Ireland joins OECD International Tax agreement

[collectedparts]

My take on this is that Ireland is now willing to come into compliance because post-Brexit, they now have a monopoly on "urban core that could sustain an HQ for multinationals in a natively-English-speaking country in the EU."

In other words, they relied on tax advantages as a differentiator for companies to choose Dublin over London for their EU HQ. But now, what would you choose if not Dublin? Obviously Paris and Berlin are candidates but if you're a straightforward multinational, or certainly a company that is actually based/headquartered in the US, you're going to experience a lot less of a shock in a natively-English-speaking country.

So it seems to be that Dublin wins now, tax advantage or no tax advantage. Which likely makes drawing the ire of other countries for being a "haven" less worth it.

[rusk]

Official Ireland were dragged into this kicking and screaming. There really wasn’t much choice involved - unless the OECD brass were thinking in generous terms towards Ireland. If anything I’d say the timing of this is in part what drove Brexit - this has been coming for a few years now and “City”* of London is one of the worlds biggest hubs for processing funny money.

* This is the somewhat cryptic name for the financial services enclave in the middle of London City.

[SSLy]

If you mention Berlin and Paris, then also Amsterdam and Warsaw deserve mentions.

[tobylane]

English common law is the basis for the American and Irish systems. Continental European countries, including Malta, are different.

[gorgoiler]

Dublin is a beautiful city. It is very small though, compared to London.

Imagine moving Wall St from NYC to Austin TX.

[_3u10]

Everyone came on board this agreement. I'm guessing that there is enough wiggle room that low tax jurisdictions can still operate without much problem. Also, I think that defacto the 15% will become a maximum, not a minimum, similar to how posted speed limits are defacto minimums not maximums.

[gerdesj]

I don't think you realize which Ireland you are talking about. There's Éire which is the Republic and there is also Northern Ireland, which is the UK bit in Britain.

If UKoGBnNI decided to set a low tax rate ...

[dandotway]

With Hollywood Accounting[1], you make taxable profits transform into untaxable expenses that you pay to yourself for services you rendered to yourself, and Ireland has been a common destination for this sort of money to flow.

  Hollywood accounting can take several forms. In one form,
  a subsidiary is formed to perform a given activity and the
  parent entity will extract money out of the film's revenue
  in the form of charges for certain "services". For example,
  a film studio has a distribution arm as a sub-entity, which
  will then charge the studio a "distribution fee" — essentially,
  the studio charging itself a sum it has total control over and
  hence control the profitability report of a project.

[1] https://en.wikipedia.org/wiki/Hollywood_accounting

Essentially, Apple USA makes billions selling iPhones in the USA, then pays those billions to Apple Ireland for the right to put little Apple logos on iPhones. Likewise, Google USA pays billions in US ad sales profits to Google Ireland for the right to use Google tech for Google search.

When the Irish loophole closes I'm sure they'll think up another "One Weird Trick" to make taxable profits mystically transmute into untaxable expenses.

[eru]

The US can change their tax system, if they want to.

Eg they could tax land value. It's very hard to move land out of the country or hide it. https://en.wikipedia.org/wiki/Land_value_tax

Or they could tax sales / consumption instead of trying to tax company profits.

Company profits are just a bit too nebulous to tax properly.

Eg you can reduce your profits just fine by shifting your capital structure from being financed by equity to being financed largely by debt. (And as we all know, too much leverage is not all that great for the resilience of the economy.) That doesn't even need any Hollywood accounting, it's very orthodox accounting.

Yet, we keep pushing companies in that direction with the incentives that most tax systems around the world set.

[colechristensen]

Probably, but it does seem over the last twenty years there has been real actual effort to close loopholes. It is slow which can be frustrating, but we’re also talking about changing the way many businesses work and quite complex topics which are not always obviously right or wrong.

[BelenusMordred]

> When the Irish loophole closes I'm sure they'll think up another "One Weird Trick"

Should countries not compete with each other and simply bow down to accept whatever corporate taxation rate the Americans tell them to have?

[munk-a]

I've always been baffled as to how this is seen as a multi-national issue. The US could always implement unilateral minimum VAT and profit[3] taxes on corporations forcing them to effectively pay whatever proportion the US demands to continue doing business in the world's largest consumer market. Just because you're only paying 3%[1] profit[3] tax in Bermuda doesn't mean you can necessarily skate around the remaining 12% when doing business in the US - the US could just pocket that additional 12% if nobody else wanted it. Implement a policy like that and the competitive tax advantage of havens disappears overnight and all this BS disappears.

