• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Firms Play "Double Dutch" to Skip on Tax

LowDown

Curmudgeon
DP Veteran
Joined
Jul 19, 2012
Messages
14,185
Reaction score
8,768
Location
Houston
Gender
Male
Political Leaning
Libertarian
Big firms play 'Double Dutch' to skip on tax | thetelegraph.com.au

MULTINATIONAL corporations including Google, Facebook, Apple and eBay are likely to have short-changed Australians by more than $1 billion in lost tax revenue thanks to an arrangement dubbed by Treasury as "the Double-Dutch Irish Sandwich".

Apropos the whole theme of how taxpayers act when taxes are increased, witness this scheme used by Google, Facebook and others to avoid corporate taxes.

It seems that when one pays for advertising on Google, for example, one buys it from an Irish subsidiary of the company which pays a 12.5% corporate income tax then transfers the money to a Dutch subsidiary. Being within the EU this transfer is tax free. The Dutch subsidiary then pays a tax deductible royalty to a Bermuda subsidiary.

This has predictably set politicians in France, Australia, etc. to huffing and puffing about these multinationals not pulling their weight with regard to their own national need for tax revenue. But what the companies are doing is perfectly legal, and the politicians are hamstrung by international trade treaties when it comes to slapping taxes on international financial transactions at their end.

Or, as they no doubt say at Google, three cheers for globalization!
 
As you say..."...what the companies are doing is perfectly legal...".

Change the law...write new treaties...if you don't like what they are doing. Pissing and moaning accomplishes nothing.

But be careful how you go about your changes. You just might get something worse.
 
Big firms play 'Double Dutch' to skip on tax | thetelegraph.com.au



Apropos the whole theme of how taxpayers act when taxes are increased, witness this scheme used by Google, Facebook and others to avoid corporate taxes.

It seems that when one pays for advertising on Google, for example, one buys it from an Irish subsidiary of the company which pays a 12.5% corporate income tax then transfers the money to a Dutch subsidiary. Being within the EU this transfer is tax free. The Dutch subsidiary then pays a tax deductible royalty to a Bermuda subsidiary.

This has predictably set politicians in France, Australia, etc. to huffing and puffing about these multinationals not pulling their weight with regard to their own national need for tax revenue. But what the companies are doing is perfectly legal, and the politicians are hamstrung by international trade treaties when it comes to slapping taxes on international financial transactions at their end.

Or, as they no doubt say at Google, three cheers for globalization!

I've always pondered why others believe they're entitled to something they didn't earn themselves.
 
Is there no corporate tax in Bermuda?
 
I've always pondered why others believe they're entitled to something they didn't earn themselves.

Like roads, internet infrastructure, an electrical grid, police and fire protection...

Oh wait. You weren't talking about Google's entitlements, were you?
 
Like roads, internet infrastructure, an electrical grid, police and fire protection...

Oh wait. You weren't talking about Google's entitlements, were you?

I'm sorry... I didn't realize Google got all of those and you didn't?

They are recieving the same services you are yet their workers pay way more in taxes. Maybe its you who isn't carrying his weight?
 
Like roads, internet infrastructure, an electrical grid, police and fire protection...

Oh wait. You weren't talking about Google's entitlements, were you?

You mean like local taxes?

Yeah, don't confuse communal and federal taxes..
 
Big firms play 'Double Dutch' to skip on tax | thetelegraph.com.au



Apropos the whole theme of how taxpayers act when taxes are increased, witness this scheme used by Google, Facebook and others to avoid corporate taxes.

It seems that when one pays for advertising on Google, for example, one buys it from an Irish subsidiary of the company which pays a 12.5% corporate income tax then transfers the money to a Dutch subsidiary. Being within the EU this transfer is tax free. The Dutch subsidiary then pays a tax deductible royalty to a Bermuda subsidiary.

This has predictably set politicians in France, Australia, etc. to huffing and puffing about these multinationals not pulling their weight with regard to their own national need for tax revenue. But what the companies are doing is perfectly legal, and the politicians are hamstrung by international trade treaties when it comes to slapping taxes on international financial transactions at their end.

