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That Apple tax verdict… August 30, 2016

Posted by WorldbyStorm in Uncategorized.
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What telling contortions we are seeing. Already, as noted here today by IEL, the LP is rowing in with any government appeal.

And here’s the IT editorial arguing that:

The Government will argue – and there is a basis for this – that rule changes in recent years have closed off some of the tax arrangements central to the Apple case.

However the damning verdict by the European Commission on how tax was applied in the Apple case left it with little option but to lodge an appeal, given the central importance of foreign direct investment to our economy. As Apple will also appeal, a lengthy legal process is inevitable.

There’s more:

Big US companies have used the interplay of European and US tax laws to pay very little tax on profits earned in European markets. Ireland’s tax system is only a part of this and, in fact, much of it is based on the peculiarities of US tax law.

Hmmm… it’s not me Ireland, it’s you US – eh?

And yet the IT has to admit:

There is no doubt that this needs to change and that the amounts paid by many of these companies has been indefensibly low. It remains to be seen, however, if the European courts support the Commission’s drive to address this problem via state aid rules.

Fintan O’Toole has a markedly better line here.

Not least the following:

At the very least, we should not be railroaded into lodging an appeal against the ruling that will define us, for the rest of the world, as the tax-avoider’s crazy little sidekick. We have some big thinking to do – and the cabinet’s job on Wednesday morning is to open up that process of deliberation, not to insist that any democratic decision that Apple does not like is unthinkable.

Comments»

1. CMK - August 30, 2016

O’Toole’s paragraph proves, for the umpteenth time, that he just does not get what has been happening here since 2008. ‘We have some big thinking to do..’, the ‘we’ in that sentence is Noonan, Kenny and Dept. of Finance senior civil servants, we know exactly what they’ll do.

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WorldbyStorm - August 30, 2016

You’re absolutely right that they’ll do nothing (and that FOT perhaps doestn’t get it), and yet I can’t help but feel it’s no harm putting it up to them to take a different path. After all, if the decisions are made by them then it’s no harm to underline that point fully. It is on them. End of story. As SoS says, the old IA will have to tread very carefully, as SoS said earlier this is the bank guarantee of this government.

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Pól - September 1, 2016

This is absolutely the current government’s bank guarantee. Thankfully there are now sufficient (and mobilised, and considered) left voices in the Dáil to ensure that opposition to this particular ‘centrist’ consensus cannot go unreported.

It’s also good that the existence of those T.D . means the organised, established political representation of opposition to this measure is given its due, and redited with its stance by popular sentiment.

As for Fintan, I listened to The Irish Times politics podcast, nd he was very good, but, presented with the (very weak) multi-party line of FF’s James Lawless, he repeatedly fell back upon this ‘but does tht not mean there should be further discussion…’ line, often allowing Harry McGee to make a stronger, pithier critique; perhaps inhabiting the IT consenus for so long has taught O’Toole to frame his argument in such general, anodyne terms, but it really ought to be more robust.

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Pól - September 1, 2016

Another bitter element is the rationale often proferred regarding the 12.5% element, the ‘ah but sure we could have a higher rate like in France but France the companies they find ways of paying next-to-nothing so its effectively self-defeating raisng it so sure we’re better off as it is’.

As it has turned out, multi-nationals based, headquartered in Ireland tend not to pay even 12.5% in corporation tax. Why anyone may have genuinely believed that a rate of 33.33% could and would be circumvented, but one of 12.5% couldn’t and wouldn’t, is a mystery.

That argument essentially was that companies would think ‘we could actually pay much less tax than 12.5%, nevermind the nominal rate there, elsewhere, but seeing as you’ve offered us such a good deal up front, we’ll do the hounourable thing and pay our taxes. Up front.’

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2. sonofstan - August 30, 2016

Tomorrow’s cabinet meeting could be the last of this temporary little arrangement…. IA having a think.

Liked by 1 person

3. irishelectionliterature - August 30, 2016

I think we are now a lot closer to an election…..
If it was a billion or two it would be bad but 13 billion is massive and also we have been told by the EU we can use it on things other than paying the bankers debts.
Come the next day or two we’ll start seeing figures where if the Apple judgement was applied to Facebook, Google etc , what we should be owed in total. It will be an even more staggering figure.

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WorldbyStorm - August 30, 2016

Did they even see this coming?

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sonofstan - August 30, 2016

According to Leahy, one cabinet minister was genuinely shocked in his hearing by the amount. Hard to see why, if they expected something this big, they would be briefing ‘a few hundred million’.

