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With the UK tax figures for several companies including apple, where they only paid approx 2.5% in tax because most of the revenue recognition occurs in Ireland

by hoi 14y ago

With the UK tax figures for several companies including apple, where they only paid approx 2.5% in tax because most of the revenue recognition occurs in Ireland where they pay cheaper corporation tax, I guess this will have an impact for revenues for several companies going forward. Google are already in a dispute with France over this, and I would expect these tax loopholes to close int he future as Austerity hits the EU and each country looking for ways to boost tax income.

fauigerzigerk 14y ago
You probably mean profits not revenue. But the thing about raising taxes is that it opens an opportunity for other countries to benefit from having lower taxes without losing any tax revenue, because global companies will want to be there. At the end of the day, consumers will benefit from global tax competition ... as long as they stay healthy and young.
- hoi 14y ago
  Yeah, profits is what I meant. That;s what they are doing using the competitive tax structure of Ireland and recognizing all EU revenue in Ireland instead of the repective countries in which the product is bought. My assumption is that these loopholes will eventually close because they are being reported about and taxpayers in those countries will be disgruntled that a company only pays 2.5% of its profits in tax because it's recognizing the revenues in a different jurisdiction to which the product was bought.
pja 14y ago
If the companies in question wanted to pay dividends out of those funds, they'd have to repatriate them into the US from the offshore holding companies & would inevitably incur US corporation tax on the resultant profits. So the cash only retains it's "full" value if the company can profitably invest it outside the US: if you think growth via R+D has peaked, then it's significantly less valuable! So how you choose to value the cash on hand depends very much on what you believe the future growth prospects of these companies via R+D or capital investment outside the US to be.

by hoi 14y ago

fauigerzigerk 14y ago

You probably mean profits not revenue. But the thing about raising taxes is that it opens an opportunity for other countries to benefit from having lower taxes without losing any tax revenue, because global companies will want to be there. At the end of the day, consumers will benefit from global tax competition ... as long as they stay healthy and young.

hoi 14y ago
Yeah, profits is what I meant. That;s what they are doing using the competitive tax structure of Ireland and recognizing all EU revenue in Ireland instead of the repective countries in which the product is bought. My assumption is that these loopholes will eventually close because they are being reported about and taxpayers in those countries will be disgruntled that a company only pays 2.5% of its profits in tax because it's recognizing the revenues in a different jurisdiction to which the product was bought.

pja 14y ago

If the companies in question wanted to pay dividends out of those funds, they'd have to repatriate them into the US from the offshore holding companies & would inevitably incur US corporation tax on the resultant profits. So the cash only retains it's "full" value if the company can profitably invest it outside the US: if you think growth via R+D has peaked, then it's significantly less valuable! So how you choose to value the cash on hand depends very much on what you believe the future growth prospects of these companies via R+D or capital investment outside the US to be.