Do you know what is "double Irish with Dutch sandwich"? No, it's not a special cheeseburger.
Many people don't know what it is. Well. The ones with no accounting & financial knowledge...
It's an accounting technique known as the “double Irish with a Dutch sandwich” which reduces taxes by routing profits through Irish subsidiaries, the Netherlands and to the Caribbean. Today, it is used by hundreds of other corporations. Apple was pioneering in developing this tactic in order to avoid paying tax in high tax rate countries. What do Apple , Amazon , Facebook and Google have in common? The love of the "double Irish sandwich Dutch." Technology giants hide tax using these sophisticated systems, while brewing billions of euros of turnover in these countries.
Corporations that implement this tactic have one thing in mind: maximize profits where taxation is low and have a very low turnover where the tax rate is higher! Check this one, many of these corporations have subsidiaries registered in the Netherlands where the tax rate is 5%, subsidiaries in Ireland where the tax rate is 12.5% and subsidiaries in Bermuda where tax rate is about 5%; compared to the UK tax rate of 24% or France 33%.
These technology giants use the transfer pricing method. This method allows corporations to move sales between subsidiaries. From subsidiaries to parent company that is based in a tax heaven!! Got it?!
As an example, Amazon who is headquartered in Luxembourg, paid in the UK 2.3 million in taxes for a turnover of nearly 260 million euros in 2011. Facebook is accused to have deliberately created a net loss to avoid UK tax. Apple has paid 6.2 million euros in taxes in the UK, only 7.2% of its turnover in the country. Apple paid less than 2% tax on overseas profits last year, just $713 million in overseas corporation tax on profits of $36.87 billion. As a result: the parent company (based in a tax heaven) gets the largest profits while the subsidiary generates virtually nothing. And this is completely legal!
Governments in Europe, particularly in France and the UK where most of the profits are made for these companies, have started investigating and complaining about these practices.
My first question to the Apple, Amazon, facebook & others: Why on earth don't you want to pay tax in the country where you're making the largest profits? I know your answer: It is capitalism. This is business. greedy-sleazy-shabby-cruel business. The simple holy act of profit maximization is the only raison d'etre of these giants.
As I mentioned earlier, this is totally legal, but I put a question mark on whether it is totally ethical as well.
Tax collection is the only revenue source of governments to support healthcare, education, nutrition of their folks. These folks are the ones who are consuming your products, buying your services and making sure that you are generating high profits for your business. Refusing to fairly pay your real tax in Spain, Italy, Greece, France, etc... is a cynical and disgraceful stand, particularly in these uncertain times.
My second question:, remind me: what societal value are these giants really creating? what is their contribution to the society? to healthcare? nutrition? water problems? poverty? oh yes I forgot, Apple is employing Chinese for $2 a day. What a great societal contribution!
I really believe that these business practices must change. Businesses should generate profits for shareholders and must contribute in creating societal value as well. We cannot continue with this open-ended consumption model, where the simple act of profit maximization is good in itself.
The world is changing, and the business practices must change as well!
Many people don't know what it is. Well. The ones with no accounting & financial knowledge...
It's an accounting technique known as the “double Irish with a Dutch sandwich” which reduces taxes by routing profits through Irish subsidiaries, the Netherlands and to the Caribbean. Today, it is used by hundreds of other corporations. Apple was pioneering in developing this tactic in order to avoid paying tax in high tax rate countries. What do Apple , Amazon , Facebook and Google have in common? The love of the "double Irish sandwich Dutch." Technology giants hide tax using these sophisticated systems, while brewing billions of euros of turnover in these countries.
Corporations that implement this tactic have one thing in mind: maximize profits where taxation is low and have a very low turnover where the tax rate is higher! Check this one, many of these corporations have subsidiaries registered in the Netherlands where the tax rate is 5%, subsidiaries in Ireland where the tax rate is 12.5% and subsidiaries in Bermuda where tax rate is about 5%; compared to the UK tax rate of 24% or France 33%.
These technology giants use the transfer pricing method. This method allows corporations to move sales between subsidiaries. From subsidiaries to parent company that is based in a tax heaven!! Got it?!
As an example, Amazon who is headquartered in Luxembourg, paid in the UK 2.3 million in taxes for a turnover of nearly 260 million euros in 2011. Facebook is accused to have deliberately created a net loss to avoid UK tax. Apple has paid 6.2 million euros in taxes in the UK, only 7.2% of its turnover in the country. Apple paid less than 2% tax on overseas profits last year, just $713 million in overseas corporation tax on profits of $36.87 billion. As a result: the parent company (based in a tax heaven) gets the largest profits while the subsidiary generates virtually nothing. And this is completely legal!
Governments in Europe, particularly in France and the UK where most of the profits are made for these companies, have started investigating and complaining about these practices.
My first question to the Apple, Amazon, facebook & others: Why on earth don't you want to pay tax in the country where you're making the largest profits? I know your answer: It is capitalism. This is business. greedy-sleazy-shabby-cruel business. The simple holy act of profit maximization is the only raison d'etre of these giants.
As I mentioned earlier, this is totally legal, but I put a question mark on whether it is totally ethical as well.
Tax collection is the only revenue source of governments to support healthcare, education, nutrition of their folks. These folks are the ones who are consuming your products, buying your services and making sure that you are generating high profits for your business. Refusing to fairly pay your real tax in Spain, Italy, Greece, France, etc... is a cynical and disgraceful stand, particularly in these uncertain times.
My second question:, remind me: what societal value are these giants really creating? what is their contribution to the society? to healthcare? nutrition? water problems? poverty? oh yes I forgot, Apple is employing Chinese for $2 a day. What a great societal contribution!
I really believe that these business practices must change. Businesses should generate profits for shareholders and must contribute in creating societal value as well. We cannot continue with this open-ended consumption model, where the simple act of profit maximization is good in itself.
The world is changing, and the business practices must change as well!
Even if the economists are arguing about a double dip recession, there is no argument amongst the nonprofit sector that they are already dipping doubly.
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