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The problem with preventing the use of 'tax havens' is that there's no non-arbitrary way to decide if a company is truly using another country as a tax haven, o

by nawitus 13y ago

The problem with preventing the use of 'tax havens' is that there's no non-arbitrary way to decide if a company is truly using another country as a tax haven, or that they are actually using developers from another country. In the Google example, Google UK is clearly benefiting from the developers that work outside UK, therefore they should be able to pay 'brand fees' or whatnot to the 'main Google'. Of course in this case most of the development is not happening in Ireland, but how can you decide if the fees are reasonable or not? You'll either end up with a very complex tax code with loopholes (which is non-desirable), or you'll give arbitrary power to tax bureaucrats to enforce arbitrary taxes to certain companies (and this will in practise create non-just tax decisions and corruption).

cmdkeen 13y ago
Google was possibly a poor example as they aren't just using the brand fees but claiming they don't actually "sell" anything in the UK at all. Despite having lots of people in their London officer with sales type titles on LinkedIn... I think the issue is that companies are currently able to get away with murder in terms of structuring debt and those brand type fees to funnel profits away. Some kind of "reasonableness" test certainly wouldn't go amiss when it comes to judging measures taken by companies. There's already a movement against measures taken solely for the purpose of tax avoidance.
edoloughlin 13y ago
Of course in this case most of the development is not happening in Ireland I'd say that very little (probably zero) development is done in Ireland, but I get the impression you think that development is the taxable activity (I don't know if it is or not). However, there are 1,700 people doing something in Ireland (from http://www.idaireland.com/google/index.xml http://www.idaireland.com/google/index.xml, 1/2 way down): A site reliability/engineering team supporting Google’s European hosting and search activities; Multilingual customer support for Google’s AdWords advertising product; On-line relevancy testing and Google product support; Shared Services to support Google’s EMEA operations. As an Irish person, I'm getting a little weary of the constant references on HN implying that Ireland is little more than a tax haven. There is a significant number of jobs attached to the US multinational presence here, viz: - Apple: 4000 employees (http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-but-yes-apple-did-pay-2-tax/ http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-...) - eBay: 3000 (http://www.irishtimes.com/business/sectors/retail-and-services/ebay-opens-european-headquarters-in-dundalk-1.1372373 http://www.irishtimes.com/business/sectors/retail-and-servic...) - Google: 1700 (see above) - Facebook: 500 (http://www.irishtimes.com/business/sectors/technology/facebook-to-hire-100-dublin-staff-1.1253407 http://www.irishtimes.com/business/sectors/technology/facebo...) I could go on, but I have stuff to do, and I feel like I've already done more research than most journalists commenting on this area. For those interested, there's a list of foreign ICT companies operating in Ireland at http://www.idaireland.com/business-in-ireland/information-communication/ http://www.idaireland.com/business-in-ireland/information-co... Edit: Removed woe-is-me comment following a trigger-happy downvoter.
- justincormack 13y ago
  Google does not pay tax in Ireland either, even at low Irish rates. So while it is great that it employs people there and it might anyway, Ireland is integral to its tax evasion strategy, as is the Netherlands.
  - edoloughlin 13y ago
    It doesn't pay very much (corporation tax), but it does pay: http://www.irishtimes.com/business/economy/ireland/google-defends-low-tax-payment-1.2003 http://www.irishtimes.com/business/economy/ireland/google-de... - it took me 3 seconds to find this.
    - justincormack 13y ago
      Sorry I didn't mean none but nowhere near what you would expect given this is the entire revenue from Europe.
amirmc 13y ago
> "The problem with preventing the use of 'tax havens' is that there's no non-arbitrary way to decide if a company is truly using another country as a tax haven..." It doesn't matter whether a specific company uses tax havens or not. The problem is that tax havens exist (and there are reasonably good definitions of how to recognise one). Companies, who's role is to maximise shareholder value/profits etc, will use them within the extent of the law. That means it's the laws that need to change.
- patrickaljord 13y ago
  > It doesn't matter whether a specific company uses tax havens or not. The only reasons there are tax havens is because there are tax hells.
  - amirmc 13y ago
    No. Tax havens exist because people (and companies) want to hide assets. That's independent of the existence of any tax 'hell'. Unless you're of the opinion that all taxation is bad (an opinion I disagree with).
    - patrickaljord 13y ago
      No, if taxation was low enough, the hasle of putting your money in a tax havens wouldn't be worth the time, money and trouble. Tax havens and the accountants needed to set them up are far from being free. If companies could spend the millions they spend on setting up these schemes on a low flat tax rate instead it would be worth it for them even if they ended up paying a bit more than by putting the money in a tax haven because of the time being saved and the good publicity + the positive effect that reasonable low taxes have on the economy.
      - Nursie 13y ago
        >> No, if taxation was low enough, the hasle of putting your money in a tax havens wouldn't be worth the time, money and trouble. You can't practically lower taxes enough to compete with tax havens. In general they have low populations and the companies don't actually do any major activity there (there are few societal costs), so the country can survive and thrive with a very low percentage tax take from many effectively non-resident companies. Contrast this with countries that have much larger populations. The number of profitable corporations per capita is going to be lower than a country that attracts corporations in simply on the basis of their low tax rate. You'll notice where countries like Ireland are involved, that do have a population to support, they seem to eventually regret the tax haven arrangements they agreed to in the good times. >> If companies could spend the millions they spend on setting up these schemes on a low flat tax rate instead it would be worth it for them even if they ended up paying a bit more than by putting the money in a tax haven because of the time being saved and the good publicity + the positive effect that reasonable low taxes have on the economy. You can't really believe this?

