Irish Unit Saves Microsoft Lots O'Green

from the so-that's-how-it-works dept

theodp writes “By transferring IP and other assets to an obscure subsidiary in a Dublin tax haven, Microsoft has managed to slash its corporate taxes in Europe and shield billions from U.S. taxation. Virtually unknown in Ireland, Round Island One Limited has few employees, but controls more than $16B in Microsoft assets, recorded gross profits of nearly $9B in 2004, and helps shave at least $500M from Microsoft’s annual tax bill.” Round Island One is apparently one of the largest companies in Ireland… and almost no one has heard of it.

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Comments on “Irish Unit Saves Microsoft Lots O'Green”

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sxt173 says:

Tax Havens, get over it!

It seems that there is always an ongoing criticism of corporations taking advantage of tax havens, but the same people are all for competition and free markets.
Here’s the deal (in my view). A global corporation should be able to take advantage of the best goods/services it deems necessary, just like we do when we go shopping. At a country level (and even state level in the US), entities are competing for business. They compete by offering preferential laws, less taxes or alternative taxes. So, why are we saying a company is allowed to buy an office desk in freedom, but they cannot buy a tax system in total freedom?
It is not a corporation that is to blame for moving to a tax haven, nor is it the tax haven’s fault. The locations that are losing the business, i.e. high tax areas, are to blame because they are simply not competitive and are trying to use ‘public sympathy’ to appeal to the image of a company by saying “they are ripping off this country by paying lower taxes”.
First of all, the tax savings that are realized are transferred to the shareholders, so the savings go back into consumers pockets. Second, a sophisticated shareholder should question why a company is not taking advantage of every tax break they can get; it’s your money (asking a company to pay more taxes is the same as requesting higher taxes on yourself)! Third, corporations contribute to the country by creating jobs, paying wages and adding value to the economy, thus taxes are not the only benefit of having a business in your borders. Finally, more and more corporations in the US and elsewhere have to pay heavy ‘exit’ fee’s to leave the tax area. How is this an open market?
What MS is doing is a normal business practice of having a SPV (Special Purpose Vehicle) that is set up for a specific task. If you look at most multi-nationals, they will list some sort of holding company with 5-10 employees that control billions and have tens of thousands of employees in its subsidiaries. This is just the legally acceptable and mandated way to do it.
Maybe we should be questioning why Delaware is a tax haven and punish companies for being there too?

AC says:

Re: Tax Havens, get over it!

yeah because the open market/free capital system is so super-awesome-great that it deserves to have no restrictions and have nothing asked of it. if you honestly believe all that happy-rainbow “capitalism/free markets are the silver bullet” crap I have some beachfront property you might be interested in.

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