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Friday Newspaper Review - Irish Business News and International Stories - - July 25, 2014
By Finfacts Team
Jul 25, 2014 - 11:33 AM
US President Barack Obama has blasted American multinationals
that move to Ireland to cut their tax bill.
In his toughest comments yet on the subject, he accused big US corporations of
trying to play “the system” by “magically becoming Irish” through so-called tax
“I don't care if it's legal, it's wrong,” Mr Obama said. “It sticks you for the
tab to make up for what they're stashing offshore.”
There has been a raft of such deals in recent months which have seen big
American companies become “Irish” for tax purposes through buying smaller firms
registered here. The same trend is happening in the UK and Switzerland.
Fears America is losing out on taxes have made the deals controversial.
Last night Mr Obama singled Ireland out – something that is certain to set off
alarm bells in government circles here.
“If you are basically still an American company but you simply change your
mailing address in order to avoid paying taxes then you are |really not doing
right by the country and its people,” he said in an |interview with CNBC before
he |spoke at a technical college in Los Angeles.
INTERNET giant Google paid just €27.7m in corporation tax in
Ireland last year, despite revenue at its Irish unit jumping by €1.5bn to €17bn.
The company, which employs nearly 2,400 people in Ireland, said the amount of
corporation tax paid was up from the €17m it paid in 2012.
But the increase is unlikely to quell concerns in the US or Europe, where
American multinationals have been accused of using convoluted corporate
structures in order to avoid swingeing tax bills.
In March, French authorities slapped Google with a €1bn tax assessment which
comprised back taxes and penalties stretching back 10 years.
Google, which has its European HQ in Dublin, manages to pay so little
corporation tax in Ireland because it reduces its taxable turnover here by
re-routing much of the revenue through foreign subsidiaries.
Last year, Google's Irish unit reported "administrative expenses" of €11.9bn
compared with €11bn in 2012. Much of those expenses consist of royalties that
are paid to an offshore unit.
Coupled with the €5.1bn costs of sales that it deducts from its revenue, that
reduced its taxable profits here to just €188.5m last year.
Finance Minister Michael Noonan has cautioned fellow ministers
against getting carried away by the package of cuts and taxes in the Budget
being lower than expected.
Public Spending Minister Brendan Howlin told the Irish Independent he is having
to "manage the expectations" of his cabinet colleagues, who are seeking to
increase their budgets, despite the need to reduce the country's debt levels.
The Government has accepted the adjustment in the Budget will be less than the
But Mr Noonan warned ministers against assuming the Budget would be easy as a
result. In a briefing to the Cabinet yesterday, he pointed out the tax take last
year was high in the first half and tapered off towards the end.
Mr Noonan said nothing can be taken for granted on the figures for the second
half of the year.
THE International Monetary Fund (IMF) has trimmed its forecast
for global growth blaming a weak start to the year and a less optimistic outlook
for emerging economies.
The Washington-based lender said the world economy would grow by 3.4pc this
year, down from the 3.7pc forecast in April.
With somewhat stronger growth expected in some advanced economies next year, the
global growth projection for 2015 remains at 4pc.
In an update to its World Economic Outlook, the fund warned geopolitical risks
could lead to sharply higher oil prices.
"Financial market risks include higher-than-expected US long-term rates and a
reversal of recent risk spread," it said.
"Robust demand momentum has not yet emerged despite continued very low interest
rates and easing of brakes to the recovery, including from fiscal consolidation
or tight financial conditions."
A series of European law firms are aggressively pitching low
corporate taxes in their countries to prospective US clients, seeking to tap
into the tax inversion frenzy that has seized Corporate America in recent
At least eight European law firms are pitching their services to major US law
firms and Wall Street banks, hoping that US companies considering an inversion
choose Ireland, Britain or the Netherlands for their new tax domicile, according
to people with knowledge of the matter.
In an inversion deal, a company moves its tax domicile to a country with a lower
effective corporate tax rate through a takeover of an often smaller company in
The Government’s new open-data portal is not yet where it would
like it to be, Minister Brendan Howlin said in a Department of Public
Expenditure and Reform meeting room earlier this week.
In case expectations are too high, the word “pilot” is in italics when you visit
the site in question – data.gov.ie.
