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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Oct 28, 2016 6:54 am 
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Head of ASI in Ireland pays €45,000 fine to avoid jail in Italian tax evasion probe.
http://m.independent.ie/business/irish/ ... 67822.html

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Oct 28, 2016 8:35 am 
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wii4miinow wrote:
Please yoganmahew can you explain what the coco world is?

What does coco refer to in terms of stability and insurance of banking markets?

Contingent convertible bonds - the idea is they are the first call rather than the state after equity and equity like instruments.
http://lexicon.ft.com/Term?term=cocos

In theory the state wouldn't be called on :|

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Oct 28, 2016 11:00 pm 
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Apple preparing for the inevitable ..... (despite the Irish media spin)

Anybody who has taken the time to read the Apple tread (God bless you) will know that, with very high probability, Apple is going to be paying the Irish State €13bn plus €6bn in fines within the next year or so. We can already see in Apple's recent 10k that they are getting ready for the inevitability of this event:

IRISH TIMES: Apple expects to offset €13bn Irish tax bill by paying less in US
http://www.irishtimes.com/business/technology/apple-expects-to-offset-13bn-irish-tax-bill-by-paying-less-in-us-1.2846950

Probably the most deliberately "under-reported" Irish moment of 2016, was the fact that Apple on-shoring its "stateless" IP (Appl Sales International) created "Leprechaun Economics", made fools of us internationally, and will cost us over €300m per annum in EU GDP levies.

We covered it here:

The c €7bn extra Apple charge Margrethe Vestager uncovered without even knowing it
http://www.thepropertypin.com/viewtopic.php?p=889565#p889565

And even Max Keiser picked it up (via Karl Whelan, who understands these things):

MAX KEISER: [KR965] Keiser Report: Leprechaun Economics
http://www.maxkeiser.com/2016/09/kr965-keiser-report-leprechaun-economics/

* * * * * *

We even still have Cliff Taylor (no stranger to taking the odd "plant" article from our Section 110 SPV thread), recently spinning the Department of Finance's line that it was mostly Aircraft Leasing (mentioning balance sheets of €35bn). But anybody who understands Aircraft Leasing and how Irish GDP is constructed, knows that this is mis-information as the debts linked with Aircraft Leasing, make its net contribution to Irish GDP tiny. You could move the entire balance sheet of the world's biggest Aircraft Leasers to Ireland (NAV of < €7bn) and it would be a small single digits contribution to Irish GDP (<4%). (fyi - the entire balance sheet of the world's biggest Aircraft Leaser was not moved in Ireland in 2015).

* * * * * *

The fact that the State wanted to hide Apple's on-shoring (and made us fools for it), and that they still take the time to push mis-information articles via Cliff Taylor that it wasn't all Apple (even though everybody knows it was), means that something is up.

Word on the street is that Apple, despite on-shoring its ASI balance sheet to Ireland in 2015, to escape further accrual of liability to Margrethe Vestager, are still not going to be paying anything like the 12.5% Irish tax rate. It is whispered that buried in the Finance Bill 2017, after extensive discussions with Apple's Dublin lawyers, are the structures to allow Apple avoid all Irish taxes (again), but this time legitimately, in a way that the EU cannot contest.

And of course, if Apple's Dublin lawyers happen to use these structures for other clients (i.e. like vulture funds in Section 110 SPVs avoiding billions in Irish taxes) who need "legitimate" shielding from all Irish taxes, then so be it. Creating (another) avenue for mass Irish tax avoidance is a price worth paying for 5,000 medium paying jobs from the world's largest tax avoider. This is even more so when those jobs are based in Cork, home of the two Michael's. Thus giving perfect alignment with FF and FG on this issue.

Word is also out that the EU Commission understand the gist of what the State is going to try to do for Apple, and have circulated such details in their briefings on what Europe needs CCCTB (i.e. we will never get those naughty Leprechauns into line).

We had the "Golden Goose" of Europe's lowest tax rate.

With CCCTB, a lot of it's benefit goes out the window.