We[2] have tax loopholes because we want to continue to have tax loopholes.

1. BS example I'm unfamiliar with the actual numbers.

2. Where "We" is lawmakers or maybe society as a whole as weighted by political power.

3. Edited: s/revenue/profit/

[Brakenshire]

Governments want to tax profits rather than revenues. A tax on revenues would kill a lot of high growth businesses.

[owlbite]

You probably have to be very clever to set this up so they can't be Company A (US) Ltd registering very little profit as they have to pay royalties to Company A (Tax Haven) limited without also inflicting massive collateral damage to smaller companies that can't afford the tax lawyers or preventing foreign companies from selling anything in the US.

[jedberg]

That would violate a bunch of treaties. Also, what would stop other countries (or the EU) from doing the same thing?

[syshum]

I agree with most of this, except for VAT

Lets not do that, We have enough hidden taxation in prices as is it, I am not a fan of this style of taxation as it allows for government to increase taxes (and prices) on consumers while never having to answer for those increases because the people take it out on companies and vendors not on the government where their anger belongs

VAT taxation is terrible and should always be opposed

[JaakkoP]

This is a shrewd move by Ireland.

Multinational companies chose Ireland largely because:

1) Low tax basis

2) English speaking EU country

3) Part of the Euro zone (less important than #1 and #2 to be sure).

Given the OECD tax agreement there are fewer low-tax destinations for companies to pick from. And because of Brexit there are no other English-speaking EU countries.

Companies in Ireland aren’t going anywhere and it remains a pretty good option for any new HQs looking to expand into Europe. Ireland is just making more money off of each of them.

[tobylane]

Ireland has English style common law, familiar to Americans. Malta doesn’t.

[space_rock]

Of course. Cartels are always about reducing competition. Even if a cartel between countries like OPEC or this agreement. Irland just killed the competition

[legulere]

There’s still Malta with English as an official language inside the EU and Gibraltar is now part of Schengen area as a result of Brexit.

Both are pretty small though.

[threatofrain]

> Global minimum effective corporation tax rate of 15% for multinationals with revenues in excess of €750 million

> No change to the 12.5% rate for businesses with revenues below €750 million

[harikb]

Hopefully 15% is for ( Total - 750 )

[kory]

Government should prove it can spend the money well before asking for more. The waste and incompetence I see in government is astounding. It's much worse than anything I've seen in private corporations.

Speaking specifically for America, the government can barely even agree on where it wants to spend its current "budget".

Say you have a couple who constantly fights over how to spend their $10m/yr budget, of which nearly half is borrowed, and 11% of which is spent on policing their entire neighborhood. Each year, they nearly default on their debt because they can't agree on a budget for the next year to keep paying interest.

You wouldn't give them even more money to solve their problems, because the problems are clearly with the amount and poor allocation of their spending. Why would you do the same with the US government?

[tomtimtall]

I have never heard anything worth remembering come form trying to argue about government spending or fiscal policy by treating it like household budgeting.

It’s kind of like if people argued that a bridge construction must be unsafe because they tried to make something similar in their kids sandbox and it fell apart when it got wet.

[oaiey]

This is not about asking for more money. This is about companies cannot fleeing rational tax rates of normal countries into countries which specialize in "stealing" the companies from normal countries and making this their code business.

[sgjohnson]

Surely all this does is makes offshore tax havens all the more attractive? Sure, some of them have signed up (i.e. Panama), but if they are not ditching the territorial taxation system, it changes absolutely nothing for them, and even if it would, Panama absolutely does not care about enforcing the exising law regarding taxation.

Sure, the companies will have to pay a bit more to their lawyers, but the way I see it, is that all it does is making offshores even more attractive.

[gruez]

>Surely all this does is makes offshore tax havens all the more attractive?

assuming they don't get sanctioned and/or tarrifed.

[lm28469]

I'm no expert but as I understand there are benefits from having an EU based entity when you sell your goods/services in the EU.

