A collection of firms – including Apple – have until this announcement from the Irish government been able to push profits through Irish subsidies from overseas to avoid paying taxes on said profits. An announcement this week from Ireland suggests that Irelands Finance Minister Michael Noon is not about to let this continue. The “ghost companies” and subsidiaries existing in Ireland with no declared tax residency anywhere in the world are about to be axed.
What this means for the immediate future in each of the companies that up until now took part in this bit of a loophole is unclear. What it means for Ireland is that they’ll no longer be taking part in what they call “this global tax challenge.” Ireland’s Finance Minister said as much earlier today:
“Let me be crystal clear. Ireland wants to be part of the solution to this global tax challenge, not part of the problem.” – Michael Noon, Finance Minister of Ireland
According to the BBC, the change in Irish policy will have little effect on companies such as Apple as more countries exist with the same flat tax rate and loopholes. Bermuda is another country with zero tax rates using this method of profit flow.
It’s also reported by the BBC that both Google and Microsoft have Irish subsidiaries at the moment that “legally channel money to Bermuda where they pay zero tax.” We’ll see soon how Ireland’s push will affect these tech giants financially.