We only have ourselves to blame.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Tue Nov 08, 2016 6:43 pm 
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Europe’s taxman could have Amazon in its crosshairs http://www.wsj.com/articles/europes-tax ... 1478601008 via @WSJ

Quote:
Amazon.com Inc. could be in the crosshairs of Europe’s taxman, and the stakes for the Seattle online retailer are high.

After the European Commission ordered Ireland to claw back €13 billion (about $14 billion) from Apple Inc. in August, other multinationals such as Amazon and McDonald’s Corp. face their own reckoning. Brussels is scrutinizing their European tax deals to determine if they constitute illegal “state aid,” benefits that could give them an unfair advantage over rivals.

It is still unclear when any of those decisions will materialize—or which company will be next. Any new clawback order likely would pale in comparison to Apple’s multibillion hit because few make nearly as much money as Apple.

Still, Amazon stands out as potentially one of the larger targets that have been under investigation by the EU, based on an analysis of company filings in Luxembourg, home to its European business. The world’s largest online retailer paid an untaxed subsidiary €3.39 billion in royalties, largely from European operations, from 2006 to 2013, according to these filings.

Those are just the sort of untaxed proceeds Brussels has targeted as it tries to rein in corporate tax loopholes across the bloc. They could translate into hundreds of millions of euros in liabilities, according to experts in European state-aid cases. If the commission deems that some of it should have been taxed by Luxembourg, Brussels can order Luxembourg to recoup the money.

That could be material for Amazon, which operates on thin margins for a large tech company. In 2015, it reported $596 million in profit on $107 billion in revenue—a profit margin of 0.56%.

Amazon and Luxembourg’s government say the company received no special treatment. Luxembourg has argued that the Amazon royalty payments it approved correspond to international norms. Amazon says it “pays all the taxes we are required to pay” and that “our profits have remained low” because of big investments it has made in Europe.

Apple and Ireland have both said they would appeal the commission’s decision. McDonald’s says it received no special treatment and pays all taxes it owes. An EU spokesman declined to comment.

Brussels is looking specifically at whether Luxembourg granted Amazon prohibited state aid when the country approved an Amazon restructuring there beginning in 2004. As part of the restructuring, Amazon set up a subsidiary, Amazon Europe Holding Technologies SCS, which had no employees and paid no Luxembourg tax because it was a partnership owned by U.S. companies, according to company filings and documents from the EU and a separate Internal Revenue Service case.

That subsidiary, in turn, owned another subsidiary called Amazon EU SARL, which operated the online retailer’s business across the EU via websites. Each year, Amazon EU paid a hefty royalty fee to its parent, for the right to use Amazon’s technology and brand.

That isn’t an unusual type of tax maneuver. Many U.S. tech companies sell the overseas rights to their intellectual property to foreign subsidiaries that collect royalties from other units in Europe. That can reduce taxable income in Europe, while avoiding tax in the U.S., as long as the profits aren’t repatriated.

Between 2006 and 2013, the years that specific structure was in operation, Amazon Europe Holding Technologies collected €3.39 billion ($3.74 billion) in income “related to royalties from affiliated undertakings,” or “based on agreements with affiliated companies,” according to the company filings. People familiar with Amazon’s tax arrangements say that income largely reflects the royalties from Amazon EU. Amazon has since changed its Luxembourg tax structure.



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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Thu Nov 10, 2016 4:18 pm 
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IRISH TIMES: Trump tax plan will see ‘flood of companies’ leave Ireland
http://www.irishtimes.com/news/politics/trump-tax-plan-will-see-flood-of-companies-leave-ireland-1.2862537

If there is one policy that Trump has been very consistent on - it's the end of US MNC tech firms using places like Ireland to avoid all US taxes and roll up $bns offshore.

It is clearer now that these US MNC tech firms had become untouchable by the US IRS in return for using their powerful media channels to support Democrats / Clinton (something I have sympathy for - but that is for another thread).

It is now time for payback.

The aggregate US tax bills of US MNC tech firms is going up.

Whether Trump does it the hard way (allow the US IRS to do the same job that Margrethe Vestager is doing), or the soft way (a Bertie Ahearn FF type tax avoiders amnesty for repatriation ), the game is up.

