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Comment by ourmandave | Hacker News Reader

By September 2018, US–controlled corporates were 25 of Ireland's 50 largest companies, paid 80% of Irish business taxes,[126] and directly employed 25% of the Irish labour force,[127] and created 57% of Irish value-add.

From here:

https://en.wikipedia.org/wiki/Double_Irish_arrangement#Conce...

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A great deal for Ireland, a terrible deal for Europe.

Ultimately I think there will need to be some kind of international agreements on taxation to prevent these kinds of tax dodges. They'll just find the next loophole now that this is closed.

It’ll have to be a highly concentrated effort, as (to my understanding) taxation policy is pretty much prisoners dilemma. One state has incentive to have slightly lower taxes than all the others to get companies to incorporate there, and then it’s a race to bottom.

That assumes countries have to accept that the licensing fees are tax deductible.

Putting some tariffs on licensing intellectual property seems like a non-prisoners dillema solution

Not sure I follow. If US Multinational charges license to Italian Subsidiary, then the pricing impacts the profit allocation between the two entities. The IRS will say "the license should be really high" so the profits in the US are higher. The Italian tax authorities will say "the license should be low" so they get more tax revenue.

For a complicated technology that's licensed, remember that neither taxing authority has any clue as to what it's actually worth. They don't care. They just want tax revenue. Remember to think about both taxing authorities when analyzing these transactions and imagine the ridiculous situations multinationals are put in.

This is exactly the goal of the global minimum tax rate the US is pushing for right now.

And yet it hasn't been that. Plenty of countries with 0 corporate tax, Why aren't all the companies incorporated there? Plenty of places with 0 income tax too, why isn't everyone moving there? The truth is balanced and properly planed taxes with a stable economy are only a minor part of doing business.

There are international agreements on taxation. Tax authorities can also work with taxpayers and agree on the transfer price for goods and services in advance.

Tax loopholes typically refer to ambiguous rules. In this case, the IRS was excruciatingly detailed on how to price related party intellectual property transfers. I always laugh about how congress / citizens get angry at when taxpayers follow their laws.

Yes, I agree the laws are ridiculous, but no more ridiculous than the standard deduction the mortgage interest deduction and a myriad of other arbitrary tax laws.

It would be easier to abolish corporation tax and shift to taxing capital gains and dividends as normal income.

There's a reason for having many different taxes: it makes it more difficult to dodge them all and also reduces the payout of dodging any given one.

It doesn’t seem to be making it difficult to dodge this one.

You are missing the point.

No, I got the point, I just didn't think it was a good one.

> They'll just find the next loophole now that this is closed.

No, a "loophole" that stays is place for years and allows enormous tax evasion is not a glitch. A legitimate "bug" in a legal system can be fixed in weeks.

Legislators work together with lobbyists to create these loopholes when needed. These are not glitches, they are the legal equivalent of backdoors.

No, companies will not simply "just find another one". There's a clear political intention behind creating new loopholes or not doing so.

You may be right, but I'm inclined, especially with government, to not attribute to malice that which can be adequately explained by incompetence.

Interestingly, the party is not yet over? https://www.bloomberg.com/news/articles/2021-03-05/irish-eco...

Or did companies decide to stay in Ireland now that they have to pay taxes? Maybe the pandemic has made it difficult for them to move.

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