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This is obscene

by IdiotSavant Fri Jun 4th, 2021 at 12:12:40 AM EST

We all know multinational corporations cheat on their taxes, using complicated legal arrangements to funnel money through different jurisdictions to avoid paying anything to support the societies that host them. How obscene are such arrangements? This obscene:

An Irish subsidiary of Microsoft made a profit of $315bn (£222bn) last year but paid no corporation tax as it is "resident" for tax purposes in Bermuda.

The profit generated by Microsoft Round Island One is equal to nearly three-quarters of Ireland's gross domestic product - even though the company has no employees.

The subsidiary, which collects licence fees for the use of copyrighted Microsoft software around the world, recorded an annual profit of $314.7bn in the year to the end of June 2020, according to accounts filed at the Irish Companies Registration Office.

The company's profits jumped from just under $10bn in the previous year and compare with Ireland's 2020 GDP of €357bn ($433bn).

Three-quarters of a country's GDP, not a cent in tax. Multinationals are simply parasites.

To use another comparison: Ireland's 2020 government spending was ~105 billion Euros (~US$127 billion). If they taxed this single corporation at the usual Irish rate of 12.5%, it would provide ~US$39 billion - or just under a third of all government spending. Not taxing them means Irish people are paying more and/or getting worse government services than they would if Microsoft paid their fair share. I'd expect them to be pretty angry about that.

This shows the need for international cooperation to stop tax-cheating, with a global minimum corporate tax, and a financial blockade of tax havens and money laundries until they join the system. Until we do that, these parasites are going to keep robbing us blind.

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This is obscene | 5 comments (4 topical, 1 editorial, 0 hidden)
Re: This is obscene (4.00 / 5)
Related: Guardian: Cyprus could block EU adoption of minimum corporate tax plan:

Cyprus could veto the EU's adoption of Joe Biden's proposal of a global minimum corporate tax rate, the country's finance minister has suggested.

[...]

There is significant support for the idea within Europe, but speaking to the economic and monetary affairs committee of the European parliament, Cyprus's finance minister, Constantinos Petrides, said his government would be opposed to an EU directive that constrained national tax policymaking. An EU directive on taxation would require unanimous support from the 27 member states.

Cyprus and Ireland have the lowest corporate tax rates in the EU at 12.5%, and both countries have framed the debate as one of national sovereignty.

"We are in favour of retaining the policy of setting the tax rate as a national competency, maintaining a level of corporate tax rate suitable for the sustainable development of the economy and investments," Petrides said.

Alternatively, they're in favour of waging economic warfare against their neighbours, and the rest of the world, on behalf of parasitical multinationals. Which really invites the question of how long the rest of the world is going to put up with such behaviour.

(As for the EU, is it within the competency of the European Parliament to legislate on the matter, if member-states won't agree to a directive?)

by IdiotSavant on Fri Jun 4th, 2021 at 12:18:15 AM EST
Re: This is obscene (4.00 / 3)
The short answer is no, it is not within the competency of the EU Parliament to legislate on tax affairs, as that remains within the competency of member states, although the boundaries of that competency are being tested in the Apple Tax case where the Commission is suing Apple for back taxes worth €13 Billion - an action the Irish government is opposing even though it would be the main beneficiary. Apparently they are miffed that the integrity of the Irish tax authorities is being called into question.

In both the Apple and Microsoft cases the profits are generated by sales of intellectual property around the world and it is up to national governments to decide how they want to tax sales in their territories. The US threatened trade tariff retaliatory measures when the EU/France proposed a digital sales tax to do this.

The loophole that a company can be registered in Ireland without being tax resident here is currently being changed, which is perhaps why Microsoft channelled historic profits through here ahead of the deadline. The practice has been obscene, as you say.

Smaller countries like Ireland and Cyprus claim they need to set lower tax rates to compete with the bigger, more central members of the EU as otherwise all global corporates would HQ their EU operations in Germany or France. This wouldn't be so controversial if Ireland's 12.5% headline rate was actually the minimum rate applied, but as you say, further loopholes like the double Irish and Dutch sandwich have allowed some corporations to evade tax altogether.

The Irish government is resigned to a global minimal corporate tax rate being agreed at OECD level and that the days of extreme tax competition are numbered. Increased mandatory reporting of corporate profits at national level has also been recently agreed although opinion is divided on how effective it will actually be in increasing the tax take.

The Irish government doesn't have a problem with Biden's 15% global minimum corporate tax proposal and is expecting a drop in its tax take as companies are forced to declare profits where they are earned as part of the BEPS process. It's a case of "O Lord, let me be virtuous, but just not yet". The Augustinians have a long history in Ireland.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jun 4th, 2021 at 12:54:22 PM EST
[ Parent ]
Re: This is obscene (4.00 / 3)
Not sure I would categorize it as "cheating." The gigantic multi-national corporations work with very clever lawyers and accountants to optimize their tax bills within the limitations that are presented by the various governments. Expecting a company to voluntarily pay taxes out of generosity is not realistic.

This situation is entirely the fault of the countries involved.

by asdf on Fri Jun 4th, 2021 at 11:16:28 PM EST
Re: This is obscene (4.00 / 2)
Yes but the question as to how long the EU has to put up with this disloyalty/cheating/corruption is very much open. I think the blackmail option, as currently being tried against Poland and Hungary over rule of law, is absolutely necessary and justified (you don't want EU common rules on tax? Well you want be wanting your various EU subsidies either...)
i.e. the rule of unanimity is not long for this world (or this Europe)

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Mon Jun 14th, 2021 at 03:55:21 PM EST
[ Parent ]
This is obscene | 5 comments (4 topical, 1 editorial, 0 hidden)


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