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GW - August 31, 2016

Which goes to show how insular and ill-informed they are. This has been flagged up as coming down the road for several months. Big push on it from Germany. Hypocritical of course because Germany is used big time to avoid corporate taxes by, for example, Swiss firms.

But that doesn’t excuse the even more egregious Irish and Luxembourgian exemplars of corporate tax robbery.

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WorldbyStorm - August 31, 2016

Spot on GW. I’ll bet it is a case of them not wanting to see what the light speeding down the tunnel towards them actually was.

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irishelectionliterature - August 30, 2016

I think they saw it coming but assumed it wouldn’t be anywhere near 13 billion.
Can’t see (I can actually) Ross holding on as this is the type of thing he’d write a book about never mind a newspaper column.

Liked by 1 person

WorldbyStorm - August 31, 2016

This will certainly show how much the ‘independent’ aspect functions.

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dublinstreams - September 1, 2016

is it not the case that this tax should have been paid not entirely in Ireland or the US but in each European country products were bought in, so the 13 billion should be recouped all around Europe.

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Gewerkschaftler - September 1, 2016

True. But sssh!

Some CSU creature in the never-really-denazified Kingdom of Bavaria has weighed in support of Apple.

It won’t surprise you to learn that Apple’s German brass plaque company headquarters is located in Bavaria, well know for underfunding it’s Tax authorities.

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Gewerkschaftler - September 1, 2016

its tax

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4. gendjinn - August 31, 2016

EU spokesperson on NPR mentioned a one off special tax deal that Apple got from Ireland. There have been other examples in other countries (Fiat/Starbucks in Luxembourg/Netherlands).

But imagine if all the companies that laundered money through Ireland in the last 10 years paid 12.5% taxes to Ireland – would we have enough to just to DI instead of FDI?

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GW - August 31, 2016

That’s it in a nutshell Gendjinn!

Democratic Public Direct Investment – not Foreign (Multi-national) Direct Investment.

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5. GW - August 31, 2016

Glad to see this is getting some traction.

I asked my children the following last night.

“Which country in the world would go to court to prevent itself getting 3 grand per head to spend on hospitals, schools etc.?”

The answer came: “Err… somewhere in Africa.”

I had a certain amount of discussion to do – not just about the despicable action of the current RoI government, but also their assumptions about African countries.

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6. Tomboktu - August 31, 2016

The decision itself is not yet public. Does the government have a copy? If not, surely it should wait for the full ruling before deciding to appeal.

Liked by 1 person

WorldbyStorm - August 31, 2016

That’s an interesting point Tomboktu.

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Tomboktu - August 31, 2016

Eh, nerdy more than interesting🙂

The legal decision has to be ‘cleansed’ of confidential information before being made public.

Liked by 1 person

gendjinn - August 31, 2016

That they don’t need to see the ruling before being against it brings clarity to the FG govt.

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7. Paddy Healy - August 31, 2016

APPLE RULING:Professor Joseph Stiglitz (American Nobel Laureate in Economics) on RTE:MINISTER (Bruton) TALKING BOLDERDASH!
Full Comment http://wp.me/pKzXa-ua
TOMMY COOPER NOONAN STRIKES AGAIN!
“The Minister(Bruton) is talking bolderdash ! There is no reason why Ireland should not take the money and use it to relieve severe hardship”-Professor Stiglitz

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8. fergal - August 31, 2016

– 13 billion is close on half of what was taken out of the economy during the austerity years
– This is just one firm- are there any more apples out there? G***le, fa*****k etc
– This is roughly the equivalent of a worker paying 1 euro tax out of a 20,000 euros annual salary
– Countries that lost out on apple’s tax euros may have had to raise taxes on the great unwashed or cut back on services- it’s not just a case of being a lacky to the multinationals
– When it comes to the rich and powerful- it’s always the same rules can be bent, appeals can be made, people can be flexible etc but when it comes to screwing the rest of us- there’s no alternative
Sick of them all..

Liked by 1 person

CMK - September 1, 2016

One of the bitter elements of this, if you can cast your mind back to early to mid-2010 when the Troika’s arrival was imminent, lies with the argument insistently made at the time by every FF and GP minister that, to paraphrase, tax rises were inevitable because ‘only 50% of workers pay tax and 10% of workers pay 50% of income tax’. This was made in justification for the USC.

Then we have the revelation that something like 70% of trading companies here pay zero corporation tax and that less than 1% of companies pay over half of the corporation tax collected.

So, when you hear IBEC or ISME talk about ‘the taxpayer’ they are not talking about their members who, almost certainly, pay no tax.

You’re last point is spot on to the nth degree: ‘Sick of them all…..’

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9. Dr. X - September 1, 2016

Today’s editorial about the Apple thing in the New York Times talks about changing US tax law to make sure that they can’t evade/avoid taxation.