Or, as they no doubt say at Google, three cheers for globalization!

Was Apple that invented the scheme back in the 1990s basically and are the one of the biggest in avoiding taxes (and are rarely mentioned... funny eh). That is why the multinational companies pay no where near the official corporate tax rate...

And even companies in the US are doing it.. they have almost all their sales in the US, but because they are officially registered in some Caribbean island and the "sales" are counteracted by goodwill costs or administrative costs so the end result is that the US government gets no tax income.. or even worse.. pays the company for losses... while the small Caribbean island gets a few bucks in taxes.... brilliant eh?
 
Is there no corporate tax in Bermuda?

No there isn't. I guess the people who have to comply with laws are smarter than the folks who write laws.
 
Like roads, internet infrastructure, an electrical grid, police and fire protection...

Oh wait. You weren't talking about Google's entitlements, were you?

No one is saying that Google is breaking the law. They are paying all the taxes the law requires.

I'm sure they pay a ton in road taxes what with all those Google camera cars buzzing all over creation.

The tree of liberty might need to be watered with the blood of patriots from time to time, but the thirst of politicians for the blood of taxpayers is constant and never ending. No one should ever be criticized for taking steps to stifle that thirst. Paraphrasing Judge Learned Hand, everyone is entitled to arrange his affairs so as to minimize his taxes and should come under no censure for doing so.

I'd like to see them try to put a tariff on those monies. There's nothing like a good trade war to exemplify stupid governance.
 
Is there no corporate tax in Bermuda?
Nope, and no income tax either!
Like roads, internet infrastructure, an electrical grid, police and fire protection...

Oh wait. You weren't talking about Google's entitlements, were you?

Are you saying you pay more taxes than Google?
 
Nope, and no income tax either!


Are you saying you pay more taxes than Google?

How does Google get the money from Bermuda to the US to pay employees and expenses?
 
How does Google get the money from Bermuda to the US to pay employees and expenses?

It dont.

Google has say 1 billion in sales in the US. It then pays its wages from those sales and it makes say a profit of 100 million as an example. Now because Google is registered in Bermuda, then the US based company has to pay "administrative costs" or "franchise" costs to the parent company... which is of course about 100 million dollars. That way the move the profit gotten in the US overseas to be taxed there and it is fully legal pretty much everywhere and all international companies do it if they can. Some dont do it for political reasons, some only take a certain portion out of the country for political reasons and so on.

Now the point is, if the company is big enough then they can do this.. even though they might not have any overseas sales at all.. but those that cant do it, are of course the small local companies who have to pay the full tax burden, where as their direct competitors who are international.. get a way with next to nothing.
 
It dont.

Google has say 1 billion in sales in the US. It then pays its wages from those sales and it makes say a profit of 100 million as an example. Now because Google is registered in Bermuda, then the US based company has to pay "administrative costs" or "franchise" costs to the parent company... which is of course about 100 million dollars. That way the move the profit gotten in the US overseas to be taxed there and it is fully legal pretty much everywhere and all international companies do it if they can. Some dont do it for political reasons, some only take a certain portion out of the country for political reasons and so on.

Now the point is, if the company is big enough then they can do this.. even though they might not have any overseas sales at all.. but those that cant do it, are of course the small local companies who have to pay the full tax burden, where as their direct competitors who are international.. get a way with next to nothing.
Precisely why the US needs to lower its tax laws and rates so that the little guys can compete with the big guys who have clever accountants. And maybe the big guys might stick around and pay us instead of them.
 
Precisely why the US needs to lower its tax laws and rates so that the little guys can compete with the big guys who have clever accountants. And maybe the big guys might stick around and pay us instead of them.

Hell no. The US and others need to plug those loopholes AND in the US case lower the tax rate a tad. It is the loopholes that are costing US society trillions, not too high corporate tax rates.
 
we need to lower our corporate rate significantly and then make sure everyone pays it, not just the small guys.
 
It dont.

