G7 agree minimum 15% corporation tax

bunny_

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Google: "ESRI Broad-based tax increases may be needed to fund future public spending"

A percentage point on the lower tax rate & a percentage point on the upper tax rate would bring in an extra billion according to the ESRI

I'd love to hear more from the ESRI on what to do about the government revenues now... the only thing I can see is lowering the tax rate bands to include more higher rate tax payers or at least freeze them for 2 or 3 years to let inflation catch up.... if government revenues excluding PRSI are €62 billion in 2020 and were approx €50 Billion in 2015 that's increasing approx €2 Billion every year just with inflation, thereby covering the deficit from corporation tax... some mild austerity might be in order
 

kinnjohn

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Google: "ESRI Broad-based tax increases may be needed to fund future public spending"

A percentage point on the lower tax rate & a percentage point on the upper tax rate would bring in an extra billion according to the ESRI

I'd love to hear more from the ESRI on what to do about the government revenues now... the only thing I can see is lowering the tax rate bands to include more higher rate tax payers or at least freeze them for 2 or 3 years to let inflation catch up.... if government revenues excluding PRSI are €62 billion in 2020 and were approx €50 Billion in 2015 that's increasing approx €2 Billion every year just with inflation, thereby covering the deficit from corporation tax... some mild austerity might be in order
Between 2015 and 2020 a good bit of the extra 12 billion you posted about came from companies paying more Corporation tax where the government tightened up on corporation tax loopholes hoping to head off the changes we are now seeing,

The Minister seems to think Corporation tax will be falling not rising once the changes are made even though our rate will be going up to as least 15%,

Do you remember The Irish Economy grows by 26.3 % in 2015 headline,
 
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bunny_

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Google: "Tax Inversions Wikipedia"

There are a good few U.S. companies who are now Irish (because of tax inversions) where we will get 15% of their foreign income if they are bigger than 750 million revenue per year, I think Corporation tax for businesses smaller than 750 million will stay the same 12.5%. It's a pitty from an Irish standpoint that the Pfizer/Allergan deal didn't go through a few years ago, that was worth 150 Billion!

The G20 has to agree to the measures, so it's possible it could go up to 21% like the U.S. & France wanted originally.

As for the economy growing 26.3% that was Intellectual Property being transferred to the Irish Patent Box to lower Corp Tax to 6.25%... I think that's what happened anyway...
 

kinnjohn

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I remember back when the Pfizer/Allergan deal got called off, people in the know saying the USA would have lost out on tax but Ireland would not have gained any extra tax if the deal went through, It was pressure from Obama that got it called off I think,
 

Purple

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I would like less tax by the way but we have some of the lowest tax to GDP in Europe so we can't complain too much either... Google: tax revenue to gdp ratio
GDP is a nonsense is an almost meaningless figure to use in this country as it is so inflated by the MNC's who are resident in Ireland but carry out very little economic activity here. GNP* is a much better figure to use.

While this is a wealth grab by countries like France and Germany it's also the case that international tax structures are almost a century out of date and MNC's manage to pay very little tax.
 

joe sod

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GDP is a nonsense is an almost meaningless figure to use in this country as it is so inflated by the MNC's who are resident in Ireland but carry out very little economic activity here. GNP* is a much better figure to use.
They only came up with GNI* I think it was called after they were ridiculed internationally when GDP rose by a ridiculous amount as described above by bunny , that's where the "leprauchan economics" term came from. The whole shenanigans of moving intellectual property from silicon valley to Ireland should never have been allowed , I doubt we benefited much from that intellectually, is an Irish tech or pharma company going to come up the next generation iPhone or covid vaccine?
 

Purple

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They only came up with GNI* I think it was called after they were ridiculed internationally when GDP rose by a ridiculous amount as described above by bunny , that's where the "leprauchan economics" term came from.
We're not the only country with a massively inflated GDP and GNI has been around for a while but GNI* is an Irish invention which controls for the distortionary effect of Multinationals on our macro economic statistics.
The whole shenanigans of moving intellectual property from silicon valley to Ireland should never have been allowed , I doubt we benefited much from that intellectually, is an Irish tech or pharma company going to come up the next generation iPhone or covid vaccine?
We benefit from it massively; we use the taxes we steal from other countries to fund our bloated and grossly inefficient State sector.

If we lose €3.5 billion in taxes the first thing we should try is wasting €3.5 billion less each year. If you don't think that's possible ask yourself if you could save 5% of your household budget each year or, even better, would you spend 5% more than you do now if you could run your house using someone else's money.
 
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Zlatanintallagh

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Has anyone ever watched the spider's web? It's a documentary on the UK's 'second empire' and how the city of London, via its crown dependencies like Bermuda, facilitate one third of the world's corporate and private tax avoidance. It's a very good watch.

If Rishi has signed up to this and will bring the crown dependencies along then while it's crap for Ireland, I can see it being good for the world as a whole.

The UAE entered the top ten list of tax avoidance facilitators last year for the first time, which makes me think that some are already preparing for the UK gov to call a halt to the tax free Carribean hideaways.

