|Cisco Systems International Sarl headquarters in Rolle, Switzerland. The US company has cut its corporate taxes by $7bn since 2005 by booking roughly half its worldwide profits at a subsidiary at the foot of the Swiss Alps that employs about 100 people.
Tax Havens: Ireland is Europe's top corporate tax
haven followed by Switzerland.
While Switzerland has become wealthy by facilitating tax evasion for
the rich from across the world, it has tried to avoid the reputational risk in
recent decades of being a safe store for the plunder of poor countries. At a
corporate level, cantons such as Zug near Zurich, operate mailbox services as
the headquarters of many American companies, saving billions of dollars in tax.
Cisco Systems Inc., the Internet gear company, has a more substantial operation,
that has cut its corporate taxes by $7bn since 2005 by booking roughly half its
worldwide profits at a subsidiary at the foot of the Swiss Alps that employs
about 100 people.
However, Ireland with its offshore centre and significant
operations of many big US companies appears to be in the lead. Microsoft
explained to the US Securities and Exchange Commission (SEC) last year that its
declining effective tax rate (what it pays as a ratio of profits) resulted from
using Ireland, Puerto Rico and Singapore as regional sales centres for routing
profits, because of their low-tax regimes.
In 2005, The Wall Street Journal had
brought attention to Microsoft's efforts to route for example profits on sales
in Germany to Dublin on which they paid Ireland at the low headline tax rate of
12.5%. The Journal said a subsidiary, Round Island One Ltd., operated from the
offices of a Dublin law firm and was one of the country's biggest companies,
with gross profits of nearly $9bn in 2004 but it had no direct staff. Now Google
and Facebook are following on Microsoft's trail.
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