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Comment by anigbrowl | Hacker News Reader

As an Irish person I find the widespread use of the Irish tax code for the purpose of tax avoidance by multinationals deeply embarrassing. This has made the country something of a pariah among EU tax authorities without conferring any discernible benefit to the Irish economy.

http://en.wikipedia.org/wiki/Double_Irish_arrangement

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> without conferring any discernible benefit to the Irish economy.

Mildly put ... Some people might say it contributed to the problems the Irish economy has at the moment and also to those of the rest of the EU, which has to compete with the low taxation and loopholes the Irish tax code offers.

At least they are sticking to the rules, even with loopholes and a low tax rate, in Ireland. Greece has much bigger problems.

Greece has both loopholes (for ship owners / shipping companies, think Onassis) and corrupt tax collectors, but their biggest [OT] problem is the corrupt government that managed to greatly increase the interest on the country's dept so the banks could earn more - on purpose, I'm sure (good reading: famous composer and author Theodorakis about this => http://theodorakisfriends.com/news/the-truth-about-greece/).

Plus all the ridiculous feather-bedding of benefits to government and other employees that were clearly unaffordable.

Same for Apple, Yahoo, Google and other big companies here in Spain. They pay taxes in Ireland instead of Spain based on simple accounting tricks.

Just an example (Apple declares losses in Spain):

http://economia.elpais.com/economia/2013/02/25/actualidad/13... [SP]

http://translate.google.com/translate?sl=es&tl=en&js... [GOOGLE TRANSLATE]

Here is a better translation of the later:

http://elpais.com/elpais/2013/02/26/inenglish/1361883380_492...

Tried to submit the article, but it seems to have disappeared misteriously.

You make it sound it's not deliberate

Why be embarrassed? It's competition in the big scale for the lowest tax rate. Ireland is getting taxes

Also, big taxes hurt the small guy the most.

In the meanwhile, Google, Facebook and others are building offices in Ireland and hiring people!

While they could do so also in the rest of the European countries if there was an homogeneous tax code among the member states.

This way they make millions from countries like Spain, Italy, Germany etc, and give nothing back.

Mind, the fault lies in how the EU is organized, it makes perfect economic sense for the companies.

> big taxes hurt the small guy the most

taxes pay for infrastructure, so while it might "hurt" the small guy proportionally the most, it also provides everyone with better infrastructure that the small guy would never be able to provide (obvious example is internet).

So true, Ireland and the Netherlands are screwing themselves and the rest of the EU out of hundreds of billions of tax income every year. What's more, even state owned companies like Dutch Rail use the same arrangement.

http://en.wikipedia.org/wiki/Double_Irish_arrangement#Dutch_...

I'm just amused that in this whole thread the phrase "race to the bottom", which was invented to describe exactly this behavior, has not been used, when you can't move in a discussion about Android without it being used incorrectly (and often incoherently).

http://en.wikipedia.org/wiki/Race_to_the_bottom

When competition between companies lowers the cost of goods and services, that's considered to be a good thing; why is it considered a bad thing when competition between governments lowers tax rates? Lots of governments look like they could use a good dose of efficiency to me; more government services for less taxation.

It's not the rates. The point of the double Irish is that companies avoid paying even the low rate of corporation tax by assigning IP to shell companies that don't actually do anything except lease it back to the parent company so it can be booked as a tax-deductible 'expense.'

OT:

I'm always surprised the Irish aren't more pissed off about Bonno - uses Irish tax code that says artists don't have to pay tax, then goes around boasting how many euro he's raised for the 3rd world, while back home isn't exactly roses.

That doesn't bother me any; U2 has generated tons of indirect income for Ireland via tourism and overseas awareness of Irish culture (and products and services). That's the whole point of subsidizing the arts via the tax code. Most artists are earning much more modest incomes.

Things are not exactly roses in Ireland at the moment, but it's a long, long way from being a third world country.

The Irish I have talked to have little time for him when the topic comes up.

So tax competition is necessarily a bad thing? As to discernable benefit, you know better than I do but presumably the Irish are free to determine their own tax code and have arranged it to their advantage? If not, why not?

http://www.telegraph.co.uk/finance/comment/ambroseevans_prit...

does not indicate 'no discernable advantage' to me.

Please don't put words in my mouth. Tax competition that doesn't bring any significant benefits to your economy is not a good thing, because you're giving away something for nothing. I included this qualifier in my original post. Why have the government not arrranged it to the country's advantage? Because a) the government that put these rules in place was not that competent, b) it overestimated the amount of job creation that would result from offering such schemes and c) since Ireland is a small country with a relatively small economy it doesn't have that much negotiating clout. If they pulled the plug on the arrangement tomorrow many f those multinationals would just move their headquarters to Luxembourg or Lichtenstein or whoever else was willing to to offer them a favorable tax regime.

As for the Telegraph article, it doesn't really bear out your point, but rather echoes mine: "Microsoft, Google, Facebook, Twitter, and a host of household names have regional headquarters in Dublin, whether drawn by a corporation tax of 12.5pc or by the critical mass of a high-tech skills. How much value is added to the Irish economy is an open question." Those regional headquarters do not involve huge numbers of jobs, any more than the large number of US companies registered in Delaware make that state a hotbed of industrial and commercial activity.

If you're the shareholder of a big company that can leverage tax competition, then tax competition is a good thing. If you're anybody else - starting from businesses that have to cope with normal tax rates where they operate, and compete with the aforementioned big companies - it is a bad thing.

Doubtless, true at present in which case the Irish government consider this to be to their advantage.

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