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I'm only going off what I've read in these comments (most of which are pretty suspect, to be honest). But it sounds like Ireland have opted to not enforce their
by spangry 10y ago
I'm only going off what I've read in these comments (most of which are pretty suspect, to be honest). But it sounds like Ireland have opted to not enforce their own transfer pricing rules by making some kind of special administrative ruling (despite it being inconsistent with the law and previous administrative practice). Truly bizarre, if I've understood the situation correctly.
For starters, it's not like Ireland have a particularly onerous corporate tax rate, so engaging in illegal transfer pricing carries less reward. But, and again I might have the wrong end of the stick here, why in god's name would you undermine the rule of law like that? If there's one thing that governments seem to universally understand, it's that you don't want to do anything to undermine the legitimacy of legal tax collection. It has historically tended to result in either public sector bankruptcy, or revolution...
As for the sovereignty issues, I suspect Ireland (and Luxembourg even more so) are fortunate to be on the inside of the system here. Because the typical response to tax-haven like policies (which suck capital out of other countries and erode their tax bases), tends to be a lot less friendly than being hauled before a EU court.
At any rate, it's just continuing evidence that the EU is an untenable proposition in its current state. Free trade and free movement makes sense on its own. But it's insane to thing you can have a monetary union with any corresponding process of horizontal-fiscal equalisation. Either the monetary union will be dissolved, or EU member countries will have to give up a whole bunch more sovereignty over their national fiscal policy.
- IBM 10y agoIreland had no transfer pricing rules until 2010, which was well after the 1991 and 2007 tax rulings. http://www.pwc.com/gx/en/international-transfer-pricing/assets/ireland.pdf http://www.pwc.com/gx/en/international-transfer-pricing/asse...
- spangry 10y agoThat paper says that Ireland did have a limited transfer pricing regime (which they hadn't really enforced, or in PWC's words "Owing to these uncertainties, it is not believed that this section [1036] is applied in practice."). Also, from: http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm ...the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a "head office". The Commission's assessment showed that these "head offices" existed only on paper and could not have generated such profits. These profits allocated to the "head offices" were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014... Yep, that sounds like either transfer pricing or just direct income mis-attribution to me.