by nawitus 13y ago

cmdkeen 13y ago

Google was possibly a poor example as they aren't just using the brand fees but claiming they don't actually "sell" anything in the UK at all. Despite having lots of people in their London officer with sales type titles on LinkedIn... I think the issue is that companies are currently able to get away with murder in terms of structuring debt and those brand type fees to funnel profits away. Some kind of "reasonableness" test certainly wouldn't go amiss when it comes to judging measures taken by companies. There's already a movement against measures taken solely for the purpose of tax avoidance.

edoloughlin 13y ago

Of course in this case most of the development is not happening in Ireland I'd say that very little (probably zero) development is done in Ireland, but I get the impression you think that development is the taxable activity (I don't know if it is or not). However, there are 1,700 people doing something in Ireland (from http://www.idaireland.com/google/index.xml http://www.idaireland.com/google/index.xml, 1/2 way down): A site reliability/engineering team supporting Google’s European hosting and search activities; Multilingual customer support for Google’s AdWords advertising product; On-line relevancy testing and Google product support; Shared Services to support Google’s EMEA operations. As an Irish person, I'm getting a little weary of the constant references on HN implying that Ireland is little more than a tax haven. There is a significant number of jobs attached to the US multinational presence here, viz: - Apple: 4000 employees (http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-but-yes-apple-did-pay-2-tax/ http://venturebeat.com/2013/05/22/ireland-were-no-tax-haven-...) - eBay: 3000 (http://www.irishtimes.com/business/sectors/retail-and-services/ebay-opens-european-headquarters-in-dundalk-1.1372373 http://www.irishtimes.com/business/sectors/retail-and-servic...) - Google: 1700 (see above) - Facebook: 500 (http://www.irishtimes.com/business/sectors/technology/facebook-to-hire-100-dublin-staff-1.1253407 http://www.irishtimes.com/business/sectors/technology/facebo...) I could go on, but I have stuff to do, and I feel like I've already done more research than most journalists commenting on this area. For those interested, there's a list of foreign ICT companies operating in Ireland at http://www.idaireland.com/business-in-ireland/information-communication/ http://www.idaireland.com/business-in-ireland/information-co... Edit: Removed woe-is-me comment following a trigger-happy downvoter.

justincormack 13y ago
Google does not pay tax in Ireland either, even at low Irish rates. So while it is great that it employs people there and it might anyway, Ireland is integral to its tax evasion strategy, as is the Netherlands.
- edoloughlin 13y ago
  It doesn't pay very much (corporation tax), but it does pay: http://www.irishtimes.com/business/economy/ireland/google-defends-low-tax-payment-1.2003 http://www.irishtimes.com/business/economy/ireland/google-de... - it took me 3 seconds to find this.
  - justincormack 13y ago
    Sorry I didn't mean none but nowhere near what you would expect given this is the entire revenue from Europe.

amirmc 13y ago

> "The problem with preventing the use of 'tax havens' is that there's no non-arbitrary way to decide if a company is truly using another country as a tax haven..." It doesn't matter whether a specific company uses tax havens or not. The problem is that tax havens exist (and there are reasonably good definitions of how to recognise one). Companies, who's role is to maximise shareholder value/profits etc, will use them within the extent of the law. That means it's the laws that need to change.

patrickaljord 13y ago
> It doesn't matter whether a specific company uses tax havens or not. The only reasons there are tax havens is because there are tax hells.
- amirmc 13y ago
  No. Tax havens exist because people (and companies) want to hide assets. That's independent of the existence of any tax 'hell'. Unless you're of the opinion that all taxation is bad (an opinion I disagree with).
  - patrickaljord 13y ago
    No, if taxation was low enough, the hasle of putting your money in a tax havens wouldn't be worth the time, money and trouble. Tax havens and the accountants needed to set them up are far from being free. If companies could spend the millions they spend on setting up these schemes on a low flat tax rate instead it would be worth it for them even if they ended up paying a bit more than by putting the money in a tax haven because of the time being saved and the good publicity + the positive effect that reasonable low taxes have on the economy.
    - Nursie 13y ago
      >> No, if taxation was low enough, the hasle of putting your money in a tax havens wouldn't be worth the time, money and trouble. You can't practically lower taxes enough to compete with tax havens. In general they have low populations and the companies don't actually do any major activity there (there are few societal costs), so the country can survive and thrive with a very low percentage tax take from many effectively non-resident companies. Contrast this with countries that have much larger populations. The number of profitable corporations per capita is going to be lower than a country that attracts corporations in simply on the basis of their low tax rate. You'll notice where countries like Ireland are involved, that do have a population to support, they seem to eventually regret the tax haven arrangements they agreed to in the good times. >> If companies could spend the millions they spend on setting up these schemes on a low flat tax rate instead it would be worth it for them even if they ended up paying a bit more than by putting the money in a tax haven because of the time being saved and the good publicity + the positive effect that reasonable low taxes have on the economy. You can't really believe this?