We may see a reversal of Apple's "leprechaun Economics" moment (which the Dept of Finance have been spinning madly as due to Aircraft Leasing, despite the fact that the huge debts attached to Aircraft Leasing make it a tiny net contributor to Irish GDP, as its NAV is so tiny) in the next year as Apple goes home ?


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Thu Nov 10, 2016 10:17 pm 
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All he has to do is allow the IRS to designate Ireland as a recognized tax haven, which a lot of senior guys in the IRS have wanted to do for almost two decades, and a whole lot of IRS penalty laws / regs automatically kick in. Nothing else need be done.

And if he drops corp tax to 20% / less as promised then its really game over.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Nov 11, 2016 10:36 am 
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jmc wrote:
All he has to do is allow the IRS to designate Ireland as a recognized tax haven, which a lot of senior guys in the IRS have wanted to do for almost two decades, and a whole lot of IRS penalty laws / regs automatically kick in. Nothing else need be done.

And if he drops corp tax to 20% / less as promised then its really game over.

So true

The Irish "experts" are in no panic mode, because of their extensive "experience" with Trump.

IRISH INDEPENDENT: Colm Kelpie: US firms not going home in the morning - but future is under threat
http://www.independent.ie/opinion/comment/colm-kelpie-us-firms-not-going-home-in-the-morning-but-future-is-under-threat-35206323.html

George Bush ignored existing US Tech MNCs in places like Ireland, as it was small stuff back then in scale of things, and the quantum of US tax avoidance was quite small pre 2008.

The Denocrats allowed the exploding new US Tech MNCs post 2008 to do whatever they wanted with their exploding non-US profits (and as we saw with Apple Tax, vigorously defended their rights to make fools of the US tax code to do this).

In return, these new US Tech MNCs became emphatic supporters of the Democratic party.

Trump seems to take the opposite view (and got almost zero help from US Tech MNCs).

He could shut down US Tech MNCs offshoring of jobs quite quickly if he wants to.

All depends whether the Republican majorities in Congress and Senate are with him?


Last edited by observer35 on Fri Nov 11, 2016 10:44 am, edited 1 time in total.

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Nov 11, 2016 10:41 am 
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jmc wrote:
All he has to do is allow the IRS to designate Ireland as a recognized tax haven, which a lot of senior guys in the IRS have wanted to do for almost two decades, and a whole lot of IRS penalty laws / regs automatically kick in. Nothing else need be done.

And if he drops corp tax to 20% / less as promised then its really game over.

As a policy, how does this stack up economically for the US?


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Nov 11, 2016 11:33 am 
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Stapler wrote:
jmc wrote:
All he has to do is allow the IRS to designate Ireland as a recognized tax haven, which a lot of senior guys in the IRS have wanted to do for almost two decades, and a whole lot of IRS penalty laws / regs automatically kick in. Nothing else need be done.

And if he drops corp tax to 20% / less as promised then its really game over.

As a policy, how does this stack up economically for the US?

Trump doesn't need to drop to 20%

He just needs the US IRS to be allowed to prosecute without interference from Washington.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Nov 11, 2016 12:12 pm 
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Stapler wrote:
jmc wrote:
All he has to do is allow the IRS to designate Ireland as a recognized tax haven, which a lot of senior guys in the IRS have wanted to do for almost two decades, and a whole lot of IRS penalty laws / regs automatically kick in. Nothing else need be done.

And if he drops corp tax to 20% / less as promised then its really game over.

As a policy, how does this stack up economically for the US?


Well based on UK and other countries experience dropping the Corp Tax rate from 40/50% effective in states like Cal to around 20% would at least double revenue in a few years. The percentage of total tax from corp tax has declined quiet a bit over the last 40 years. Just like it did in other countries pre drop. 50% was pretty much the going rate before the '90's. And net yield was relatively low. Reduce the rate and corps will stop expending huge effort and expense in managing their tax bill. So revenue goes up.

High corp tax rate is purely an old school populous political slogan. Nothing more. Its got nothing to do with maximize tax yield from an economic sector.

Trump has none of the lobby baggage that the Dems/Reps had for the last 25 years. Since the last serious tax reform movement petered out. 1986 was the high point of the last wave.