Obama has already proposed a mandatory 14 per cent tax on overseas profits of MNCs – that’s on current profits. This would then be followed by a 19 per cent (minimum) tax on all ‘profits moved offshore’.

These reforms, if implemented, would cancel at a stroke any advantages corporations like Apple enjoy from their current relationship with the Irish state. And it would also cancel, at a stroke, the entire raison d’etre behind decades of Irish corporate tax policy, and the developmental strategy that policy was meant to support.

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Dr. X - September 1, 2016
10. Paddy Healy - September 1, 2016

The real crisis for capitalist Ireland and its political representatives is that economic development/job creation through low or zero taxes on multinational companies is over. The Big powers have so decided. Standing still requires the replacement of exiting multi-nationals by new arrivals. Ireland hass virtually no say in the matter. Where does capitalist Ireland go from here?

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Gewerkschaftler - September 1, 2016

That’s a good point Paddy – they most of their eggs in that basket at the cost of local businesses for generations and now the basket is coming apart.

No contingency planning – nada. Just headless chickens to continue the poultry metaphor.

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Gewerkschaftler - September 1, 2016

put…

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CMK - September 1, 2016

‘CONTINGENCY PLANNING!!!’ jaysus, GW, I’m shocked that you’ve even think that the Irish establishment would engage in anything of the sort.🙂

One think that won’t change, however, is that whatever financial fallout for exchequer arises from this, it will fall on working class taxpayers. Easier said than done after the water charges campaign. Looks like the crisis continues anew……

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11. sonofstan - September 1, 2016

There’s a much bigger issue about tax, and it’s role here though. It suits government to have us think that first you tax, then you spend, but in fact, as Richard Murphy explains, it’s the other way around, and that’s quite important. The tax take only partially dictates expenditure – it’s not the engine, but the gearing system, the way in which a government ensures that the money it spends does what it wants it to do.

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12. Paddy Healy - September 2, 2016

Government is now quoting former Competition Commissioner, in support of its rejection of EU Apple ruling. She is being described as an “independent outside expert”
BUT ACCORDING TO THE GUARDIAN–“Neelie Kroes, the Dutch former politician, who headed the commission’s competition directorate from 2004 to 2010, now sits on the public policy board of the taxi-hailing business Uber, a technology group headquartered in California. Uber uses subsidiaries in the Netherlands to shield its overseas income from United States taxes.”

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13. sonofstan - September 2, 2016

According to the Indo, Big Phil has gone native and is supporting his commission colleague rather than his old gang.

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14. Paddy Healy - September 3, 2016

AS “ENDAPENDENTS” CAVE IN ON APPLE
Minister Zappone Gives Outrageous Interview to RTE
Full Comment http://wp.me/pKzXa-ua
Appeal will give other countries an opportunity to appeal to the EU court for some of the 13 Billion!!
Zappone also caved in to Labour Burton’s cuts in Loan Parent Entitlements

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15. Paddy Healy - September 3, 2016

See RTe Television 601 News 02/09/2016 for full Zappone interview (It is more than half-way into the bulletin.) Unbelievable!!

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EWI - September 3, 2016

In fairness, Zappone has previous form in not being left-wing in any shape or form (once she got gay marriage, of course).

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16. fergal - September 3, 2016

That didn’t take long-a few days and the IA are all on board, Zappone becomes her master’s voice and the appeal is happening- there was never not going to be an appeal.
Enda thinks this is an attack on ‘our’ sovereignty, on the state’s right to levy corporation tax at 12.5%- it isn’t and the language of the Commission is very clear. Apple enjoyed ‘illegal’ state aid, and that’s the issue, not Dublin’s fiscal policy.
Has the Irish Times done a colour piece on Margethe Vestager yet? The kind of ones they would do on Christine Lagarde..
Has Vestager been interviewed on Irish Tv/radio yet? She has been on US tv.

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17. Paddy Healy - September 10, 2016

28 of the 35 OECD Members in EU-US-UK Axis
OECD-23 of the 35 are either NATO Members or have other Mutual Defence treaties with the US. A further 5 including Ireland are members of EU only. Russia and China are not members. South Africa is not a member and there are no “third world” countries in membership
Full Discussion http://wp.me/pKzXa-ua
The proposition that the economic interest of the Irish people and of “third world” countries should be placed in the hands of such a body is, at best, foolhardy and, at worst, treacherous. Clearly, the big capitalist powers are using the OECD to enable them to “corner” a much bigger share of corporation tax in the now extremely globalised economy. The current EU Conference in Bratislava is furthering this agenda

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