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NARRATIVE REPORT ON IRELAND
Part 1: NarratIVE rEPOrt
How Ireland became an offshore financial centre
Overview and background
Ireland is ranked 37th in the 2015 Financial Secrecy index, based Chart 1 - How Secretive? 40
on a very low secrecy score of 40, one of the lowest in our index, combined with a weighting of just over two percent of the global market for offshore financial services. Yet despite Ireland's low ranking we have chosen to probe it in detail because offshore financial centres are a political and economic phenomenon that goes far beyond secrecy, and Ireland makes a remarkable case study.
Secrecy was never a central part of Ireland's ‘offshore' offering. Instead, its offshore financial centre is based on two other key elements. The first, dating from 1956, is a regime of low corporate tax rates, loopholes and laxity designed to encourage transnational businesses to relocate – often only on paper – to Ireland. The second big development has been the Dublin-based International Financial Services Centre (IFSC), a Wild-West, deregulated financial zone set up in 1987 under the "voraciously Exceptionally secretive corrupt" Irish politician Charles Haughey: the IFSC has striven in particular to host risky international ‘shadow banking' activitya and it has posed – and continues to pose – grave threats to financial stability.
Chart 2 - How Big?
Ireland over half of the world's top 50 banks and half of the top 20 insurance companies; in July 2013 it nearly 14,000 funds (of which 6,000 were Irish-domiciled) administering an estimated €3.7 trillion: up from $840 billion a decade earlier. The Irish Stock Exchange hosts about a quarter of international bonds: Ireland is the domicile for around 50 percent of European ETF assets. In 2014 total IFSC foreign investment in liabilities was equivalent to around 15 times Ireland's Gross National Product (GNP;) as this report explains, many toxic developments in ‘subprime' markets that triggered the global financial crisis from 2008 can trace their lineage back to Ireland.
What is a tax haven or
Ireland hosts a of tax secrecy jurisdiction?
Ireland accounts for slightly over 2.3 per cent of the haven deniers: as this report makes global market for offshore financial services, making clear, it is one of the world's most it a large player compared with other secrecy is a bit of a misnomer: important tax havens or offshore these places aren't just financial centres.
about tax. From political The ranking is based on a combination of its economy perspective, they secrecy score and scale weighting. Contrary to popular mythology, offer escape routes to
Ireland's famous and sudden "Celtic read more
financial players elsewhere
Tiger" economic boom from the early ("offshore"), helping them 1990s was driven not by Ireland's avoid taxes, or disclosure, corporate tax regime, but by other or financial regulation, or Tax Justice Network 2015 - 23.9.2015 whatever other ‘burdens' of society they don't like. Read If you have any feedback or comments on this report, please contact us at firstname.lastname@example.org factors, as this report explains. It was followed In short, the tax haven strategy that began in by a spectacular, debt-laden bust from 2008 1956 is now nearly six decades old -- and was onwards, from which Ireland is only now starting spectacularly unsuccessful for Ireland for most to emerge. For proper context to this report, it of that time. Note, too, that Ireland's famous is important to explode the Celtic Tiger myth in 12.5 percent corporate tax rate was in fact a tax more detail.
rate increase. What triggered the Celtic Tiger era above all was Ireland's accession to the The Celtic Tiger myth
EU single market in 1993 – plus several other factors. There are of course important nuances The simple popular story is that Ireland used in this basic story. its 12.5 percent low corporate tax rate, and tax loopholes, to attract foreign multinational On one level, this is a fairly straightforward tale corporations, and built the so-called "Celtic about corporate taxes, financial deregulation Tiger" Irish economic boom on the back of and their local economic impacts. But on that, helping Ireland the single largest another level this is an Irish version of a location outside the US for the declared pre- phenomenon we've encountered in tax haven tax profits of U.S. firms. The Irish singer Bono after secrecy jurisdiction: the state ‘captured' echoed popular beliefs when he said that by offshore financial services. Before exploring Ireland's corporate tax system "brought our this peculiar story of nepotism and hubris, country the only prosperity we've known."b however, it is worth providing more context for the Celtic Tiger.
The next graph helps illustrate why the popular story is quite wrong.
