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News : International Last Updated: Jul 25, 2014 - 3:48 PM


Friday Newspaper Review - Irish Business News and International Stories - - July 25, 2014
By Finfacts Team
Jul 25, 2014 - 11:33 AM

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Irish Independent

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 inversion deals.

“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 projected €2bn.

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."

Irish Times

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 months.

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 that jurisdiction.

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 Times.

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 recapitalisation.

“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.”

Irish Examiner

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.

Europe

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."


© Copyright 2011 by Finfacts.com

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