Tax avoidance – a multibillion-dollar industry
Since the late 1980s, several multinational companies have been criticized for avoiding taxes by jumping through different European tax loopholes. A system called the “double Irish”, for instance, has made this possible. This is how Apple has used and enjoyed the
Through a scheme literally called the “double Irish”,
a company can create two Irish subsidiary companies,
and the first Irish company (usually in the Cayman
Islands) licenses everything to a second Irish
company, the upshot being that the mother ship
is not considered a tax resident anywhere thanks
to differences between the US and Irish definitions
of residence. The result of all this is that Apple had
a “head office” in Ireland with no premises, no employees
and no real activities. But because they had
pulled the double Irish, the European commission
has ruled, Apple deprived the EU of $14.5bn over
the last 10 years.
-Mike Daisey, The Guardian, 7 September, 2016
Tax evasion is illegal. It means not paying, or underpaying, taxes. It has been estimated that about 5.1 per cent of annual world GDP is lost to tax evasion. Tax avoidance is the use of legal methods to pay as little tax as possible. Although a given tax avoidance
scheme could be strictly legal, it is usually in contradiction with the intent of the law. In this video you can learn more about tax avoidance (YouTube).
Instead of studying the technicalities of European tax laws, we would like you to focus on the effects of the loopholes. In groups of 3–4, choose either Amazon, Apple, Google, Microsoft or Starbucks as your case study.
• How much has the company paid in corporation tax
in EU countries in recent years?
• How is the company’s tax-avoidance case
commented on in the media?
• In your own opinion: How fair is the system? What
would be a reasonable level of corporate tax for
“your” company? Make sure you support your
claims with concrete evidence based on reputable
Create a collaborative document, for instance in Google Docs, and write a few paragraphs where you present your findings and views.
This task is taken from E2 International English. You can read more about E2 here.