Chart 1: Ireland's GNP per capita, as a share of
European GNP per capita, 1955-2013
Source, Fools' Gold blog, March
10, 2015, and associated sources and links. Graph
created by John Christensen and Nicholas Shaxson.
what was most likely the boom's biggest driver: soaring property prices. "it is difficult to avoid the conclusion that Irish economic performance has been the least impressive in Western Europe, perhaps in all of Europe, in the twentieth century ()." The take-off that followed almost as soon as he had published those words was rocket-fired. During the spectacular upswing phase, most of what was written about this episode was uncritical, and often gushing: "an economy to be rather than examined," as one account put it. The describes the attitude: The new government believed it had discovered a quicker-acting formula for wealth creation: tax cuts to stimulate consumption, property to replace manufacturing as the source of wealth, Dublin to become a tax haven for businesses seeking to avoid the more rigorous regimes of London and New York. The fact that this looks so similar to our first As mentioned, it was EU single market accession graph in scale and timing is no coincidence: this that was the big factor. But there were of course was, once again, largely the result of Ireland's several other crucial ingredients. One was the accession to the EU single market, which fact that Ireland had a skilled (and, crucially, massively boosted housing finance, creating English-speaking) and educated workforce – an enormous new pool of available wholesale many educated by the UK and other countries funding with exchange-rate risks removede. during earlier periods of mass Irish emigration – plus membership of the Euro currency from Irish people only understood how ephemeral a 1999, not to mention a worldwide boom in lot of this ‘growth' was when crisis hit. global FDI flows at the time. It is true that the tax offering did help attract Inward FDI flows responded massively to all large amounts of investment, particularly from these factors: rising from 2.2% of GDP in 1990 U.S. multinationals – and European membership to an astonishing 49.2% in 2000c. Boosting the helped keep Ireland off tax haven blacklists that Irish economy further, European agricultural apply to classic tax havens such as Cayman and spending on the country rose from just €500m Bermuda; a broad network of with in 1980 to €2bn annually on average from other jurisdictions complement this.
1990-2010.d Yet the next graph that illustrates but the story does not end there. The FDI the European Economic Community (EEC) benefits to Ireland may have been offset by it suffered a setback when it was told that the scale of the tax giveaway involved, and these tax measures were discriminatory. The these benefits also have accrued to a relatively EEC allowed Ireland plenty of time to adapt, small segment of Irish societyf. What is more, however, and it responded by replacing the Ireland has triggered ‘beggar my neighbour' differential tax system with a single, across-the- competition from other nations, meaning it has board tax rate of 10 percent to apply without to constantly offer new and larger subsidies to discrimination to all industrial sectors. mobile capital, just to keep upg.
Implementation of this single rate was delayed It's also always important to stress that what until 1981, however, and other sectors such we've described in this section are simply the as tourism, facing corporate tax rates of 40 costs and benefits to Ireland: the corporate percent, began to lobby hard to obtain the same tax haven strategy (and the financial centre low tax rate. Finally, in 1997 it was announced strategy, below) have transmitted tremendous that Ireland would from 2003 introduce a 12.5 harms onto other countries, notably the U.S. percent tax rate and expand its application to which has seen Ireland help facilitate a massive all trading companies, with non-trading income transfer of wealth from ordinary taxpayers to taxed at 25%. This happened over a decade mostly wealthy shareholders.) after the Celtic Tiger awoke.
The corporate tax haven strategy, in detail
Tax loopholes and transfer pricing
The Irish corporate tax haven strategy Ireland's 12.5 percent corporation tax rate is in 1956 with the Export Profits Tax Relief (EPTR) which completely exempted Box: Apple, Facebook, Google and the Double
manufactured export goods from corporate income and profits tax. This was pushed through by John Costello, the Irish Taoiseach (head of The "Double Irish" scheme relied on two Irish- incorporated companies: the first, taxable in Ireland, government) in October 1956, who failed even collects profits (say, from operations in Europe) but to discuss the measure with other members of wipes them out by paying royalties to a second Irish- the government, and in the face of objections incorporated company tax resident in another tax from the Irish Revenue - relying instead (on haven like Bermuda or Cayman, which won't tax them. advice from his son-in law Alexis Fitzgerald and In 2014 the Irish government, under international other personal advisers. The ‘captured state,' pressure, said it would phase out the Double Irish; with its incestuous links among political and new schemes are already in development. economic insiders and absence of democratic debate, was evident from the outset.
