6 ms·

I think we can all agree that transfer pricing and the Double Irish Dutch sandwich were not intended to be used in the way they have been by modern multinationa

by stirlo 5y ago

I think we can all agree that transfer pricing and the Double Irish Dutch sandwich were not intended to be used in the way they have been by modern multinationals.

lotsofpulp 5y ago
What is stopping the governments from changing the laws to make it illegal? I do not understand the concept of expecting an entity to pay taxes they are not liable for paying.
- xdennis 5y ago
  These companies paying them not to.
  - deleted 5y ago
    [deleted]
  - jtbayly 5y ago
    So... they are paying money to the government that they aren't required to?
    - foepys 5y ago
      The problem is the EU's process which requires all countries to vote unanimous on this. Ireland is vetoing any change to keep being allowed to set their own tax rates and underbid anybody else while still keeping access to the EU market. In that regard The Netherlands aren't any better by the way.
    - fabianhjr 5y ago
      They do that to pay proportionally less (not zero) and the countries they are paying proportionally less to are interested in being the fiscal hosts of those multinationals.
      - jtbayly 5y ago
        So taxation is a free market competition for global corporations.
        fabianhjr 5y ago
        Not really, other countries have better capital controls to avoid fiscal shenanigans.
- pindab0ter 5y ago
  Because that would be bad for 'het vestigingsklimaat'; the branch/business climate.
- criley2 5y ago
  The issue is that the governments offering tax evasion to corporations are smaller countries that use their evasion schemes as a competitive advantage against larger countries. The incentive for a big country like the US is to make these companies pay their domestically accrued taxes, but the incentive for a small country like Ireland is to attract these companies to come open offices and do business locally at all. These companies have tricks to avoid paying taxes, such as creating a parent company in Ireland that owns all of the intellectual property, then making the actual Apple or Google in the USA rent the intellectual property from that Irish parent for the cost of all of their revenue. Thus to the US company, they paid 100% of their revenue as the cost of doing business and have 0 tax. Then to the Irish company, they can essentially launder this revenue into being almost completely tax-free. For the record, the "Double Dutch Irish" has been closed, but there will always be another Caribbean country or looked-over European country willing to offer major benefits to a multinational in exchange for an office and some local hires. After all, why should a small country care if a multinational isn't paying taxes to another country far away?
  - deleted 5y ago
    [deleted]
  - lotsofpulp 5y ago
    > Thus to the US company, they paid 100% of their revenue as the cost of doing business and have 0 tax. Why is the country that wants taxes not able to change their rules to collect something similar to an excise tax?
- MomoXenosaga 5y ago
  America. Recall Washington crying foul when France wanted a digital tax.
- fighterpilot 5y ago
  It's a problem when small companies have to pay company tax, and large multinational companies do not, merely because the latter has the legal know-how and the funds to achieve it. As an analogy, it'd be like a road worker paying 30 percent tax on a $70k income and a company CEO paying 0-5 percent tax on a $10m income. The necessary solution is obviously systemic change rather than asking large companies to pay above what they're required to, the latter would actually be a breach of their agency duty and anyone who thinks companies should do that are foolish. I don't know what the solution is. Perhaps abolishing company tax, which is my favorite proposal. Perhaps a worldwide company tax as Biden is pushing for (which concerns me for other reasons, even though I do admit it would solve this specific problem).
  - lotsofpulp 5y ago
    > It's a problem when small companies have to pay company tax, and large multinational companies do not, merely because the latter has the legal know-how and the funds to achieve it. Hence the question of why are countries not changing the rules so the large multinational companies cannot achieve it. > As an analogy, it'd be like a road worker paying 30 percent tax on a $100k income and a company CEO paying 0-5 percent tax on a $10m income. This seems unrelated to my question, but is there anywhere that this is true? All the examples of this I am familiar with in the US involve ignoring the fact that the CEO is not getting $10m of cash income, otherwise they would be paying a lot more tax than someone with $100k cash income. Which is stupid and invalidates any point trying to be made. If the argument is that society needs to start collecting tax on wealth and forcing sales of assets, then so be it, but it should be stated as such.
    - fighterpilot 5y ago
      "Hence the question of why are countries not changing the rules so the large multinational companies cannot achieve it." I don't know. Probably some combination of cronyism, status quo bias, and the problem being very difficult to solve? Also it wasn't really front of mind in a big way in people's day to day political thinking in the US until about 5 years ago. "but is there anywhere that this is true?" It was a hypothetical, I was trying to provide a what-if analogy. I don't know if it is true or not true in itself. "If the argument is that society needs to start collecting tax on wealth and forcing sales of assets, then so be it, but it should be stated as such." That's some people's argument, but not mine. My only observation is that the company tax as it is currently implemented is extremely regressive. I'm not against regressive tax per se, but it's too regressive in this case. If large and small companies paid the same flat rate, I'd be pretty happy. How to achieve it, I don't know.
- moomin 5y ago
  Think of it like an invasive and experimental medical treatment. You know the disease is there, but a lot of the changes you could make would damage good tissue as well as the bad.
svdr 5y ago
This seems to have ended: https://www.bbc.com/news/world-57368247 https://www.bbc.com/news/world-57368247
- oblio 5y ago
  Want to bet that the end of this included a hidden grace period to allow large corporations using them to: A) find another similar system B) put their internal bureaucracies at work to switch the entire corporation to the new system? It's like stock market news, by the time it's in the newspaper it's much too late, all the insiders have finished their trades and you're the chump buying overpriced stuff. We'll probably find out the 2021 latest scheme in 2031, when it gets banned.