All Trump has to do is drop the effective rate to 20%. Allow the IRS to enforce the current laws, especially retained earnings rules, and corp tax rate revenue should double very quickly. Apple net margins would collapse, As would companies like MS, Google and Facebook. Their very high nets are purely due to them paying almost no tax. Anywhere. Make them pay 20% and they are still very profitable companies. At least in the short term. But those huge cash balances would quickly disappear.

If Trump drops corp tax rates and end double taxation of dividends (the most damaging tax rule of them all) then you will quickly have a 1980 style boom of *real* economic growth. Its only in retrospect that I now realize just how much good Reagan actually did. You need to lob a political hand grenade once a generation at the entrenched establishment to insure the whole edifice does not collapse due to institutional incompetence.

What this mean for Ireland and it tax haven is short term, much instability but long term it will be facing an 1950's like existential crisis. Its not going to be pretty.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Nov 11, 2016 1:31 pm 
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I always thought 12.5% rate was a band aid and not intended to be the industrial policy, though somewhere along the line it did become industrial policy.

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Nov 11, 2016 1:38 pm 
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Hard to articulate this but not budging from the 12.5% rate seems to be a badge of honor from Irish politicians. You see it time and time again where they reiterate that our special rate will not change. It looks like they are standing up to the big bullys.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Fri Nov 11, 2016 1:51 pm 
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greentree wrote:
Hard to articulate this but not budging from the 12.5% rate seems to be a badge of honor from Irish politicians. You see it time and time again where they reiterate that our special rate will not change. It looks like they are standing up to the big bullys.

It's just misdirection for external consumption. Talk about the 12.5% not the %0.005.

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Mon Nov 14, 2016 12:01 pm 
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US TECH TRYS TO FIND A TAX AVOIDANCE ALLY FOR IRELAND (now Brits are gone)

FINFACTS: US tech groups lobby Netherlands to resist EU tax reforms
http://www.finfacts.ie/Irish_finance_news/articleDetail.php?US-tech-groups-lobby-Netherlands-to-resist-EU-tax-reforms-689

* * * * * *

Of course the Irish Media is full of 'no panic' articles regarding Trump's effect on US MNC Tax Avoidance. They assume that the issue is one of Trump trying to match Ireland's low taxes.

Here is Democratic Senator Carl Levin (who investigated Apple's Tax scheme in Ireland) on why Trump (or any future US President), should just call it what it is - US tax avoidance. Just let the US IRS do their job.

WASHINGTON POST: Next US president should curb "tax havens such as Ireland", by Carl Levin
http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Next-US-president-should-curb-tax-havens-such-as-Ireland-722

Now that Hillary is gone, the US Tech MNCs - who did everything legally (and quasi-legally) possible to get her elected, have lost their greatest shield from the US IRS.

Interesting to see if Trump will allow them to continue with their US tax avoidance schemes in Ireland.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Tue Nov 15, 2016 9:42 am 
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Thing Fish wrote:
I always thought 12.5% rate was a band aid and not intended to be the industrial policy, though somewhere along the line it did become industrial policy.

Except when you start arguing to address the (possible/potential) US action by lowering our own corporation tax even further (was presenter on one of the morning radio programmes last week either Newstalk or RTE R1).

To tease out some of the debate: I think on balance of probabilities there are a lot of MNCs here because of our tax rate (the other stuff "young educated workforce", etc., are probably more hygiene factors). The key question is where is it important for our tax to be lower than to continue this. If USA corp tax drops, then that creates one reduced gap. However, surely a lot of operations in Ireland are here not because it's cheaper-tax than USA, but because it's one of the lowest tax ways to get into the EU market (hence importance of EU transfer pricing regulations etc., as observer35 has discussed). For those scenarios, the US rate isn't as critical, it's rather trade deals that matter more.

I've heard this line trotted out as an antidote to the fear of US corp tax cuts. I think it makes some sense, but can't be the whole story (some of the biggest inversion deal antics involving Ireland were definitely about finding a globally-low tax rate, rather than just a local minimum in the EU market).

Thoughts?


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