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"Double Irish" Tax Loophole Used By US Companies To Be Closed
An anonymous reader writes: The Irish Finance Minister announced on Tuesday that Ireland will no longer allow companies to register in Ireland unless the companies are also tax resident. This will effectively close off the corporate tax avoidance scheme known as the "Double Irish" used by the likes of Google, Apple, and Facebook to route their earnings through their Irish holdings in order to garner an effective tax rate of, as in Google FY2013, 0.16%. Ireland's new policy will take effect in 2015 for new companies. "For existing companies, there will be provision for a transition period until the end of 2020."
> "For existing companies, there will be provision for a transition period until the end of 2020
Why? Isn't that just leaving the loophole open but closing?
Of course they're giving a 6-year transition period. It was the most they could get away with, after the pressure from other countries to either do something or they would unilaterally close these loopholes a lot quicker.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
To a new tax haven we go!
*whistles*
Why wouldn't people just use the system of "where your customers pay you" for any multinational company to determine "where to tax is owed"? Much simpler and fairer between different nations.
Within that time frame another country will step forward to fill the need, don't worry corporate revenues won't decline :-)
You know, like how IKEA is organized? Google could set itself up as a charity dedicated to the preservation of web sites.
Mostly random stuff.
Of course give them until 2020. They can all squeeze a few hundred billion in that time.
You wonder why US economy suffers? It is because of schemes like this to save a buck and starve a worker/citizen/parent/homeowner/mentor.
Come on....... Which avenue will they hit for the next tax evasion scheme?
At least that money could go back to companies for new growth, now it will be taken and flushed down the toilet.
When a politician's promises something that is not even in his next term of office then he is basically saying that they aren't doing it. In 2020 (assuming their hand isn't forced before then) they will grant "extensions' and "waivers" and magical beans that will allow this practice to carry on.
This could easily be implemented in 2015 or at most 2016. Taxes change all the time and often by huge amounts so drastically changing this wildly unfair situation would be nothing out of the ordinary.
But I will make a prediction. The EU, or Britain, or the US will simply wave a wand and end this practice. Too much revenue is being lost. These companies are clearly generating vast profits domestically in many countries and somehow not paying taxes on those revenues. Not only is this not fair from a tax owed perspective but it is unfair competition to those local companies that pay those massive taxes and can't then use that money R&D, massive marketing, or simply attracting new investors to expand the company. So for any country to allow this continue is to basically throw faeces into the faces of their own industries.
"Tax evasion" is a crime. "Tax avoidance" is what is being done here.
--Jim (me)
Google seems to be dedicated to the preservation of a lot more of my personal details than that.
Bono hails Ireland's controversial business tax laws: 'Tax competitiveness has brought the only prosperity we've known' Because of its generous tax allowances, he added, Ireland has reaped the benefits of “more hospitals and firemen and teachers because of [the tax] policies”.
He is arguing that Ireland's public sector workers will be in jeopardy due to this.
0.16%. That much, huh?
> "For existing companies, there will be provision for a transition period until the end of 2020
Why? Isn't that just leaving the loophole open but closing?
Also known in consumer circles as creating a sense of urgency. I mean, you have a few short months in order to setup your new company such that you can take advantage of the double Irish, or you'll be playing against an unlevel field for the next 5 years.
Talk about land rush.
Make sure everyone's vote counts: Verified Voting
back taxes!
just imagine by 2020 all large corporations just ships their tax-planning units out of ireland its tens of thousands jobs possible re-collapse of economy due such massive amounts of cash flowing out of country and guess what IT's going to happen becouse they announced beforehand deadlines and just didnt announce that next morning we have blocked tax evasion... :D
theres literally tax heavens within eu like UK and their merry trusts+direct tax agreements with multiple countries across the globe...
You've been told that "the enemy" is bad because they're doing "tax evasion" by the corporate overlords who bought the politicians. Nothing more.
Let's say childcare for X kids in this city costs $1000.
