts).

So these companies arent paying 12.5% corporation tax in ireland, we're neither the first nor last step in corporate tax avoidance. Profits move from where they are filtered through fictitious cost structures which brings the money through ireland briefly before it is further filtered further fictitious cost structures before finally finishing in some jurisdiction with 0% tax such as virgin islands.

The evidence is that there is are estimated trillions in multinational cash flows engaged in tax avoidance schemes. How much of it comes through ireland I dont know, but it's clear that the amount is much more than the eur32bn profits which would generate eur4bn of corporation tax.

So why do people defend our participation in this global tax avoidance ? Why dont we make these companies pay a fair contribution to society ?
I think you will find that companies do need to employ people in order to establish a presence in Ireland so that the company can avail of Irish tax laws.
 

dancl2000

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Joined
Sep 17, 2011
Messages
517
I think you will find that companies do need to employ people in order to establish a presence in Ireland so that the company can avail of Irish tax laws.
what are you basing that on ? it isnt true, the companies act does not requre a company to have employees. Also the directors dont have to be resident or citizens of ireland
 

Spanner Island

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Joined
Feb 22, 2011
Messages
24,199
There shouldn't be any corporate tax imo...

Tax people and their income and use VAT if you have to...

But that should be it...

All other taxes should be abolished...
 

Niall996

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Joined
Dec 5, 2011
Messages
12,126
For shareholders (and that includes pension trusts etc upon whom many depend on for their future income) it is obligatory that a company reduces it's tax liability to the minimum legal level. Anything short of that is a failure of financial management. You cant blame the companies for the international trade agreements and export/import laws established by our genius politicians worldwide.
 

NYCKY

Moderator
Joined
Apr 17, 2010
Messages
13,112
Ronald Reagan was right when said companies don't pay taxes, people do.

""Some say shift the tax burden to business and industry, but business doesn't pay taxes. Oh, don't get the wrong idea. Business is being taxed, so much so that we're being priced out of the world market. But business must pass its costs of operations--and that includes taxes--on to the customer in the price of the product. Only people pay taxes, all the taxes. Government just uses businesses in a kind of sneaky way to help collect the taxes. They're hidden in the price....."

If you increase corporation tax, the shareholders/owners won't eat the reduced the profit they will just pass it on to the consumer.
 

dancl2000

Well-known member
Joined
Sep 17, 2011
Messages
517
There shouldn't be any corporate tax imo...

Tax people and their income and use VAT if you have to...

But that should be it...

All other taxes should be abolished...
not sure that's a solution either, the current situation where corporation tax is widely circumvented results in situations where large corporatons have trillions in corporate wealth on deposit in tax havens. I dont see why that's desirable or why we should let that situation continue

I'd favour some measures such as
- define a reasonable amount for a company to keep in cash reserve based on it's size, business etc
- any cash reserves in excess of that amount has to be paid as dividends, it cant be left on deposit (and therefore that money becomes personal income for shareholders and taxed as such)
- establish a tax regime where any money paid to shell companies in tax havens (or anything else resembling tax avoidance) is considered profits rather than a company expense and taxed as such
 

Andycap

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Joined
Feb 22, 2012
Messages
1,277
what are you basing that on ? it isnt true, the companies act does not requre a company to have employees. Also the directors dont have to be resident or citizens of ireland
You ave to satisfy certain substance requirements in order to qualify. Brass plates alone do not work, u need a paddy on the board, you need to hold board meetings here and you need to perform some sort of function here (finance, admin, or hr or something)
 

seabhcan

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Joined
Sep 3, 2007
Messages
14,327
There shouldn't be any corporate tax imo...
I partly agree - but because its always going to be too hard to define what 'profit' is. I think the solution for Ireland would be a revenue tax for large companies - which would be a lot simpler to calculate.

It could be as simple as: pay the greater of a) 12.5% profit tax, or 1% revenue tax.

Such a change would only effect large tax-dodging multinationals. For Google, instead of paying 0.1% of revenue (which supposes that their profit margin is less than 1%, hard to believe) they pay 1%, or about €300m extra on €47 billion of sales in Ireland.

At a profit margin of 8%, a 1% revenue tax and a 12.5% profit tax are equal.
 
Last edited:

dancl2000

Well-known member
Joined
Sep 17, 2011
Messages
517
You ave to satisfy certain substance requirements in order to qualify. Brass plates alone do not work, u need a paddy on the board, you need to hold board meetings here and you need to perform some sort of function here (finance, admin, or hr or something)
Ok originally you were saying a company has to have employees which isnt the case.

Now you seem to be saying there are rules about what is and isnt a legitimate company. For sure, not the ones you mention but yeah a company has to be legitimate. However that's not a barrier, there are service companies who are willing to stand as directors, provide everything what's necessary to make the company legitimate. all you have to do is move money through the bank account
Companies

The documentary linked to in the OP describes how this works, basically if you went through the CRO database you'd find all the shell companies giving the same address, which would be some office space managed by intertrust or a similar company
 

YouKnowWhatIMeanLike

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Joined
Apr 13, 2011
Messages
7,225
Ok originally you were saying a company has to have employees which isnt the case.

Now you seem to be saying there are rules about what is and isnt a legitimate company. For sure, not the ones you mention but yeah a company has to be legitimate. However that's not a barrier, there are service companies who are willing to stand as directors, provide everything what's necessary to make the company legitimate. all you have to do is move money through the bank account
Companies

The documentary linked to in the OP describes how this works, basically if you went through the CRO database you'd find all the shell companies giving the same address, which would be some office space managed by intertrust or a similar company
is that Intertrust office in Dublin itself a subsidiary of the Swiss Intertrust Group?
 

Spanner Island

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Joined
Feb 22, 2011
Messages
24,199
I partly agree - but because its always going to be too hard to define what 'profit' is. I think the solution for Ireland would be a revenue tax for large companies - which would be a lot simpler to calculate.

It could be as simple as: pay the greater of a) 12.5% profit tax, or 1% revenue tax.

Such a change would only effect large tax-dodging multinationals. For Google, instead of paying 0.1% of revenue (which supposes that their profit margin is less than 1%, hard to believe) they pay 1%, or about €300m extra on €47 billion of sales in Ireland.

At a profit margin of 8%, a 1% revenue tax and a 12.5% profit tax are equal.
Yeah... I see what you're saying and it's not a bad idea etc. but I just think tax should/could be simplified further...

The way I look at it is that wealth or money or whatever always ends up in someone's possession/bank account...

There are massive amounts of wealth/money on company balance sheets etc. but eventually all that money moves around either to shareholders or to employees or to the owners or to other companies which are acquired etc.

There's very little money that just sits in company accounts doing absolutely nothing...

So why not simply abolish corporate taxes and all other taxes (apart from income and VAT), and tax everyone on their global income and get rid of all the bullsh!t loopholes and tax evasion vehicles and all the rest of the crap that's out there...?

Make the entire thing completely transparent and screw anyone who cheats with punitive consequences...

This is what I'd prefer to see, although I am aware there are many vested interests in whose interests the current overly complex system serves...

Regardless, I still favour a system with just income tax and VAT and have multiple layers of each with the main aim being to reduce the tax burden on everyone as much as possible...
 

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