Corporate haven

This perceived respectability encourages corporates to use these IFCs as regional headquarters (i.e. Google, Apple, and Facebook use Ireland in EMEA over Luxembourg, and Singapore in APAC over Hong Kong/Taiwan).

Economic Substance legislation introduced in recent years has identified that BEPS is not a material part of the financial services business for Cayman, BVI and Bermuda.

While the legislation was originally resisted on extraterritoriality, human rights, privacy, international justice, jurisprudence and colonialism grounds, the introduction of these regulations has had the effect of putting these jurisdictions far ahead of onshore regulatory regimes.

Modern corporate tax havens, such as Ireland, Singapore, the Netherlands and the U.K., are different from traditional "offshore" financial centres like Bermuda, the Cayman Islands or Jersey.

[22][23][24] This is to ensure that other higher-tax jurisdictions, from which the corporate's main income and profits often derive, will sign bilateral tax-treaties with the haven,[25] and also to avoid being black-listed.

However, the G7 leaders in the wake of reporting about a Microsoft subsidiary's level of taxation in 2020, have proposed an agreement on a global minimum corporate tax rate of 15%.

It is morally, politically and economically wrong for Ireland to allow vastly wealthy corporations to escape the basic duty of paying tax.

We increasingly find offshore magic circle law firms, such as Maples and Calder and Appleby,[58] setting up offices in major Conduit OFCs, such as Ireland.

It is considered a low-technology facility, building iMacs to order by hand, and in this regard is more akin to a global logistics hub for Apple (albeit located on the "island" of Ireland).

[71] The Netherlands is fighting back against its reputation as a tax haven with reforms to make it more difficult for companies to set up without a real business presence.

Menno Snel, the Dutch secretary of state for finance, told parliament last week that his government was determined to "overturn the Netherlands' image as a country that makes it easy for multinationals to avoid taxation".The United Kingdom was traditionally a "donor" to corporate tax havens (e.g. the last one being Shire plc's tax inversion to Ireland in 2008[72]).

[78] A growing array of tax benefits have made London the city of choice for big firms to put everything from "letterbox" subsidiaries to full-blown headquarters.

This distortion means that all corporate tax havens, and particularly smaller ones like Ireland, Singapore, Luxembourg and Hong Kong, rank at the top in global GDP-per-capita league tables.

In fact, not being a county with oil & gas resources and still ranking in the top 10 of world GDP-per-capita league tables, is considered a strong proxy sign of a corporate (or traditional) tax haven.

[118][119][120] It was interesting that when [Member of European Parliament, MEP] Matt Carthy put that to the [Finance] Minister's predecessor (Michael Noonan), his response was that this was very unpatriotic and he should wear the "green jersey".

[58] This is substantive and complex legislation that needs to integrate with tax treaties that involve G20 jurisdictions, as well as advanced accounting concepts that will meet U.S. GAAP, SEC and IRS regulations (U.S. multinationals are leading users of IP-based BEPS tools).

said PwC Ireland International Financial Services Centre Managing Partner, Feargal O'RourkeThat is until the former venture-capital executive at ABN Amro Holding NV Joop Wijn becomes [Dutch] State Secretary of Economic Affairs in May 2003.

[131] Leprechaun economics an example of how Ireland was able to meet with the OECD's transparency requirements (and score well in the Financial Secrecy Index), and still hide the largest BEPS action in history.

[152][153] However, both Administrations were silent when the Irish State announced in July 2016 that 2015 GDP has risen 26.3% in one quarter due to the "onshoring" of corporate IP, and it was rumoured to be Apple.

[154] It might have been due to the fact that the Central Statistics Office (Ireland) openly delayed and limited its normal data release to protect the confidentiality of the source of the growth.

The "arm's length" criteria are achieved by getting a major accounting firm in Ireland's International Financial Services Centre to conduct a valuation, and Irish GAAP audit, of the IP.

The technique of getting full tax-relief for an artificially high-interest rate in a foreign subsidiary, while getting additional tax relief on this income back home in the Netherlands, became known by the term, "double dipping".

This way no taxes are paid in either country.The Irish Section 110 SPV uses complex securitisation loan structuring (including "orphaning" which adds confidentiality), to enable the profit shifting.

[173][174] While securitisation SPVs are important new BEPS tools, and acceptable under global tax-treaties, they suffer from "substance" tests (i.e. challenges by tax authorities that the loans are artificial).

Irish Section 110 SPV's use of "Profit Participation Notes" (i.e. artificial internal intergroup loans), is an impediment to corporates using these structures versus established IP-based BEPS tools.

There are many reasons advocated for the OECD's failure, the most common being:[202] Figures released in April 2017 show that since 2015 [when the double Irish was closed to new schemes] there has been a dramatic increase in companies using Ireland as a low-tax or no-tax jurisdiction for intellectual property (IP) and the income accruing to it, via a nearly 1000% increase in the uptake of a tax break expanded between 2014 and 2017 [the capital allowances for intangible assets BEPS tool].The global legal firm Baker McKenzie, representing a coalition of 24 multinational US software firms, including Microsoft, lobbied Michael Noonan, as [Irish] minister for finance, to resist the [OECD MLI] proposals in January 2017.In a letter to him the group recommended Ireland not adopt article 12, as the changes "will have effects lasting decades" and could "hamper global investment and growth due to uncertainty around taxation".

Perversely, this is encouraging countries that previously shunned them to give them a try.It has been noted in the OECD's defence, that G8 economies like the U.S. were strong supporters of the OECD's IP work, as they saw it as a tool for their domestic corporates (especially IP-heavy technology and life sciences firms), to charge-out US-based IP to international markets and thus, under U.S. bilateral tax treaties, remit untaxed profits back to the U.S.

However, when U.S. multinationals perfected these IP-based BEPS tools and worked out how to relocate them to zero-tax places such as the Caribbean or Ireland, the U.S. became less supportive (i.e. U.S. 2013 Senate investigation into Apple in Bermuda).

Post 2015, quantitative studies (e.g. CORPNET and Gabriel Zucman), have highlighted the greater scale of corporate tax haven activity.

[225] Regardless of method, most corporate tax haven lists consistently repeat ten jurisdictions (sometimes the Caribbean "triad" is one group), which comprise: [citation needed] Note four of these ten jurisdictions have financial centres that appear in 2017 top 10 Global Financial Centres Index: London, Hong Kong, Singapore, and Zurich.