If mom works, perhaps in a childcare center, she pays FICA and income tax of $250 in order to bring home $1000. She spends the $1000 on childcare and is left with $0. Her net gain for month is that her kids were taken care of. To get that benefit, she did $1,250 worth of work.
Suppose mom stays home and does the $1,000 worth of childcare herself. She doesn't get a check or write a check, and pays no taxes. Her net benefit at the end of the month is that her kids were taken care of. To get that benefit, she did $1,000 worth of work.
Mom saves $250 in taxes by "working for her family " instead of doing the exact same work in a childcare center. There's a big tax difference based on which organizations are involved, even though the work done and the benefit received are identical.
The money isn't flowing into Ireland as it is though. It's flowing THROUGH Ireland and straight into corporate warchests.
Where do Google's ad companies pay it?
If you write a law that makes sense, and I have millions of dollars worth of incentive, I'm sure I can find a loophole to exploit.
I once won a gold medal for meddling in politics!
You should too.
But isn't it odd how this happens right after Apple and others say they plan on enabling user encryption that has no back doors? Sounds like a loose/loose scenario. Get back on board or no tax extention for you, baby!
You know, it's like how when more than half of the population uses a word wrong, the meaning changes.
Unity? Screw that: XFCE. Slashdot Beta? Screw that: SoylentNews. Australis? Screw that: Pale Moon. UX developers DIAF
Seems like the US government went a redid their calculations and realized they were on the low side of the laffer curve. Time to ramp it up again!
Exactly, the whole point of that exercise is to determine if going to work is worth it, not paying less taxes. If, as you said, she end up poring her whole income in daycare there's nothing to gain (monetarily speaking that is, some may prefer to work). That is why I said bad example.
Let me rephrase it for you. What I was pointing out is that she's doing the same job either way, involving a third party (the daycare center) means she has to do 25% more work to get the same benefit, due to the taxes. So let's look at a lightly different pair of scenarios:
My wife spent ten years working at day care centers. (This is actually true of my real wife).
In May, we had a baby. (Also actually true).
Suppose she took our baby with her to work. What income does she have from taking care of our baby at work, and therefore what tax should she pay?
That depends. We had two options (both real options we actually have looked at):
The day care simply allows her to bring her kid in to work., as she could have done at one daycare,
She'd get paid $X less than if she were caring for another paying customer.
A friend's home daycare offered that option.
Being allowed to bring your kid to work is not income reportable to the IRS. We'd pay taxes on what her income would have been, minus the $X she's not paid because she's watching her own kid.
At another daycare, she'd need to register our kid as client of the daycare, and pay the monthly fee.
At the same time, the daycare would be paying her full wages for being there.
So the daycare gives her some money, and she gives the money back to the daycare.
A chain daycare offered that option.
In that case, the full wages are taxable, both for FICA and income tax - including the money she gave back to the daycare.
Therefore, she brings home a smaller paycheck because she has to pay taxes she wouldn't have to pay in the other (very similar) scenario.
In those two options, there is no difference in what my wife DOES. She goes to work, and brings our kid along.
The ONLY difference is that it's either taxable or not, depending on whether or not, on paper, the daycare pays the money and takes it back.
We see here that moving money from one person or company to another, then giving it back, can drastically affect the taxes due, even though the money ends up in the same place either way. Both options are legal, and I don't see any moral problems with either choice. Given the two perfectly acceptable choices, we'd be smart to choose option #1, in which no taxes are due.
That's what companies have done. Congress has written thousands of pages of complex laws saying that you DO have to pay taxes if you pay this person directly, but you don't have to pay taxes if you go through a third party. Companies look at the rules and choose the one that makes the most sense financially.
Yes, sometimes the effects are kind of "unfair", but that's because when you have thousands of pages of rules and regulations, things get complicated and people who can figure out the complicated rules are going to do better than people who can't figure out all of the new rules every year. If you want laws that benefit everyone equally, write laws that everyone can understand. Don't get mad at the people who do understand the law and make the most reasonable choice under that complex law.
