Posted by Carlos on Sep 26, 2011
What do companies such as Twitter, Facebook, and Google have in common with Pfizer, Amgen, BioMarin, Alkermes, and Jazz Pharmaceuticals?
Most of us know that Ireland has a low 12.5% corporate tax rate, making it an attractive place in Western Europe for an international operation. However, Ireland is…
…even more attractive because of “transfer pricing”. This is a tax law which allow the likes of Google to legally shuttle profit into and out of subsidiaries in Ireland and on to tax havens. Google, which funnels all its European revenues through Dublin, pays 2.4% tax on operations outside the US.
Unlike such as Luxembourg, companies have to have “real” operations in Ireland, and not just letter boxes, to qualify for these arrangements. Regardless, a lower tax rate, coupled with a freedom to move profits to tax havens, means that international companies can have their cake and eat it too. In other words, they can set up an international operation close to Europe in an English-speaking country with a highly skilled workforce AND enjoy lower taxes.
For years, the debate over the repatriation
of profits held overseas has raged
in Congress, and with unemployment approaching 10%, it may become an election issue in 2012.
Regardless, what Ireland
is showing all of us, especially its neighbors in London, Oxford, and Cambridge
, is that a business-friendly, tax-friendly environment can attract life science business and growth.