Friday, October 18, 2013

Ireland to Close Highly Criticized Loophole, but Create an Even Bigger One.

Ireland said on Tuesday it planned to shut down a much-criticized tax arrangement used by Apple Inc to shelter over $40 billion from taxation - but will leave open an even bigger loophole that means the computer giant is unlikely to pay any more tax.

Parliamentary hearings were held to review Ireland's tax rules amid concerns that damage to its reputation could jeopardize the foreign investment on which its economy relies heavily.
Irish Finance Minister Michael Noonan said on Tuesday that he planned to make it illegal for a company registered in Ireland to have no tax domicile anywhere.

A spokesman for the Department of Finance declined to explain the change but denied it was due to U.S. pressure.

He added that companies could still nominate any country they liked as their tax residence, including zero tax jurisdictions such as Bermuda - a provision that tax advisers said was unusual internationally.  This means this change was unlikely to result in higher tax bills for companies that use Irish subsidiaries to minimize taxes.

The highly criticized arrangement has become known in the tax avoidance industry as the "double Irish". this arrangement has been used by Google, Microsoft & Apple, just to name a few.

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