Google has say 1 billion in sales in the US. It then pays its wages from those sales and it makes say a profit of 100 million as an example. Now because Google is registered in Bermuda, then the US based company has to pay "administrative costs" or "franchise" costs to the parent company... which is of course about 100 million dollars. That way the move the profit gotten in the US overseas to be taxed there and it is fully legal pretty much everywhere and all international companies do it if they can. Some dont do it for political reasons, some only take a certain portion out of the country for political reasons and so on.

Now the point is, if the company is big enough then they can do this.. even though they might not have any overseas sales at all.. but those that cant do it, are of course the small local companies who have to pay the full tax burden, where as their direct competitors who are international.. get a way with next to nothing.

But in the US it doesn't matter where the company is registered, if they derive income from inside the US it has to be declared as income on their US Corp tax return.
 
If those countries want the tax revenue of global companies, perhaps they should lower their corporate rates to attract those businesses.
 
But in the US it doesn't matter where the company is registered, if they derive income from inside the US it has to be declared as income on their US Corp tax return.

Yes Income minus administrative costs... like wages, franchise costs and so on.

Else why can Apple pay such a low tax rate when its by far biggest market is the US and has one of the biggest profits of any company?

Face it, big international companies fiddle with the numbers time and time again to avoid as much tax they can.

Apple?s tax rate: 9.8 percent? - Washington Post

And it seems the IRS either has no clue on what is going on or is ignoring it.

And it does matter where the company is registered... there is a city in Nevada that has very low corporate tax and that is where Apple funnels most of its US sales. It is basically a P.O.Box.
 
I'm sorry... I didn't realize Google got all of those and you didn't?

I didn't realize I said anything of the sort. (because I didn't and you know it)

They are recieving the same services you are yet their workers pay way more in taxes. Maybe its you who isn't carrying his weight?

They are (legally) dodging taxes in those countries, while benefiting from said infrastructure in those countries.

Does a corporation not benefit from these things? Should it not pay taxes to support these things?
 
I didn't realize I said anything of the sort. (because I didn't and you know it)



They are (legally) dodging taxes in those countries, while benefiting from said infrastructure in those countries.

Does a corporation not benefit from these things? Should it not pay taxes to support these things?

That comes down then to a matter of opinion. How much money that the government takes in actually goes to "infrastructure"? We spend more money on wars, subsidies, and other BS than 100 Googles could ever pay. I'm willing to bet the 10% or however much tax they actually pay would buy quite a bit of infrastructure if that's what it went to.
 
That comes down then to a matter of opinion. How much money that the government takes in actually goes to "infrastructure"? We spend more money on wars, subsidies, and other BS than 100 Googles could ever pay. I'm willing to bet the 10% or however much tax they actually pay would buy quite a bit of infrastructure if that's what it went to.

Corporate welfare is a huge problem around the world. CATO estimated that the US spends 100 billion a year on it.. and that is a conservative think tank that has a history of underestimating things big time (if not out right lying). They for one dont include tax loopholes in the number.. so the actual number could easily be double that.
 
Corporate welfare is a huge problem around the world. CATO estimated that the US spends 100 billion a year on it.. and that is a conservative think tank that has a history of underestimating things big time (if not out right lying). They for one dont include tax loopholes in the number.. so the actual number could easily be double that.

Yep, so you can see why I'm not exactly supportive of taking more from some corporations to give to others.
 
Yep, so you can see why I'm not exactly supportive of taking more from some corporations to give to others.

Yes I understand you, but you are looking at it the wrong way. You need to take more from corporations.. the ones getting away with massive avoidance and huge subsidies... aka stop those loopholes. That will raise the taxes on those corporations but not effect the rest that dont abuse the system.. and then you can lower the tax rates a tad..

You dont get anything by lowering the tax before plugging the holes.. it would only mean most likely... that the holes wont be plugged at all.
 
But in the US it doesn't matter where the company is registered, if they derive income from inside the US it has to be declared as income on their US Corp tax return.

No, if the buyer pays the Irish branch for advertising then it's income in Ireland. They pay 12.5 percent corporate tax there. If the US reduced the corporate tax rate we'd be able to get at least that much out of that corporate income.

"Plugging" these "loopholes" involves changing international treaties, which is extremely difficult, and we could end up worse off than before.
 
Back
Top Bottom