Is Ireland about to become a fully-fledged tax haven?

Reading stories this one certainly makes one think so.

Shire, UBM and many others must be getting ready to make the switch to Ireland and take advantage of our lower and simpler tax rates.

What do the commonwealth of Machine Nation think about this? Are we about to become a fully fledged tax haven? It could have its upsides since the corp tax revenue can help us plug our government deficit.

I thought we had been one for many years, and that the evidence in the form of theatrical luvvies, popstars of the one hit variety and CEOs of Transatlantic firms was all around us.

I think its great from a business point of view. The lower the taxes on commerce the better the chance of attracting commerce to the island.
This means jobs, wealth and financial security for our citizens.

But.....


There is a lot more to life than money. We need to address the work/life balance. If we are very productive as an economy, we shouild be rewarded with things other than money.

1. Six weeks holidays per annum.
2. Community Centre/Swimming pool in every community of up to 5000 people.
3. Publically funded theater in every town of up to 10,000 people.
4. Publically funded Youth Cafe/Club in every community up to 1000 people.

Just for starters. We would be the envy of the world.

Tullamore County Council last week (or the week before) refused to second a proposal by an independent councillor Dervill Dolan (who actually lives in Clara - CownTown, not Tullamore, ironically), that 60 acres of waste ground in the town that joins the canal and the river and some forestry NOT be rezoned for housing but left as it is with the intention of turning it into a people's park. Tullamore is growing at an astronomical rate and in years to come the children of those daft councillors who refused to support the motion will wonder why nobody thought of leaving a bit of land near the town for a decent recreation area with pitches, etc.

Quality of life, my eye.

But according to Libertas - we'll have communists levels of corporate taxation within the year!

Kate P wrote:

Tullamore County Council last week (or the week before) refused to second a proposal by an independent councillor Dervill Dolan (who actually lives in Clara - CownTown, not Tullamore, ironically), that 60 acres of waste ground in the town that joins the canal and the river and some forestry NOT be rezoned for housing but left as it is with the intention of turning it into a people's park. Tullamore is growing at an astronomical rate and in years to come the children of those daft councillors who refused to support the motion will wonder why nobody thought of leaving a bit of land near the town for a decent recreation area with pitches, etc.

Quality of life, my eye.

That's actually a heartbreaking story - it shows how ignorant we can be and how we doom ourselves to the same old shite over and over. Some towns do not have enough green area in them and you'd wonder if there is a natural law which should dictate that a certain amount of concrete should proceed only if there is a certain amount of green - half and half sometimes.

That's following on from Johnny Keogh's cue to strike that work/life balance and we should make it our business to pursue that work/life balance because though it may not generate wealth, I'm convinced the pursuit of it can give meaning to the wealth we already have (natural and otherwise).

We should not become a tax-haven. Tax should be paid where profits are made.

Companies which make profits in Britain, France and Germany should pay taxes in those countries. These taxes would be used, for example, for British, French and German hospitals etc. The idea that it is morally ok for companies to establish a shell company in Ireland and pretend that they made their profits here in order to avail of a lower tax rate is wrong. Legal moneylaundering is still moneylaundering.

I do not want Ireland to be a nation of parasites.

And from a cultural point of view, the idea that the profits of moneylaundering be used for artistic purposes (publicly funded theatres, etc) is crass in the extreme.

DeGaulle, I think your name is a giveaway. I think you represent the interest Francais. However as I am Francophile, I am seduced enough by the beautiful language and culture to ignore for the moment the aspersions of parasitism and free theatre. There was a wonderful Moliere production I went to in the en plein air in the centre of Paris that I will swear was subsidised.

cactus flower wrote:

DeGaulle, I think your name is a giveaway. I think you represent the interest Francais. However as I am Francophile, I am seduced enough by the beautiful language and culture to ignore for the moment the aspersions of parasitism and free theatre. There was a wonderful Moliere production I went to in the en plein air in the centre of Paris that I will swear was subsidised.

I am not against subsidised theatre - but I am sure it was subsidised by French taxes, not by money France sneakily skimmed off the top of German taxes

In the day that was in it, I guess that France was a net recipient.

DeGaulle wrote:

We should not become a tax-haven. Tax should be paid where profits are made.

Companies which make profits in Britain, France and Germany should pay taxes in those countries. These taxes would be used, for example, for British, French and German hospitals etc. The idea that it is morally ok for companies to establish a shell company in Ireland and pretend that they made their profits here in order to avail of a lower tax rate is wrong. Legal moneylaundering is still moneylaundering.

I do not want Ireland to be a nation of parasites.

And from a cultural point of view, the idea that the profits of money laundering be used for artistic purposes (publicly funded theatres, etc) is crass in the extreme.

I was of the same mind just before the general election and so the higher corporation tax policies of SF - at first (and the Green Party?) - impressed me enough to vote for them in that election... I firmly believed we should be building our own industry here and exporting expertise or something particular to our genius and putting ourselves into a position of world demand. I believed that we were prostituting ourselves to multi-nationals and making ourselves wage-slaves - cheapening our economy and making it vulnerable to every draft and change in the world economy. At the time a German Minister was ranting about the low Irish Corporation rate too and I felt Ireland deserved. Then I read a book on the PDs and became a bit swayed by the idea of low taxes being suited to Ireland in some way ...

