Multinational tech giant Oracle has been charged $293 million for corporate tax evasion in South Korea.
The $293 million charge is made up of back taxes, as well as a punitive charge from the government tax agency.
Oracle was told of the tax debt in January last year, when the National Tax Service charged Oracle with evasion of corporate tax payments from 2008-2014.
The outfit was accused of funnelling revenues to Ireland to avoid paying taxes in South Korea. In an audit of the company’s books, the tax authority found that Oracle had channelled profits generated in South Korea to an Irish subsidiary.
It was found that those funds profited the company’s headquarters in the United States.
Because of this, the NTS figured out that Oracle should have paid taxes on profits generated in South Korea to the South Korean government.
The nation which tends to give illegal sweeteners to big tech companies is gunning for Facebook.
Ireland’s privacy watchdog has launched a bid to refer Facebook’s data transfer mechanism to the European Union’s top court in a landmark case that could put the shifting of data across the Atlantic under renewed legal threat.
The move is the latest challenge to the various methods by which large tech firms such as Google and Apple move personal data of EU citizens back to the United States. It does not appear that Ireland is going for Google or Apple yet.
The issue of data privacy came to the fore after revelations in 2013 from former US intelligence contractor Edward Snowden of mass U.S. surveillance caused political outrage in Europe and stoked mistrust of large technology companies and an overhaul in the way businesses can move personal data – from human resources information to people’s browsing histories – so as to protect Europeans’ information against US surveillance.
Ireland’s data protection commissioner, who has jurisdiction over Facebook as its European headquarters are in Dublin, wants The Court of Justice of the European Union to determine the validity of Facebook’s “model contracts” – common legal arrangements used by thousands of firms to transfer personal data outside the 28-nation bloc.
Irish Data Protection Commissioner Helen Dixon has formed the view that some of the complaints against the model contracts are “well founded.”
Collins said only the CJEU and not a national court or the Data Protection Commissioner has the jurisdiction to rule a European Commission decision invalid.
He said that under EU law, a transfer of data can only be made to a country outside the EU if that country ensures an adequate level of protection.
However the court agrees it could be a major headaches for companies that need to transfer personal data to the United States. Ironically Facebook is building a huge data centre in Ireland which is designed to prevent this sort of data shifting to the US.
The court has since agreed to a request to allow the United States government to join the case, potentially giving the new US administration a platform to lay out its views on surveillance laws. Since Donald (Prince of Orange) Trump has already signed an executive order which removes the safe harbour rules negotiated between the US and the EU it is unlikely that he will prove particularly helpful to Facebook.
Facebook, which is due to speak in court during the case, said in May that it was one of thousands of companies that used model clauses and said it had a number of legal ways of moving data to the United States.
Intel Ireland is lodging a fresh planning application with Kildare County Council for an estimated $4 billion new chip manufacturing facility at its headquarters in Leixlip.
It is not clear if the project will go ahead as Ireland is competing with other locations, most notably Israel, to land the investment. It received a 10-year permission for the plant in 2013, which its local management said “sits ready to be used when the corporation needs it”.
Since then the standard design of Intel’s “fabs” has changed and new planning approval would be needed.
The latest application is for a smaller facility than the one for which it got permission in 2013, which at the time was estimated could create more than 3,000 jobs during construction and fit out, and would cost $4 billion.
Intel said the new application, as well as reducing the footprint, would also site the proposed manufacturing plant further back from the N4 road. It would also be lower in height than the 2013 version.
The latest application also seeks permission for a car park to hold 2,200 cars, indicating that, if the project proceeded, it would likely provide a significant permanent employment boost to the area.
Apparently Chipzilla Ireland is still waiting on Intel HQ to give the project the nod.
The Irish have voted overwhelming to fight the EU for their right to be shafted by a big US multi-national for billions of dollars of tax money.
The government, which was once so desperate for money that it forced its citizens into a number of particularly unpleasant austerity measures says that it does not want Apple to give it the 13 billion euro of unpaid tax.
Ireland’s fragile coalition overcame initial misgivings from independent members of cabinet to join Apple last week in fighting the ruling that Ireland granted state aid to the company through undue and selective tax benefit.
The government insists Ireland did not give favourable tax treatment to Apple, despite the fact that fruity cargo cult only pays .5 per cent tax instead of the 15 per cent that every other company does. It insists that no state aid was provided, and it won a motion to endorse its position in parliament by 93 votes to 36.
Irish Prime Minister Enda Kenny said that the picture of Ireland painted by the Commission in its decision, as a country prepared to play fast and loose with the law to gain unfair advantage, could not be more damaging or further from the truth.
“This is not a Commission finding that stands by a small country that has played by the rules. It cannot be allowed to stand.”
The EU is fighting Apple’s spin that somehow demanding it pay the same tax as everyone else is “anti-American”.
Apple is telling its Tame Apple Press, and its “lobbied” US politicians, that the EU is targeting it as part of an anti-American campaign inspired by those nasty communist Europeans.
But European Commission President Jean-Claude Juncker said on Sunday that the EU ruling was clearly based on facts and existing rules and was not a decision aimed at the United States,
France and Germany have come out to back Brussels on the decision.
Juncker said EU Commission investigations on taxation had mainly targeted European companies.
The decision comes amidst a coordinated global initiative to crack down on tax evasion by multinational companies, spearheaded by the Paris-based Organization for Economic Cooperation and Development (OECD).
The ruling against Apple has pushed the issue into the limelight and raised the risk of significant push-back from the United States, analysts say, where some lawmakers are saying the result represents a European encroachment on the US potential tax base.
