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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."
I will mostly agree on you point. It ignores some of the difficulties of transfer pricing but it is the right principle. The double Irish worked because the US is the only country that does not charge taxes on where the profit is earned, but charges US taxes no matter where it is earned.
Great link here. It's a shell game complicated enough to make a mollusk blush.
For legitimate business this is true. This was not for legitimate business.
Each country has it's own tax laws as to when and what revenue they will tax. Because each country makes their own they don't dovetail like you think they should. The US has some crazy rules and Ireland had a gap. The results was that some income from intangible property (patents and trademarks mostly) fell into a gap between Ireland and US tax laws so it would never be taxed.
They're not parking their billions there. They're funnelling money through Irish registered companies which are domiciled in places like the Cayman islands. Ireland might make some money but it doesn't get much out of it. Ireland is changing the rules so that Irish registered companies must be domiciled in Ireland and therefore liable to Irish corporate taxes.