It's a question that brings up other questions about how ireland works, literally and figuratively. Our economy has gone through various shifts and changes of focus - agriculture, tourism, technology ... and I don't know if all of these industries now work concurrently thus enriching the many but I'm inclined to think not. Our agriculture is largely for export and tourists are a necessary evil at times. Then there's this total proliferation of agencies and bodies here ... doing what? If we have industries here shouldn't the first ones be agriculture and tourism for the irish themselves first? How self-sufficient in food and energy could we be? Shouldn't we pride ourselves on our visitors because we pride ourselves on our own country first? The car-park at the Cliffs of Moher is €8 and it's impossible to find a car-parking space nearby to walk to the cliffs and this is probably representative of much of the West which is an utter scandal - we should be focusing on repeat custom and encouraging locals and the Irish themselves to be tourists here. €8 to park isn't conducive to any of this and I wonder if it should be examined by some monopoly commission of Europe?

Figure 81: Standard Corporate Tax Rate (%), 2003

http://www.forfas.ie/ncc/reports/ncc_annual_05/ch04/ch04_01.html

This article is very germane to this subject. It seems that even more companies other than Shire and UBM are on their way, with actual jobs a possibility!

Auditor #9 wrote:

DeGaulle wrote:

We should not become a tax-haven. Tax should be paid where profits are made.

Companies which make profits in Britain, France and Germany should pay taxes in those countries. These taxes would be used, for example, for British, French and German hospitals etc. The idea that it is morally ok for companies to establish a shell company in Ireland and pretend that they made their profits here in order to avail of a lower tax rate is wrong. Legal moneylaundering is still moneylaundering.

I do not want Ireland to be a nation of parasites.

And from a cultural point of view, the idea that the profits of money laundering be used for artistic purposes (publicly funded theatres, etc) is crass in the extreme.

I was of the same mind just before the general election and so the higher corporation tax policies of SF - at first (and the Green Party?) - impressed me enough to vote for them in that election... I firmly believed we should be building our own industry here and exporting expertise or something particular to our genius and putting ourselves into a position of world demand. I believed that we were prostituting ourselves to multi-nationals and making ourselves wage-slaves - cheapening our economy and making it vulnerable to every draft and change in the world economy. At the time a German Minister was ranting about the low Irish Corporation rate too and I felt Ireland deserved. Then I read a book on the PDs and became a bit swayed by the idea of low taxes being suited to Ireland in some way ...

It's a question that brings up other questions about how ireland works, literally and figuratively. Our economy has gone through various shifts and changes of focus - agriculture, tourism, technology ... and I don't know if all of these industries now work concurrently thus enriching the many but I'm inclined to think not. Our agriculture is largely for export and tourists are a necessary evil at times. Then there's this total proliferation of agencies and bodies here ... doing what? If we have industries here shouldn't the first ones be agriculture and tourism for the irish themselves first? How self-sufficient in food and energy could we be? Shouldn't we pride ourselves on our visitors because we pride ourselves on our own country first? The car-park at the Cliffs of Moher is €8 and it's impossible to find a car-parking space nearby to walk to the cliffs and this is probably representative of much of the West which is an utter scandal - we should be focusing on repeat custom and encouraging locals and the Irish themselves to be tourists here. €8 to park isn't conducive to any of this and I wonder if it should be examined by some monopoly commission of Europe?

Figure 81: Standard Corporate Tax Rate (%), 2003

http://www.forfas.ie/ncc/reports/ncc_annual_05/ch04/ch04_01.html

The 8€ was to fund a crazy vanity project that wasn't even needed. Perhaps we could have gone for a sliding scale on the Corporation Tax and shifted some of the tax take into R and D as Edo said. Horse has bolted now though.

The past is prologue though (where did my lovely graph go?) Forfas must be switched off for the night.

This story means that this thread deserves a good bump.

I wonder how much in terms of corporation tax we stand to gain by welcoming Henderson. I hope its lots.

Ard-Taoiseach wrote:

I wonder how much in terms of corporation tax we stand to gain by welcoming Henderson. I hope its lots.

You get the distinct impression that this little tax haven stuff is going to cause a bit of trouble. Nobody minded when we were all making a few bob but now with the EU economy running out of steam, the big lads will take a long hard look at what we are doing.

They cannot stop us from charging 12% CT.

They can stop the likes of Hendersons from getting any juicy government business in GB, France, Germany etc. Ireland does not pose a serious threat to GB and EU tax takes but we would have to be very careful.

Edo wrote:

But according to Libertas - we'll have communists levels of corporate taxation within the year!

Didn't we the people kick the Lisbon treaty to the kerb? So we benefit from our tax situation still, for the moment, lets keep it that way!

Johnny Keogh wrote:

They can stop the likes of Hendersons from getting any juicy government business in GB, France, Germany etc. Ireland does not pose a serious threat to GB and EU tax takes but we would have to be very careful.

