The problem is that if those countries raise their taxes companies will just find other tax havens. I think that's why they are trying to find a solution that will work no matter where someone is technically headquartered
You cannot move latency sensitive infrastructure easily if at all. (Most of networking infrastructure including cloud services.) At least once laws relating revenue (not income) at location to tax at location committee into play.
Otherwise everyone would already operate out of Christmas Islands etc.
The EU very skillfully and intentionally crafted the current Dutch Sandwich style scheme by essentially legislating tax heavens in various EU and quasi EU territories (the EU outermost territories make it a very fun map to look at).
The thought behind it was to both attract large companies to pay tax in the EU and allow EU multinationals to remain competitive without having to go somewhere else.
But a lot has changed the EU became less and less competitive and it didn’t really manage to bootstrap any new giants and lost a lot of its former ones.
The plan also did not account for companies like Google, Microsoft and Apple to exist with their market cap nor that companies would love nothing more than to sit on piles of cash that amount to the entire GDP of Europe when those laws were legislated.
Now with US companies actually repatriating cash the EU is basically looking for a new way to get some of that money back and more.
Ireland's corporate tax rate is 12.5% which is in the lower half of the table of EU rates but that's no basis to brand it a "tax haven".
People get riled up because of an exclusively American twist to their corporate tax rule which allows American companies to defer paying US corporate tax on foreign earnings until the money is "repatriated". This is why you never see UK, German, Japanese, etc. companies use Ireland as a tax "haven".
Ireland follows international law in taxing multinationals on the profits generated in Ireland. When you hear a claim along the lines of "Apple only pays 2% on its revenues in Ireland", it's because the vast majority of the profit is taxable in the US not in Ireland but payment is deferred because of this US tax loophole. Just because the cash hasn't been handed over to Uncle Sam, doesn't mean it isn't due.
It's perfectly understandable that the US government is unhappy at this attempt by a foreign government to grab corporate tax which by all international standards belongs to the US treasury. If the EU (and I'm a proud European) wants a share of digital tax, then they should grow their own profitable tech companies to tax instead of selectively eyeing up US tech companies. The US doesn't get to impose corporate tax on German car makers or French wine producers - nor should the EU get to impose a corporate tax on US tech companies.
"When you hear a claim along the lines of "Apple only pays 2% on its revenues in Ireland", it's because the vast majority of the profit is taxable in the US not in Ireland"
No, this is not the reason. They pay an incredible low tax rate for all EU profit because of special illegal deals.
That’s not a fair comparison. You don’t pay corporate tax based on a percentage of turnover so your rate has nothing to do with corporate tax rates. They pay Irish corporate tax on profits generated by their operations in Ireland which are understandably a tiny fraction of their sales in Europe. The rest is taxable in the US and in fact Apple have recently started repatriating foreign profits to the US and are paying US corporate tax on them.
First, they shift all profit to Ireland as "licensing costs" for intellectual property.
Next:
"Ordinarily, those profits would be taxed in Ireland at the relatively low rate of 12.5 percent but — thanks to an agreement between Apple and Ireland — the vast majority of profits in Ireland were attributed to a "head office" not located in any country and therefore not subject to taxes in Ireland or anywhere."
https://www.cnbc.com/2016/08/30/how-apples-irish-subsidiarie...
You’re contradicting yourself - they cannot simultaneously shift all profits to Ireland and to a non-Irish head office. They split the profits on their international sales channeled through Ireland between both. The non-Irish profits are taxable by the US which is why the US government is fighting the EU over this as they rightly (in my opinion) see it as a money grab.
No he is not contradicting himself, and yes they can do both of those and spirit away the entirety of their EU profits into a caribbean island with minimal taxation. Read up on the double irish dutch sandwich tax strategy.
You’re implying that by moving international profits to a Caribbean country means Apple has avoided corporate tax? Like laundering money?
This is not the case - they park their international profits in the Caribbean because US tax code allows them to keep profits offshore and only pay tax when they bring the profits onshore.
If Ireland was facilitating corporate tax avoidance by an American country, why is the US supporting Ireland in the Apple case in the ECJ?
Does this not suggest that there is more complexity to this situations than the hyperbolic headlines?
On car makers or wine producers the US can impose import duties i.e. 25% on light trucks. There is no equivalent to import duties for online businesses, hence this tax plan.
Sure every country can just impose duties on imports. But it's an impoverishing move for the planet. The last time every country believed this was a good idea was in the 1930s and it lead to economic devestation and arguably contributed to WW2.
I think a major point of contention is still if the Irish made special accommodations for Apple. The European Commission claims so, and it doesn't seem a far-fetched accusation [1]. The Irish government still energetically denies it [2].
it makes it obvious who will actually pay the tax - the consumers of the products
I'm not sure you understand how taxation works. Tax is always paid by the consumer, one way or the other. If the Government would show up on your doorstep one day and demand, in a single payment, all the money they suck out of you over the course of a year - directly or indirectly - as a lump sum, there would be a swift, brutal and extremely violent revolution.
I am not sure of the exact percentage, but I suspect that about 60 to 70% of our money eventually ends up with the Government. On top of that, our pension funds are being raided and drained, social services are in rapid and consistent decline since the 70's - not just direct social security, but also healthcare, education, safety and security, etc. Where does the money go? I look around, and pretty much the only place I see real, serious money flow into instead of out is war, or distracting people from all the money that is going into war.
"Does the number of warships we have, and are building, really put America at risk, when the U.S. battle fleet is larger than the next 13 navies combined — 11 of which are our partners and allies?
Is it a dire threat that by 2020, the United States will have only 20 times more advanced stealth fighters than China?"
We are all being played, and it is a game that has been played since the first caveman picked up a rock and brained the guy next to him for a better spot at the watering hole.
All taxes are paid by the consumer of the products, always. This is trying to fix the gap in taxes companies have to pay. Why does Amazon pay less taxes than a 3-person book shop? Do you deem that appropriate?
As far as I can tell the corporate tax in Ireland the 2nd lowest in the EU, with only Bulgaria being lower. Calling that "in the lower half" is reaching a bit, isn't it?
