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There will be an inquiry into how Ireland uses the "global tax architecture," but the questioning will no longer require the presence of company executives

Apple and Google are off the hook when it comes to an investigation into how they use the Irish tax system

Apple, Google and other multinational companies were originally called to talk about their tax setups in Ireland; as such arrangements had come under fire recently. The companies were accused of dodging taxes in other countries by a special route through Ireland. 

However, Ciaran Lynch, chairman of the Irish parliament's finance committee, has cleared company executives from Apple and Google from having to explain their tax situations with Ireland. According to Lynch, there's no need for Ireland to have a tax investigation when the U.S.'s Senate subcommittee and the UK's public accounts committee are doing the same already. 

"If there has been suggestions that companies have been 'off side' on tax, then the right people to go are those who make the rules," said Lynch. "You don't go to Manchester United or Chelsea when they're accused of being offside – you go to the referee, or to Fifa or Uefa."

Lynch will, however, have an inquiry into how Ireland uses the "global tax architecture," but the questioning will no longer require the presence of company executives. 

In April 2012, The New York Times accused Apple of dodging millions of dollars in taxes in California and 20 other U.S. states (and dodging billions of dollars in taxes worldwide) by routing its money through other locations. Even though Apple is based in Cupertino, California, it put an office in Reno, Nevada which allows Apple to escape California's 8.84 percent tax rate for Nevada's 0 percent. Apple has also sold digital content from low-tax countries anywhere around the world, and has used the "Double Irish With a Dutch Sandwich," which allows Apple to cut taxes by directing profits through low-cost Irish subsidiaries, the Netherlands and the Caribbean.

In May of this year, Apple CEO Tim Cook was called to appear before Congress to offer tax proposals. More specifically, he presented proposals that discuss companies bringing back foreign earnings to the United States. Furthermore, he suggested that this money be invested in research and development and creating jobs in the U.S. 

Apple had come under fire for dodging heavy tax payments by profit shifting. For example, Apple made an estimated £6B ($9.50B USD) in Britain last year, but paid only £10M ($15.8M USD) in taxes.  It was able to do this because of the British tax code's rule that largely exempts companies based in Ireland from paying British taxes.

Source: The Guardian

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RE: so...
By Samus on 7/6/2013 12:24:38 AM , Rating: 2
Corporate taxes are one thing, but if you a a citizen of Canada, you should (and for the most part must) pay Canadian taxes on your "personal" income.

If you have a corporation (like an LLC or S-Corp) and are based in Canada, that company should pay Canadian corporate taxes.

The gray area is when a corporation is so large they have multiple offices around the globe, and they either

a) base their "headquarters" in a country with low corporate taxes and claim majority profit in that office

b) have a subsidiary in a country with low corporate taxes that earnings is funneled as profit.

The latter has been popular for decades, but the former has been popular recently as companies are "relocating" to Mexico, China, India. Not only do they shaft the ITC on import tariffs (because foreign goods that are produced for a domestic company, abroad, are tallied differently, opposed to, say, Apple buying from Foxconn) but they still get the income tax benefits.

RE: so...
By Solandri on 7/6/2013 3:13:35 AM , Rating: 4
Canada taxes based on residency. If you spend half a year + 1 day residing in Canada, you owe Canadian taxes on everything you make. That's why Canadians working abroad have to be careful to document all their trips home for the holidays. If they're working in the U.S. (which taxes based on both residency and citizenship) but spend more than half a year in Canada, they could be subject to double taxation.

A company is different however. A person can only exist in one country at any given time. A company can exist in multiple countries simultaneously. Couple that with the hodgepodge of national tax laws which aren't always compatible, and things can go either way (less taxes for the company, all the way to double taxation for the company). Obviously, companies then try to work with these laws to minimize their tax liability.

e.g. Let's take your initial assertion.
If you have a corporation (like an LLC or S-Corp) and are based in Canada, that company should pay Canadian corporate taxes.

Ok, so you start a Canadian company. Over the course of the year, you sell $1 million worth of stuff to a U.S. customer. Canada says you owe taxes on that $1 million.

But wait a sec, the U.S. says because the customer was in the U.S., you were conducting business in the U.S., and thus owe U.S. taxes on that $1 million too.

The "right" answer here isn't for the company to pay taxes to both countries (which would be "unfair" if you're defining "fair" based on the Canadian taxes you pay when selling to a Canadian customer). It's for the two countries to work out a way to split the taxes. That way the company isn't double taxed.

But not all country pairs have tax treaties for situations like this. In fact, most of them don't. And some countries (e.g. Ireland, various Caribbean nations) deliberately avoid making tax treaties so a company can set up there and funnel all their money through them (so they get the taxes).

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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