They should really compete by reducing their tax rates and by making it easier to pay taxes. Cutting contracts off from the likes of Shire and UBM simply give these countries bad reputations for business and that will reduce the level of business investment they get. This means less jobs, less tax revenue, less exports and less social goods created.

How about this. Charge a company 20% on their profits. In return let them hire workers with no income tax thereby getting the workers cheaper but still a great deal for the workers. A Free Enterprise Zone near Shannon

This of course won't be attempted as it is an example of what should be done

youngdan wrote:

How about this. Charge a company 20% on their profits. In return let them hire workers with no income tax thereby getting the workers cheaper but still a great deal for the workers. A Free Enterprise Zone near Shannon

This of course won't be attempted as it is an example of what should be done

At the moment the main thing we get out of the FDI is income tax. FDI's have driven wages up in Ireland and reduced competitivity, so that they can avail of a massive tax break. Irish industry has had to compete with the FDIs for workers. There have been infrastructural works done to accommodate the FDIs, with no claw back if they leave. On the plus side, as Edo says, they have taken in and trained up a workforce to a level that would not have been achieved without them. But if they leave Ireland (the FDIs), only a portion of the workforce have transferable skills.

Ard Taoiseach, with our very high costs, poor access to high speed broadband and high shipping costs (now estimated at 9% of price) why would any FDI manufacturing outfit not shift to mainland Europe or back to the States? The "internationally traded service sector" is a lot of it finance, and in turmoil, but still holds a better long-term prospect: but only if the cost base is reduced and high speed broadband provided.

Ironically, the idea of being a tax haven may be the last refuge of a scoundrel, but one of the few recourses for small islands.

cactus flower wrote:

youngdan wrote:

How about this. Charge a company 20% on their profits. In return let them hire workers with no income tax thereby getting the workers cheaper but still a great deal for the workers. A Free Enterprise Zone near Shannon

This of course won't be attempted as it is an example of what should be done

At the moment the main thing we get out of the FDI is income tax. FDI's have driven wages up in Ireland and reduced competitivity, so that they can avail of a massive tax break. Irish industry has had to compete with the FDIs for workers. There have been infrastructural works done to accommodate the FDIs, with no claw back if they leave. On the plus side, as Edo says, they have taken in and trained up a workforce to a level that would not have been achieved without them. But if they leave Ireland (the FDIs), only a portion of the workforce have transferable skills.

Ard Taoiseach, with our very high costs, poor access to high speed broadband and high shipping costs (now estimated at 9% of price) why would any FDI manufacturing outfit not shift to mainland Europe or back to the States? The "internationally traded service sector" is a lot of it finance, and in turmoil, but still holds a better long-term prospect: but only if the cost base is reduced and high speed broadband provided.

Ironically, the idea of being a tax haven may be the last refuge of a scoundrel, but one of the few recourses for small islands.

FDI is a good thing, especially for a small open economy like ours. quite simply, an autarky (the opposite to an open economy) is not possible for ireland.

we need more robust enforcement of transfer pricing laws currently within our tax treaties with other nations.

for the IFSC "10%" companies (charged the same tax as manufacturing companies), any profits or margins had to be at "arms length" to comply with the tax cert (ifsc 3d cert). in practice many corporations based "intergroup lending" operations there earning a margin between loans received and loans lent. this margin had to be at arms length (either euribor plus 2% or libor plus 2% or such) and provably at arms length.

the strategy was to put risk free fixed or slightly floating income in those companies as international tax strategies place high risk income (i.e. big risk but big rewards) in high tax countries. the reason for this is that if your international operation made significant losses, losses "grouped" in ireland at 10% are much less valuable as losses "grouped" at, say, the US rate of 40%.

Johnny Keogh wrote:

Ard-Taoiseach wrote:

I wonder how much in terms of corporation tax we stand to gain by welcoming Henderson. I hope its lots.

You get the distinct impression that this little tax haven stuff is going to cause a bit of trouble. Nobody minded when we were all making a few bob but now with the EU economy running out of steam, the big lads will take a long hard look at what we are doing.

They cannot stop us from charging 12% CT.

They can stop the likes of Hendersons from getting any juicy government business in GB, France, Germany etc. Ireland does not pose a serious threat to GB and EU tax takes but we would have to be very careful.

I think you are right, Johnny, in saying that we have to be careful. I would prefer Ireland to be investing in infrastructure and domestic companies. We have no truly world class companies in Ireland of domestic origin. We should be aiming at building up companies in sectors where we can count on a distinct advantage. I am very averse to the idea that we continue to pin our hopes on a tax regime which could change or some such nebulous comparitive advantage.

I agree with Slim Buddha that we are big enough to have some world class indigenous industry. Where is our equivalent to Nokia, for example ?
Over reliance in FDI is a potential disaster. At the moment 90% of what Ireland exports comes from foreign firms. They have no long term affiliation here and a lot of them could be gone in ten years time.

smurfit kappa is a world leader.
ryanair is a world leader.
kerry group is a world leader.

given our meagre natural resources, we're not going to have heavy industries native to our country. and i'm sure finnish internet commentators are posting about the finnish overreliance on one company.