A systematic assessment of multinational enterprise (MNE) tax minimisation strategies at the firm level is difficult. This paper aims to present systematic evidence for Ireland of tax minimisation strategies at both an aggregate and individual firm level. The paper uses Apple and Google as its case studies.
The paper is based on 31 US intellectual property (IP)-intensive MNEs with substantial operations in Ireland. Financial and other data including tax payments were extracted from Form 10K and filings in Companies Registration Office in Ireland.
The paper develops three different measures of effective tax rates and that tax strategies have resulted in effective tax rates lower than the nominal US tax rate and far lower than those published in company accounts. Although two-thirds of profits are earned outside the USA, around 70 per cent of corporate tax is paid in the USA.
The paper relies on data from a subset of MNEs operating in Ireland. The paper also uses publicly available data which may not be available for all firms.
The findings have implications for European Union (EU) tax policy and tax revenues in countries where MNEs operate. The paper also has implications for industrial policy based on attracting Foreign Direct Investment (FDI).
The study has implications not only for the equitable distribution of corporate tax payments and income distribution but also especially for a tax-based industrial policy.
MNE tax strategies, although of considerable public interest, are often obscure and poorly understood. The paper is original in providing a detailed examination of MNE tax strategies at the firm level and discussing some implications from a public policy perspective.
