Multi Nationals Tax Avoidance

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CROCKD
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Multi Nationals Tax Avoidance

Post by CROCKD »

It seems that goverments in Europe and Australia have decided to go after multi nationals such as Apple, Amazon and Starbucks over profits made in their countries and shifted to other jurisdictions to avoid tax.

War of words hots up between US and EU over tax avoidance
Apple boss Tim Cook has dismissed the claim that his company avoids taxes overseas as “political crap”. The iPhone maker has paid as little as 2% in tax on its international profits, most of which are routed through Ireland.
ATO warns 60 multinationals 'enough is enough' on tax avoidance
Apple, for example, came under fire in January when it was revealed the tech giant paid taxes of just $85 million in Australia last year on sales of $7.9 billion.
Maybe there is not as much scrutiny here because I gather corporate tax rates are lower in Canada than in the US. Still they are much higher than the 1 - 2 % they are paying in these other countries.
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Re: Multi Nationals Tax Avoidance

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CROCKD
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Re: Multi Nationals Tax Avoidance

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Update: Paying the Piper
EU orders Apple to pay up to $14.5-billion tax to Ireland
Analysts said the move could add a compelling new dimension to the tax reform debate surrounding the treatment of more than $2.1 trillion in U.S. corporate profits held offshore to avoid U.S. taxes.
For Apple, whose earnings of $18-billion last year were the biggest ever reported by a corporation, finding several billion dollars should not be an insurmountable problem. The €13-billion represents about 6 per cent of the firm’s cash pile.
Apple employs 5,500, or about a quarter of its Europe-based staff, in the Irish city of Cork, where it is the largest private sector employer. It has said it paid Ireland’s 12.5 per cent rate on all the income that it generates in the country.
Of course Ireland is not interested in upsetting the apple cart. Pun intended.

And from another article in The Melbourne Age
All profits from Apple's European sales had been recorded by Apple Sales International in Ireland, which paid almost no tax under a sweetheart deal with the Irish state.
Apple had been given illegal tax benefits by Ireland, where the company recorded all its profits from sales across Europe.

This allowed the tech giant to pay an effective tax rate of just 0.005 per cent in 2014.
"Other countries in the EU or elsewhere can look at our investigation and can use our data," she said. "If they conclude Apple should have recorded its sales in those countries they could require Apple to pay more tax in that country – that would reduce the amount paid to Ireland."
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kcowan
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Re: Multi Nationals Tax Avoidance

Post by kcowan »

I suspect this might be another flaw in the construction of the EU! EU orders Ireland to collect more taxes!
France is next. Maybe the Brexit was timely?
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Re: Multi Nationals Tax Avoidance

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For Ireland, I suppose 1% of something is better than 100% of nothing.

Pretty funny that the Irish government (at least the party in power, anyways) doesn't want the money.
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Re: Multi Nationals Tax Avoidance

Post by OhGreatGuru »

Tax avoidance (or tax efficiency as they prefer to call it) is standard practice for big multinationals. Apple's only getting caught up because Ireland is part of the EU, and Apple hadn't counted on the EU trying to flex some muscle over the sweet deal they made with Ireland. What was in it for Ireland? Over 5000 jobs, plus the small taxes that Apple does pay, which are still probably significant in the Irish budget.

I'm glad some jurisdictions are trying to do something, but with the prevalence of these schemes and the number of tax havens worldwide, it will be a long time before we see the problem adequately addressed globally.

PS. I watched the news last night, and it isn't so much a case of an off-shore tax haven, as a predatory practice by a member of a common market. Ireland gave substantial preferential tax treatment to a business so that it would locate there instead of in another EU country. (They seem to have done the same for number of other big high-tech multinationals as well.) And what's more they are supporting Apple in its contention that all its European profits should be taxed only in Ireland. A common market won't work if individual members behave this way.
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