Pascal Saint-Amans, director of the OECD Center for Tax Policy and Administration, dubbed Apple’s tax planning “outrageous” but, like Juncker, said the decision was based on enforcing current regulations.
Saint-Amans said he believed it would be unlikely to serve as a precedent for enforcement on future income earned by multinationals.
The European Commission is expected to tell Apple that its cosy arrangement with Ireland is tax evasion and it owes Dublin a billion euro.
The Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation and claim it is not up to the Commission to decide how much tax Jobs’ Mob pays. Both have said they will appeal any ruling.
When it started looking at Apple in 2014, the Commission told the Irish government that tax rulings it agreed in 1991 and 2007 with the iPhone maker amounted to state aid and might have broken EU laws.
The Commission was miffed that the rulings had been “reverse engineered” to ensure that Apple had a minimal Irish bill and that minutes of meetings between Apple representatives and Irish tax officials showed the company’s tax treatment had been “motivated by employment considerations.”
Apple employs 5,500 workers, or about a quarter of its European-based staff in the Irish city of Cork, where it is the largest private sector employer. It claims that it paid Ireland’s 12.5 percent rate on all the income that it generates in the country.
Apple can rely on its chums in the US Treasury Department to help out. Last week the department issued a white paper claiming that the EU executive’s tax investigations departed from international taxation norms and seemed to be focused on US companies. The Commission said it treated all countries equally. Our guess is that it is just the American companies which take the Michael.
The European Union’s antitrust chief has indicated that it will likely reach a decision in September or October on its two-year probe into Apple’s tax dealings with Ireland.
The European Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland reject the accusation.
The Irish Finance Minister Michael Noonan said that Commissioner Vestager had told him that there would not be a decision in July but there would probably be a decision early in the autumn – probably September or early Octobe.
“I didn’t discuss the potential decision but we did discuss the presentation of the decision. I have no indication of what way the decision will go or what the implications of the decision will be,” the finance minister said.
The investigation could force Apple to pay substantial back taxes. But given it has huge problems fessing up when it does anything wrong, Apple has said it will join Ireland in appealing any adverse ruling.
It will have its work cut out for it. The European Commission has already ordered Dutch authorities to recover up to 30 million euros from US coffee chain Starbucks and Luxembourg to do the same with Fiat Chrysler for their tax deals.
The US Internal Revenue Service is having a look at Facebook’s moves to transfer various rights associated with its worldwide business to a holding company in Ireland.
The US Justice Department filed a lawsuit to enforce summonses served on Facebook and to force the world’s largest social network to produce various documents as part of the probe.
The lawsuit said the documents relate to an IRS examination of the company’s tax liability for 2010, when Facebook’s tax return reported royalty income from transfers of intangible property to Facebook Ireland Holdings Unlimited.
Of course Facebook says it complies with all applicable rules and regulations in the countries where it operates. However, it is just that the Tax authorities have not got their heads around the whole globalisation thing, meaning that big multi-nationals have a habit of hiding out in tax havens leaving their own governments coming up short.
It stuffs up the whole “trickle down” effect of neo-liberalism because the money stays off-shore and is not sued to help social programmes for the poor.
Facebook transferred to the Irish company rights associated with its worldwide business, with the exception of the United States and Canada, the lawsuit said.
Facebook reduces its tax bill by having non-U.S. clients pay advertising fees directly to an Irish subsidiary called Facebook Ireland Ltd.
This subsidiary reported revenues of 4.8 billion euros in 2014, the last year. But Facebook Ireland Ltd reports low taxable profit, of just 13 million euros in 2014, because it pays a significant chunk of its revenue to another Irish-registered company called Facebook Ireland Holdings, in return for the use of the Facebook platform.
The data protection commissioner for Ireland said yesterday that it was asking an EU court to investigate whether Facebook is breaking EU law by shipping data to the United States.
Data privacy rules in the European Union are strict and companies based in the trade area have to obey the rules or face fines and other penalties.
The European Court of Justice stopped an agreement between the EU and the USA which let US companies freely ship data it collects in Europe.
But Facebook isn’t apparently upset by the plans and is confident it won’t face sanctions from the court.
The Court of Justice stopped the EU-USA agreement, called Safe Harbour, because it feared surveillance from the Americans.
The EU and the USA are working frantically to open up a new scheme called the Privacy Shield which could be signed as early as next month.
But this new agreement may also face sanctions from the European Court of Justice, according to reports.
European Union antitrust regulators have asked Ireland to provide further details on the country’s tax deal with Apple.
The regulators are concerned that this might before deciding whether this constitutes illegal state aid to the fruity cargo cult.
The European Commission, which has been investigating the Apple deal for more than two years, said Irish authorities had not responded fully to an earlier query.
Commission spokesman Ricardo Cardoso said: “Ireland did not reply in full to the Commission’s last request for information, which is why the Commission has sent a reminder to Ireland to request the missing data. Furthermore, the Commission has requested clarifications to follow up on some of the replies sent by Ireland,” he said.
The Irish finance department insisted that it had provided a detailed response, saying an EU ruling was not imminent.
“There is simply no question that the Irish authorities sought to give the company in question any kind of special tax deal,” a finance department spokesman said.
In 2014 the EU competition watchdog barked that Ireland was avoiding international tax rules by letting Apple shelter profits worth tens of billions of dollars from revenue collectors in return for maintaining jobs.
Apple’s vice-president of its European operations, Cathy Kearney, told a European Parliament hearing that the company had paid every cent of its taxes in Ireland.