Will the UAE agree to the global tax minimum? I highly doubt it. Will China, Singapore etc? Again, i highly doubt it.

The G7 can try bring this in but other countries will pop up as tax havens. There'll be other work arounds.
 

kinnjohn

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The G7 can try to bring this in but other Countries will pop up as tax heavens, there will be other workarounds,


I don't think Ireland will be part of the workaround, Our Government already saying We will be down 2 to 3.5 billion in tax receipts,

It is Pascals job as president of the euro19 Countries to make sure Ireland do not have a workaround if they reach an agreement on the changes to Corporation tax ,
 
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joe sod

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If Rishi has signed up to this and will bring the crown dependencies along then while it's crap for Ireland, I can see it being good for the world as a whole.
The focus is on the tech companies though and the gargantuan profits and power they now have, governments don't like that in their eyes the tech companies have moved into their arena and they want to bring them down a notch or two. The fact that Ireland hosts these here means we are really in the firing line now. Also the fact that all the G7 governments want more tax from them and they are mainly US companies we dont have much say really.

The US also has its own tax shelters and Wall street is a much bigger fish than london , I doubt the brits are going to offer up the city of london as a sacrificial lamb unless Joe Biden and others like Switzerland are also offered up. They have the advantage anyway in that they are hosting the G7 so can control the agenda.
 

Sophrosyne

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One of Ireland’s objections was that the proposals were in the form of a competition issue rather than tax law. This allowed majority rather than unanimous acceptance.

If the proposed changes to the corporate tax rate and taxing rights of market countries are to have any meaning, it would have to be through changes to tax laws.
 

kinnjohn

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Irelands objections don't affect the big players there will still be plenty of tax shelters when this is sorted,
According to Pascal Ireland Corporation tax take will to go down by 2 to 3.5 billion, but is this the full story will there be job leakages to the new tax locations,

The point is the Corporation tax take from Companies located in Ireland at present will go through the roof the few billion we take from them at present is only a thimble full of what they are going to pay unless they can offset tax by having a presence where the New extra tax is due,

Will, they stay in Ireland or move to a location where they may be in a position to offset some of the extra tax paid for jobs,
 
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Sophrosyne

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The point I was really making is that because this majority agreement was reached on the basis of competition, that is a long way off alignment of tax rules, which could take years.
 

joe sod

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Our GDP is based on the huge presence of the U.S. tech companies located here. If that were to reduce due to the corporation tax changes then our borrowings look unsustainable. Already we have the highest per capita in the EU and it rose faster than any other country during the pandemic. That is all based on inflated GDP figure rather than GNP, how sustainable would our borrowings be if we had to revert to the actual real size of our domestic economy?
 

Dublinbay12

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Is there a tangible risk that we would lose the 'big tech' presence in Ireland? The big tech firms need to maintain a European base (local knowledge, timezones, logistics, target markets etc), a level tax playing field across Europe means less likelihood of them moving to another location.

I don't think at this stage that they would make their decision solely based on tax to pay.
 

Zenith63

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I don't think at this stage that they would make their decision solely based on tax to pay.
Combined with the other challenges these companies face here, it may begin to tip the balance out of our favour. Some of those challenges being expensive housing in the city centre, high cost of living, poor public transport, heavy traffic levels, perception that income taxes are high (compared to their US based colleagues), not enough local talent combined with difficulties bringing in talent from non-EU countries to name a few I’m aware of as being a concern.
 

kinnjohn

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Pay would not be an issue up to now because of the low corporation tax they were paying,

In fact, some may have allowed pay to drift up high because of difficulties hiring home-based talent and the need to attract talent from outside Ireland,
With the tax dividend gone Ireland may not be as attractive when recruiting or expanding,
We have seen it already happen in manufacturing Dell just one of many that come to mind, We have seen manufacturing moving out of Ireland to other EU states for less costly talent and lower cost base,
 

joe sod

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We have a huge welfare state to pay for now only exasperated by the pandemic, still just under 300k still on the pup even though most sectors now opened . The lack of urgency and diligence in ironing out fraud and people not wanting to go back to work is astounding. All this of course paid in part by the corporation tax
 

Zenith63

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Pay would not be an issue up to now because of the low corporation tax they were paying,

In fact, some may have allowed pay to drift up high
I know a few people working in the FAANG companies here, lower pay and higher taxes than in the US are regular grumbles about being based here.

I don’t think we can/should fix either of these though to be clear, just saying they’re on the list of cons. The housing/traffic/transport however is something that has been called out by these companies for years, could have been fixed had we started earlier and would have been for the betterment of everybody in Ireland not just these high-end employees. It’s a real shame.
 

Purple

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I know a few people working in the FAANG companies here, lower pay and higher taxes than in the US are regular grumbles about being based here.

I don’t think we can/should fix either of these though to be clear, just saying they’re on the list of cons. The housing/traffic/transport however is something that has been called out by these companies for years, could have been fixed had we started earlier and would have been for the betterment of everybody in Ireland not just these high-end employees. It’s a real shame.
The problem is that we have the wrong conversation about these issues. The bottom line is that the State is very inefficient in delivering services and infrastructure. Therefore we have to tax more to deliver less.
 
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