by stirlo 5y ago

I think we can all agree that transfer pricing and the Double Irish Dutch sandwich were not intended to be used in the way they have been by modern multinationals.

lotsofpulp 5y ago

What is stopping the governments from changing the laws to make it illegal? I do not understand the concept of expecting an entity to pay taxes they are not liable for paying.

xdennis 5y ago
These companies paying them not to.
- deleted 5y ago
  [deleted]
- jtbayly 5y ago
  So... they are paying money to the government that they aren't required to?
  - foepys 5y ago
    The problem is the EU's process which requires all countries to vote unanimous on this. Ireland is vetoing any change to keep being allowed to set their own tax rates and underbid anybody else while still keeping access to the EU market. In that regard The Netherlands aren't any better by the way.
  - fabianhjr 5y ago
    They do that to pay proportionally less (not zero) and the countries they are paying proportionally less to are interested in being the fiscal hosts of those multinationals.
    - jtbayly 5y ago
      So taxation is a free market competition for global corporations.
      - fabianhjr 5y ago
        Not really, other countries have better capital controls to avoid fiscal shenanigans.
pindab0ter 5y ago
Because that would be bad for 'het vestigingsklimaat'; the branch/business climate.
criley2 5y ago
The issue is that the governments offering tax evasion to corporations are smaller countries that use their evasion schemes as a competitive advantage against larger countries. The incentive for a big country like the US is to make these companies pay their domestically accrued taxes, but the incentive for a small country like Ireland is to attract these companies to come open offices and do business locally at all. These companies have tricks to avoid paying taxes, such as creating a parent company in Ireland that owns all of the intellectual property, then making the actual Apple or Google in the USA rent the intellectual property from that Irish parent for the cost of all of their revenue. Thus to the US company, they paid 100% of their revenue as the cost of doing business and have 0 tax. Then to the Irish company, they can essentially launder this revenue into being almost completely tax-free. For the record, the "Double Dutch Irish" has been closed, but there will always be another Caribbean country or looked-over European country willing to offer major benefits to a multinational in exchange for an office and some local hires. After all, why should a small country care if a multinational isn't paying taxes to another country far away?
- deleted 5y ago
  [deleted]
- lotsofpulp 5y ago
  > Thus to the US company, they paid 100% of their revenue as the cost of doing business and have 0 tax. Why is the country that wants taxes not able to change their rules to collect something similar to an excise tax?
MomoXenosaga 5y ago
America. Recall Washington crying foul when France wanted a digital tax.
fighterpilot 5y ago
It's a problem when small companies have to pay company tax, and large multinational companies do not, merely because the latter has the legal know-how and the funds to achieve it. As an analogy, it'd be like a road worker paying 30 percent tax on a $70k income and a company CEO paying 0-5 percent tax on a $10m income. The necessary solution is obviously systemic change rather than asking large companies to pay above what they're required to, the latter would actually be a breach of their agency duty and anyone who thinks companies should do that are foolish. I don't know what the solution is. Perhaps abolishing company tax, which is my favorite proposal. Perhaps a worldwide company tax as Biden is pushing for (which concerns me for other reasons, even though I do admit it would solve this specific problem).
- lotsofpulp 5y ago
  > It's a problem when small companies have to pay company tax, and large multinational companies do not, merely because the latter has the legal know-how and the funds to achieve it. Hence the question of why are countries not changing the rules so the large multinational companies cannot achieve it. > As an analogy, it'd be like a road worker paying 30 percent tax on a $100k income and a company CEO paying 0-5 percent tax on a $10m income. This seems unrelated to my question, but is there anywhere that this is true? All the examples of this I am familiar with in the US involve ignoring the fact that the CEO is not getting $10m of cash income, otherwise they would be paying a lot more tax than someone with $100k cash income. Which is stupid and invalidates any point trying to be made. If the argument is that society needs to start collecting tax on wealth and forcing sales of assets, then so be it, but it should be stated as such.
  - fighterpilot 5y ago
    "Hence the question of why are countries not changing the rules so the large multinational companies cannot achieve it." I don't know. Probably some combination of cronyism, status quo bias, and the problem being very difficult to solve? Also it wasn't really front of mind in a big way in people's day to day political thinking in the US until about 5 years ago. "but is there anywhere that this is true?" It was a hypothetical, I was trying to provide a what-if analogy. I don't know if it is true or not true in itself. "If the argument is that society needs to start collecting tax on wealth and forcing sales of assets, then so be it, but it should be stated as such." That's some people's argument, but not mine. My only observation is that the company tax as it is currently implemented is extremely regressive. I'm not against regressive tax per se, but it's too regressive in this case. If large and small companies paid the same flat rate, I'd be pretty happy. How to achieve it, I don't know.
moomin 5y ago
Think of it like an invasive and experimental medical treatment. You know the disease is there, but a lot of the changes you could make would damage good tissue as well as the bad.

svdr 5y ago

This seems to have ended: https://www.bbc.com/news/world-57368247 https://www.bbc.com/news/world-57368247

oblio 5y ago
Want to bet that the end of this included a hidden grace period to allow large corporations using them to: A) find another similar system B) put their internal bureaucracies at work to switch the entire corporation to the new system? It's like stock market news, by the time it's in the newspaper it's much too late, all the insiders have finished their trades and you're the chump buying overpriced stuff. We'll probably find out the 2021 latest scheme in 2031, when it gets banned.