For example I doubt airbnb could pull its Ireland trick on EU countries from Panama (otherwise they'd already be doing it)

https://news.in-24.com/business/167774.html

[cblconfederate]

this will push most countries to compete towards 15%, and 'legitimizes' 12.5% corporate tax that other countries in the EU have. If it s no longer seen as punishable offense to move profits to malta, cyprus, bulgaria etc, lots more companies will do it.

[dzink]

It matters who is not in. Cyprus doesn’t seem to be on the list, along with many others. All it takes is one country to make this irrelevant.

[pmoleri]

Only if the joined countries don't implement some kind of differentiated tax on products and services commiting from outside the list.

[IkmoIkmo]

No, it just matters if countries are willing to implement consequences for non-membership. And that's frankly a pretty trivial thing from a political and technical perspective, so I'm assuming it'll come. Various countries already have lists, e.g. the EU has lists for 'non-cooperative third-countries', which can be used by member states to add witholding taxes for transactions with these countries in-particular as a preemtive measure to reduce aggressive tax avoidance.

Ireland is not joining this agreement for no reason, they're doing it because non-membership will hurt them more in the end.

[vegai_]

That's easy to fix, at least technically: punish financially all the countries who don't sign this. Just requires willingness to do this.

[anshumankmr]

Serious question: what about Luxembourg, the Cayman Islands, the Bahamas and quite oddly, Pakistan???

[dang]

Presumably related:

136 Countries agree to minimum corporate tax rate - https://news.ycombinator.com/item?id=28801599 - Oct 2021 (170 comments)

[busymom0]

I have never understood the whole "tax the rich" idea and I am not rich, don't own a house or car or stocks or anything expensive.

When and how will the taxes help you and me? The money just ends up going to a black hole for the government to spent inefficiently. And if you are in the US, the money gets spent on funding the military industrial complex for bombing more countries, regime changes, intelligence agencies, sent to other countries for random gibberish studies and hiring more admin or useless jobs.

I would recommend listening to the first few minutes of this "Walmart vs. The Morons" video to understand how inefficient the government really is:

https://youtu.be/oKFdAOKq4Lk

[adgjlsfhk1]

Here's a short list of things tax money funds: Roads

Schools

Healthcare (in civilized countries)

Making sure companies selling medicine aren't killing people

Making sure companies don't dump toxic waste into rivers and lakes

Note that comparing Walmart vs the government is especially funny since most of Warlmart's expansion comes from the fact that it under-pays it's workers so much that the federal government has to support them since they aren't able to afford housing and food. It's also really funny that he brings up Fanny Mae as an argument against government efficiency since they are a private company that screwed up so badly they basically destroyed the economy. It's also really funny that he brings up healthcare since Medicare and Medicaid both run several times more efficiently than privately run healthcare.

[jpmoral]

In Australia, I like:

- parks

- museums

- libraries

- free primary and secondary education

- subsidised tertiary/vocational education

- a (relative of course) functioning public transport system

- healthcare

- worker protections

- other stuff I'm sure I'm forgetting

Sure, government is inefficient. All large orgs are. But are you telling me for-profit corporations are going to create a society with all these things for everyone?

[Agathos]

> When and how will the taxes help you and me?

In the US? On our 65th birthdays. Military spending is big, but Medicare is bigger.

[yesenadam]

(I'm not in the US, and agree that that's a disgraceful list.) Inefficient compared to what? What is your proposed alternative?

> When and how will the taxes help you and me?

Well.. for example, you use roads I assume.

[lm28469]

> "Walmart vs. The Morons"

The US doesn't have the same history, culture, institutions, structures and views on what society is as Europe.

For having lived in the US and in several EU countries I can tell you it's extremely obvious to see where the money is going

[fcanela]

I am really surprised by the HN community. I wasn't expecting people to downvote an user who politely expressed his point of view just because theirs is the opposite.

[hartator]

It will be good to focus in reopening most borders before moving forward with more bureaucratic agreement.

The world is becoming a closed place where out of democratic reach bureaucrats are making most of the decisions.

[yourapostasy]

I'd like to see some domain experts chime in on whether CAIA neuters this headline, and whether Ireland will swan on down the road with multinationals continuing on as before.

[technick]

McKesson is screwed

[dougmwne]

All these greyed out comments about international taxation of all things really tells you something about the current state of the HN userbase and increasing political polarization. We even managed some completely off-topic insults of Texas and Poland. Fine work fellas!