That's not completely true. By working for $1,250, she is also working towards Social Security eligibility, unless she already has that. You need, IIRC, forty quarters of work paying FICA taxes to qualify, and somebody who's not normally in the workforce might have trouble making that over time.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
After reading the comments here, it's surprising how few people seem to understand that taxes are just theft. Yeah yeah yeah, I know the government provides public "services", but that's all just a pretext to justify stealing from people. It's pathetic when people think these programs are about helping them.
If the mafia went from business to business extorting money from people, and one of the business people found a way out of it via a technicality. That is not a bad thing. And neither is it getting out from under the thumb of government criminals either. It amazes me how easy it is to see all the evil and crap done by the government, yet people still want to give them money. It's like there is some kind of disconnect.
If a slave escaped from the plantation, would people go off and say that is evil because the master will just make the other slaves work harder ... yet this is the exact kind of logic people use when they see others escape taxes. The gov will take more from us! Less money for our programs! The Mexican mafia has charity programs too, do you think they're doing it just because they are nice guys?
The state is already taking the max they can, and giving back the least they can get away with to justify themselves. People escaping them will not make things worse for us, but instead create more opportunity out there for us to escape too as well.
You are putting words into their mouths just as you did with me. How pathetic.
I really do not get why you want to bring childish "conservative" (in fake label only) student political bullshit to a tech site like this. How about being honest instead of using pathetic little dirty tricks from the mass debating playbook?
Tell me, will the owner of companies shut down and do no work because they're having to pay taxes now? Because you're saying that they'd prefer to be penniless than earning a shitload but pay more taxes. Talk about cutting off your nose to spite your face!
EVERY EMPLOYER employs someone because they make more goods than the salary pays out, and the employer gets the difference. NOT employing people means NO COMPANY therefore NO MONEY FOR THE EMPLOYER.
Moronic little shithead pissing about screaming about the sky would "EXPLODE I TELLS YA!!!!" if anyone rich had to pay a dime more.
Fuck off.
Donald Trump gets to meet the President and the Secretaries because he's rich. I don't because I have no power to get access to them.
The police protect the rich people more than the poor ones because the rich people know the Chief Commisioner and a good lawyer, the poor person doesn't.
The army protects the land, most of which is owned by rich people.
The laws protect contracts, written by the rich, protects property, mostly owned by the rich, jails the poor before the rich.
And on education, the rich man owns (part of) (many) companies, and educate workers are more profitable, so the rich man pays for his own education, but benefits from the education of everyone who works for him, whereas they only get benefit at being *more than averagely* educated.
Lastly, healthcare. Rich people don't want to pay for poor people and in the USA nobody wants to pay for anyone else's health. So public healthcare is run down and corners cut for profit. Hence nurses catch Ebola and the rich man is now at risk from a fellow countryman he did not want to pay to keep healthy. So they should have been paying for health SO AS TO KEEP EVERYONE ELSE healthy, and no risk to their health.
The rich should pay more as a percent of their income BECAUSE THEY GET MORE BENEFIT from it, exponentially.
Why are you turning down money? For a 50 hour week, 45 week year, that's nearly 7 grand you're throwing away.
Imagine the outcry if your taxes went up to the same tune! YOU'D BE LIVID.
Yet you're happy losing 7 grand because you'd have to work for it!!! LOL!
$3 is $7000 to spend, but because someone else would get money too, you'd prefer to have you ALL be worse off!
No wonder the USA is fucked.
Childish is clearly not the same as good behaviour by children, and mud slinging does sum up your behaviour on previous threads very well. Also "mass debate" is somewhat of an insulting bad pun connecting personal ego massaging in threads like this and onanism. I was not suggesting you were using proper debate methods at all - I was calling you a complete and utter wanker.
Besides, your premise that the Irish economy is a house of cards built on this loophole is utterly ridiculous and is not supported by the people you are name dropping. I really do not see what you get out of being so misleading other than attention.
You didn't answer. What is your reasoning behind suggesting that their entire economy will collapse if this loophole will close?
You did write "Closing the loophole would likely collapse its economy" after all.
Insulting me for inconveniently remembering that doesn't make it go away and is rather pathetic I must say.