Is that the legal version of "you're holding it wrong"? Law changes based on interpretation. Most of these loopholes exist because someone found a way to exploit a condition that the law wasn't designed to cover. The idea that a perfect law can be written is just not realistic and you have to know this.
Which is why there is provision to change it. There is no provision to apply existing laws in an arbitrary fashion depending on what happens to get your goat up. The law works for the most part because it's absolute, and it doesn't get much more simple and absolute as taxation law.
If you don't declare your earnings, you're breaking the law, and this applies even if it turns out the taxman owes you money.
If you declare your earnings and pay the wrong amount, then you must pay the difference plus interest.
If you declare your earnings and your calculations are correct then you can buy that yacht.
Muddying these rather clear and placid waters by applying emotions from folk feeling hard done by because they can't afford expensive tax specialists is a bad place to be.
Oh, and these loopholes exist, and stay in existence, so that the people in power can exploit them too.
A very clever marketing stunt if ever I saw one.
You're missing the point. They are paying what's due. If they weren't, they'd be prosecuted.
The government could try to pressure me to pay more tax than I'm legally liable for, but to be honest, if this chap won't then why should I?
Whoa whoa whoa. This talk about prosecuting kind-of-law-break is crazy talk. That can only lead to hands being thrown in the air in frustration and anarchy. Cbae said it right "The point is that there's a fine line between "lawful" and "unlawful" that's arbitrarily drawn." There is a line and until it is crossed it isn't crossed. Whether the line is arbitrary or not is irrelevant. What matters is that a line has been drawn. The fact that some fancy corporate legal departments can scooch right up to and ride parallel to that line may not be popular but let's not call it something more than it is.
Well put. That is exactly the point here. The law has been broken or has not been broken. That's the difference between avoidance and evasion.
You cannot even say they are attempting to evade tax because they filed their earnings correctly, so the only other recourse is to go through their calculations to see if there is something they've done wrong. At this point then it is not a criminal act; it's a mistake and they will be charged the additional tax plus interest.
When people start going on that the these companies are not paying a 'fair' amount of tax, then they may as well just get off the soapbox and go home. They're applying an emotional argument instead of a legal one.
If these companies are not paying a 'legal' amount to tax then by all means slap them with multi-billion dollar fines because they're breaking the law.
Because software can be copied infinitely using the very computers it runs on? It's not a physical product! Yeah, I know copyright law treats software as a physical product. But the thing is, it's hard as hell to enforce. What makes Microsoft so successful in this, is they need to enforce copyright on OEMs and big businesses mostly. It's harder if you are selling to the general public.
The other major thing is, software is utilitarian. If you are some huge software company you can corner the market simply by being in a market you need billions of dollars to compete in. If you aren't, someone is going to compete with you. And one or more of them are going to competing with you using a price tag of $0. Software is not like music where we can have a collection of music of the same genre. That's totally normal with movies, or music. Maybe some people "collect" text editors, but that's not normal.
So you also think that books should be free?
The European Union's top antitrust official opened an investigation on Wednesday into the way countries including Ireland provide tax arrangements that enable big multinational corporations like Apple to reduce their tax bills worldwide.
The inquiry by Joaquín Almunia, the European Union's competition commissioner, if it leads to changes, could undermine tax strategies pursued by many American technology companies that have their international headquarters in Ireland and in other countries in the bloc.
The inquiry also covers Starbucks in the Netherlands and Fiat Finance and Trade in Luxembourg.
My question is how did Microsoft avoid this inquiry unless they don't do this?
First off, the headline: Tax evasion?
Tax evasion is illegal and the investigators are going to great lengths to stress that no one is accusing the three companies of evading tax. To evade tax would imply that they are not declaring earnings which is a very serious offence.
Tax avoidance is perfectly legal (I myself use ISAs to avoid paying taxes on trust earnings). The companies have found a perfectly legal way to pay less tax; what the investigators are looking for is a discrepancy in how they are applying the avoidance scheme that will allow them to extract more tax. It's actually how most tax investigations work; they're not looking for wrongdoing, they're looking for 'discrepancies' from either the company or the host country. In this particular case, they're looking to see if the companies are being given preferential treatment.
Now, your main point:
And it a very good question. To begin with, just because you haven't been investigated, it doesn't mean you're not doing it. Before singling out companies for an investigation, the EU needs to consider the following:
1/. How much will the investigation cost.
2/. How much will they get back.
This is going to be expensive, so they are chasing the companies from which they hope to get the greatest returns.
The EU is looking into a particular form of tax avoidance (Transfer Pricing) which is used mainly by companies that produce a physical product that sells at retail. Since Microsoft's main earners are software and services, then I'd be surprised if they'd be running a particularly lucrative Transfer Pricing scheme. Even if they are, would it net the EU enough tax to make an investigation worthwhile?
No, Microsoft runs the Double Irish with Dutch Sandwich scheme, which is more suitable to software/services/patent outfits. Apple, which makes quite a bit of money on software/services/patents too, runs the exact same scheme from the same countries. But to make the scheme work, and this is the clever part, you need to actually have a presence in Ireland. Apple Operations International (at least one employee, most probably the local CEO) is the parent company of Apple Sales International and Apple Operations Europe (both located in the same buildings in Ireland and home to about 4400 employees). This requirement of an actual presence means that the host country actually gets more out of the deal than they lose in the tax break.
And that is why I always ask, 'Why don't they just close the tax loophole?'
Because if they did, then jobs would be lost or incomes would fall.
Another case in point: Starbucks.
Why doesn't the UK government put up a decent fight over Starbuck's Transfer Pricing Scheme?
Answer: Because they know that Starbuck's uses the scheme to offset some of the losses it would make through its use of Fairtrade coffee sourcing. If they lose the break, then many low income farmers would suffer.
Apple pays a lot more for its components because they need to recyclable and free of toxic agents. They also pay their manufacturing partners more than companies like Dell to ensure that the people who build Apple products (and remember, these people don't actually work for Apple directly) are better paid and have better, safer working conditions (including capped working hours, which they apparently don't particularly like).
Now while this is very humanitarian of them, I'm pretty sure that by running these extra costs through tax avoidance schemes then they are picking up more in tax benefits elsewhere.
But who would want to stop a scheme that helps the disadvantaged in countries outside Europe?
Since the schemes bring benefits to countries that are a lot poorer than the countries trying to rake back the tax, it's always going to be a tough road trying to close them down.
Very smart. I've avoided OSX/IOS programming because ObjectiveC didn't appeal. Swift looks really good: kind of like a simplified Scala, or Kotlin.
Not a single IT pundit saw this coming. I guess it's a lot easier to keep secrets when you don't have to tell an external supply chain.