End of the "Double Irish" Scheme Could Take a Bite Out of Apple's Tax Avoidance

Last May, many were shocked to hear that one of their favorite companies, Apple, was acting less than patriotically. The corporation was stashing profits out of the reach of the U.S. Treasury.

Apple has been using the “holy grail of tax avoidance,” as Sen. Carl Levin (D-MI) described the accounting tricks, to generate profits that cannot be taxed by any country. The company is one of several that have taken advantage of this scheme. Google used the "Double Irish" accounting maneuver, as it is known, to avoid paying an estimated $2.5 billion in U.S. taxes last year.

Alternative tax schemes will likely ensure multinational corporations continue to pay next to nothing in taxes.


Overall, corporations save approximately $70 billion per year by stashing profits in offshore tax havens. Loopholes also hit the European Union hard; EU member states forgo more than $1 trillion in taxes per year as a result of individual and corporate tax avoidance.

An announcement last week suggests the days of the Double Irish are numbered. Ireland said that as of January, no additional companies would be able to take advantage of this scheme. Companies like Apple and Google, already established in the country, will be allowed to continue the practice until 2020.

The move comes largely as a result of pressure from European partners. The European Commission launched an investigation into Ireland’s tax dealings with Apple, suggesting that the less-than-one-percent tax rate that the company enjoys there could be classified as illegal state aid. If Apple is found to have received illegal state aid, the European Commission could demand that the company pay more than 1 billion euros to the Commission.

While the Double Irish will be phased out, Ireland’s finance minister seems to be throwing more tax breaks at multinational corporations. Michael Noonan has announced plans for a “knowledge development box,” which would ensure Ireland’s tax regime remains attractive to corporations.

“For multinationals there will be no practical change,” said Stephen Kinsella, an economics lecturer at the University of Limerick, in an interview with Bloomberg. Ireland’s priorities are evidently to continue to offer lucrative tax avoidance schemes to lure companies to the island, and alternative schemes will likely ensure multinational corporations continue to pay next to nothing in taxes.

And experts note that tax avoidance practices stretch far beyond Ireland's shores. “Unless the international community acts in unison, practices such as the ‘Double Irish’ will continue, just in different countries,” said Aidan Byrne, a tax partner at Baker Tilly Ryan Glennon in Dublin.

In a time when Americans are feeling the squeeze of a weak job market, rising prices, and stagnating wages, the idea that corporations are skipping out of paying billions in taxes leaves a particularly bad taste in the mouths of working families. Unlike multinational corporations, workers don’t have the luxury of stashing cash offshore or in tax shelters. The American people, like the Europeans, want to see companies taxed fairly and asked to chip in for the public structures and services that help them succeed.


For Further Reading:

Report: Anonymous Companies Threaten American InterestsThe Fine Print, 10/6/2014

Support Those Who Support Us: Let Your Dollar Be Your Vote for Responsible Corporate TaxpayersThe Fine Print, 9/15/2014

House Majority’s Last-Ditch Effort to Undermine Public Protections, Award Corporate GiveawaysThe Fine Print, 9/15/2014

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We should tax companies the same amount, and allow them to write off taxes they pay abroad. This way, they have to pay the taxes, regardless of where it is. If there is no advantage to saving them taxes, the countries will stop offering them this.
interesting article
...one of the larger culprits is a well known software firm which stashed 69$ billion of their profits overseas. Meanwhile this same corporation is continuing to lay off thousands of personnel at it's home campus in Washington State while hiring new people in India at a fraction of what US workers in the tech sector are paid. If corporations wish to continue this practise and/or "invert" by moving their HQ's overseas to dodge their tax obligations, they should also be prohibited from having any influence on US policy (through lobbying, direct campaign contributions, and PACs) as they technically have become a foreign entity. This also part of the reason why the economy is still so stagnant as none of these profits are being used to stimulate growth and hiring here at home.
You want to penalize Apple, don't buy their products. I am wondering how many apple products the Author has in her possession. By the way a Corporate tax is a tax on the poor. Since the "Consumer" pays all corporate taxes. I believe we should put an end to all current taxes and switch to an "Excise Tax" on all goods, this way no one escapes the tax.