Meanwhile the words “start” and “beginning” pepper the conversation with the
Minister and a variety of data experts from the Insight Centre in NUI Galway who
have helped create the site.
Data.gov.ie allows those in the Government, as well as interested businesses and
citizens, to examine data from a variety of public bodies, opening opportunities
for Government efficiencies and commercial possibilities along the way.
The main problem is that there is not much of it, and a lot of what is there
can’t be utilised in a particularly useful fashion.
Ireland has “no chance” of securing a deal on its legacy bank
debt, one of the most influential figures in German politics has told The Irish
Joachim Pfeiffer, who is the economic policy spokesman for the parliamentary
group of the ruling Christian Democrats, said the euro zone’s new bailout fund
had not been established for nor would be it used for retroactive bank
“There is no chance Ireland’s legacy assets will be paid by the European
Stability Mechanism (ESM). This instrument is only an instrument for emergency.”
The "all or nothing" incentive schemes for sales staff that
contributed to the collapse of the Irish banks that employed them were not
structured in the best interests of consumers and were inherently risky,
according to the Central Bank.
These schemes, which prioritised the volume of sales over the quality or
suitability of the financial products being sold to customers, were not fit for
purpose and had the potential to encourage poor sales behaviours among employees
of financial institutions.
The report on variable remuneration of sales staff also found, while all firms
had a process in place for the design and approval of incentive schemes, there
was a failure to recognise the inherent risks in remuneration arrangement and to
mitigate those risks.
Central Bank director of consumer protection Bernard Sheridan said: “The Central
Bank expects that, when firms remunerate sales staff on a variable basis, these
arrangements focus on encouraging the right culture and behaviour in sales
staff, while actively discouraging poor practices.
Euro Topics: Criticism of Israel is not
anti-Semitism: When international politicians seek a solution to the Gaza
conflict it must be possible for them to criticise Israel's course of action -
even if they come from Germany, the liberal German weekly Die Zeit demands: "When
Martin Schulz, the president of the European Parliament, criticised Israel's
settlement policy and the blockade in Gaza as obstacles to peace in a speech
before the Knesset at the start of the year, he was promptly accused of
anti-Semitism by the Israeli right wing. When such criticism is addressed to a
German it always has the following implication: because of your responsibility
for the Shoah it is your duty to defend Israel, no matter what. This
misconception should be dispelled: Because of their history Germans have a
special obligation to fight anti-Semitism and campaign for Israel's right to
exist. But it is not their duty to remain silent when an Israeli government
contravenes international law."
Twitter a formidable propaganda machine: Since the escalation in the Gaza
conflict, Hamas's al-Qassam brigades and the Israeli army have been spreading
their own versions of events via Twitter. Social networks are a wonderful
achievement for press and media freedom but they also aid war propaganda, the
liberal daily Le Quotidien complains: "Everyone can be connected, follow or
communicate with people they know - or not, as the case may be. Information
circulates at an unimaginable speed, with tools that can be considered the
ultimate embodiment of a free world where no limits are set on people's ability
to inform and express themselves. These tools remain an expression of the free
world. The proof is that the social networks are censured in overtly
authoritarian countries. However they have also become a formidable propaganda
tool for the parties engaged in these hazy conflicts. But it must be clear to
everyone that they have likewise become indispensable for the protagonists of
wars, be they psychological, diplomatic, economic or military."
Russia shouldn't host World Cup: Following the alleged shooting down of
flight MH17 in eastern Ukraine, European politicians have raised doubts about
Russia hosting the football World Cup in 2018. The Swedish Football
Association should also campaign for the tournament to be held elsewhere, the
conservative daily Svenska Dagbladet comments: "International sport has a
uniting effect, and championships in team sports can be seen as peaceful
competitions among nations. To allow a championship in one of the major sports
to take place in a country that is occupying parts of a neighbouring country
would be a mockery of the basic principle of sport. The Swedish Football
Association should therefore join forces with other like-minded associations and
governments and campaign for Russia to lose the World Cup 2018 unless the
situation in Ukraine improves markedly in the next few months. In addition the
Crimea issue must be resolved in accordance with international law."
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