Well, after musing about the rate of Irish corporate tax being up for review, I was not at all surprised to wake this morning to news that a Bloomberg Businessweek report said that Google was using an innovative technique of tax ‘avoision’ (1) called a ‘Double Irish’, which when coupled with a ‘Dutch Sandwich’ meant that it paid as little as 2.3% in tax on non-US income.
Now I had intimated that some multinational technology companies used Ireland as site through which it could pay tax on foreign income at a lower rate, this avoiding US corporate tax rates. This was explained to me by a source that shall remain unnamed but works in just such an organisation.
Little did I know that the creative accounting went so much further than mere clever routing of funds to a low tax regime. Now, I will not go into the detail, as Cade Metz writing for TheRegister.co.uk frames it far better than I, but suffice to say the ‘Double Irish’ is neither an extra sausage at breakfast, nor two Jamesons to celebrate a job well done. It is in fact a way to avoid both US and Irish corporate tax rates, according to Metz, by having one Irish company do the sales while licensing IP from another Irish organisation.
Similarly, the ‘Dutch Sandwich’ is nothing to do with nutrition and everything to do with enrichment. It involves a similarly clever use of two organisations, with a Dutch organisation in the middle, that allows further savings to be made on tax bills.
Well, in light of these revelations, I would suggest that there is probably a fair bit of headroom in the corporate tax rate for Ireland before the multinationals grow weary of our charming ways.
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