Ireland will apparently announce plans to phase out its “Double Irish” tax arrangement that has allowed companies like Apple and Google to save billions, according to a Reuters report citing sources familiar with the matter.
Over the past 18 months, the country has been criticized by both the United States and Europe for tax loopholes that let companies slash their overseas tax rate to single digits. Preliminary findings by the European Commission recently slammed a “sweetheart” tax deal on the part of Ireland that allowed Apple to avoid paying taxes by building up a massive offshore cash pile of $137.7 billion in the country.
The complex tax structure let multinational companies move untaxed revenues to an Irish subsidiary, which in turn transfers the money to another company registered in Ireland but which is a tax resident elsewhere, usually a tax haven like Bermuda.
The new measures are set to be announced today, and would mean that all Irish-registered companies would have to be deemed tax-resident in Ireland. The move would bring Ireland in line with U.S. tax laws.
It is likely that companies such as Apple — which has had a base in Ireland since 1980 — will be given a grace period to change their accounting structures. New companies setting up in Ireland must abide by the new rules effective immediately.
Currently Apple’s multiple subsidiaries — like Apple Operations International, which is located in Cork — reportedly pay less than 2 percent in taxes. That’s substantially lower than the Irish 12.5 percent corporate tax and much lower than the U.S. corporate income tax, which ranks as the highest in the world.
Apple has denied any wrongdoing on its part for taking advantage of the loophole, previously pointing out that it “has received no selective treatment from Irish officials over the years.”
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
7 responses to “Ireland plans to close tax loophole that helped Apple save billions”
They’re going to move the HQ to Switzerland or Luxembourg in that case
“Double Irish” loophole to be abolished from Jan 1st 2015 for new companies. For existing companies it will be 2020.
Guess that means Ireland can enjoy the economic boom of Apple’s (and others’) local employees for 5 more years.
Then it’s “adios”. Or the Irish equivalent.
“Slán” would be the Irish equivalent. It will also mean that Facebook, Google, Twitter and about 30 other tech companies HQ’d in Ireland will leave probably too. We didn’t get any tax revenue from them, but we did get some residual employment in sales/admin staff.
Really don’t think they will jump ship. I’m sure this was’t a shock to the companies and the they would have been aware of the changes before Tuesday.If you look at there activity over the last couple of months.. .Facebook doubles office space, Twitter expanding. Linked IN building purpose built office block, Apple renovating and expanding its HQ in cork Microsoft building a purpose built office.. The list goes on..
OOPS. Medtronic just did this… I guess it’s not going to pay off for them now.
LOL! Best picture ever.