The Organisation for Economic Cooperation and Development (OECD) announced that in the future Apple and other companies will have to pay taxes in each country they sell products and services in (via Reuters).
No Dutch Sandwich For You
Apple is credited for inventing a tax strategy called “The Double Irish with a Dutch Sandwich.” This is where a company sends profits through an Irish company, then a Dutch company, then to tax havens in the Caribbean in order to avoid paying taxes elsewhere like the United States or European Union.
Over 130 countries and territories want practices like this to stop and asked the OECD to come up with a plan. Under the plan, if a company sells products in a country, the government will have a right to a bigger share of the profit. Tax havens and countries like Ireland could suffer, but countries with big consumer markets like the United States would benefit.
Next week finance ministers from the Group of 20 economic powers will discuss the plan at a meeting in Washington. If all goes well an outline agreement to the countries that have signed up will be created in January 2020.
Further Reading:
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It’s my understanding that Apple moved to the Bailiwick of Jersey in anticipation of such nonsense. Apple’s profits are now protected by The Crown, or The Queen if you like. Good business for Jersey and good, legal business for Apple. Those arguing for Apple to pay even more taxes, well you just don’t sit with the Cook moral stance, do you??
>Apple is credited for inventing a tax strategy called “The Double Irish with a Dutch Sandwich.” This is where a company sends profits through an Irish company, then a Dutch company, then to tax havens in the Caribbean in order to avoid paying taxes elsewhere like the United States or European Union.
That is not true, Apple ultimately will have to paid those tax in United State, but as long as those foreign profits are not brought back to US, they wont have to. ( yet )
The new tax proposed will likely be the first step towards a Common Global Taxation System. And there will be lots of complication to deal with.
Charlotte:
Thanks for the post.
Implementation is everything. This has got to be universally applied, otherwise it risks asymmetrical application to specific companies, industries or practices.
For example, will this only be applied to companies that actually produce hardware or software that are directly sold in a country, but not be applied to a company that simply provides a cloud service or business analytics? What if a company has no operations in country, but their products are sold in that country by third parties without contract by the company? What of companies that give away their platform, but profit if people download apps from their online stores? And what of the surveillance capitalists who offer their services supposedly ‘for free’?
The details will be the devil’s playground. And that’s before we even get to implementation.
Good, it’s bloody well about time.