A U.S. Senate investigation in 2013 found that the
U.S. technology firm Apple had used the Double Irish
The tax exemptions were expanded in the late in what U.S. Senator Carl Levin called the "holy grail 1950s – not least with the Free Zone around of tax avoidance. . magically, it's neither her nor Shannon airport – the world's first Free Trade there". These Irish-based entities were not taxable zone – and the system really took off in the anywhere, y no tax on the lion's 1970s when the Industrial Development share of for Tax Justice Authority (IDA) started aggressively marketing in the U.S. that Apple would owe Ireland's tax system internationally, under nearly if it hadn't stashed its profits off slogans such as ‘no tax' and ‘double your after-tax profits' (.) An Irish subsidiary at the heart of Facebook's tax
affairs funneled profits of €1.75 billion in 2012 to a While these antics attracted some investment pre-tax loss of €626,000 by paying mighty ‘expenses' and profit-shuffling to Ireland, the graph above to another Irish Facebook subsidiary tax resident shows that they failed to deliver economy-wide in Cayman. Similarly, Google escaped $2 billion a
benefits And, as Ireland negotiated entry into year in taxes using a "Double Irish" scheme via the Netherlands and Bermuda.
well known, but less has been written about Phil Burwell, said he had "no responsibility for its role in providing prolific tax loopholes: a the nominee directors or activities of the firms far more important offering for many large after they are incorporated." The Irish Financial Services Centre (IFSC)
The key for multinationals is to make sure The second main leg in Ireland's ‘offshore' that the lion's share of profits can escape that offer came with the birth of the Irish Financial 12.5 percent tax rate by being shifted to a tax Services Centre.
haven (or nowhere – see the Box) where they get taxed lightly or not at all. Ireland makes this particularly easy to do, not only because In the late 1970s a group of Irish officials, with of the general laxity of its tax administration, the help of Wall Street offshore lawyer but more specifically via sought to set up an offshore banking tricks. Astonishingly, until 2010 Ireland had no centre modelled on Bermuda. The Irish Central meaningful transfer pricing legislation, allowing Bank rejected it, saying that it "smacked of a something of a Wild West free-for-all, which has banana republic.) since only been tightened up a little.h This lax regime produced famous wheezes such as the Yet within a decade the concept had been "Double Irish" tax scheme operated by the U.S. revived, and pushed aggressively through by a tech firms Facebook, Apple and Google (see tiny group of insiders with very little democratic The biggest early driver of the IFSC project was the (now billionaire) stockbroker , formerly of Citibank and Pricewaterhousecoopers, who first the idea to a few key individuals in a meeting in Kitty O'Shea's pub in Dublin. In 1985 he formally proposed the idea of a financial centre in Dublin to the government. Desmond's stockbroking firm part-financed the first full-scale feasibility study by PWC, and he also owned some box) which have, as this graphic illustrates, led of the original buildings that would become to extremely low effective tax rates in Ireland designated to the IFSC project. He then got for US multinationalsi.
together with stockbroker Michael Buckley, later to become Chief Executive of Allied Irish Shady shell companies
Bank, to the relevant section of the manifesto for the dominant political party, Beyond these tax-structuring activities, Ireland Fianna Fáil, during the 1987 election campaign, – like many offshore jurisdictions – has also with a promise of 7,500 full-time jobs within five been happy to serve as an ask-no-questions years. Fianna Fáil was led by Desmond's friend, incorporation centre for shady businesses. the politician Charles Haughey (see box), and As the Irish Times in June 2013, one although the document asserted that Dublin-based company incorporation business it was "not oriented in any way towards the alone had set up some 2,000 shell companies, creation of a tax haven," they all knew that the some of which have been found to have been truth would be the opposite.
involved in large-scale criminal activities around the world. The man behind the agency, "‘Finance', in the current era, Haughey was returned as Taoiseach (head of is not just a sector of the government) in March 1987, and within two months the government had chosen economy; it is at the core of a in Dublin to host the IFSC. new social settlement in which Padraig O'hUiginn, Haughey's super-fixer
the fabric of our society and The IFSC project was bulldozered into place economy has been reworked." above all by a fixer named Padraig O'hUiginn, Haughey's right hand man. O'hUiginn compete with nearby banking centres such "tremendously strong personality" and as Luxembourg and the Channel Islands, "unique levels of say-so" in politics: Haughey including a tax rate of 10 percent for licensed reportedly considered him to be "as wise companies. A raft of laws and rules, notable as old sin himself." A leading employer said for their laxity, were crafted to attract global that O'hUiginn ‘could walk on water;' and when O'hUiginn spoke about "my 11 years working under three Taoisigh [Taoiseachs]," Charles Haughey: corrupt offshore Taoiseach
businessman Tony O'Reilly that "three The " Charles Haughey was Taoisigh worked under O'hUiginn." Irish Taoiseach (prime minister) for most of the Allied Irish Bank's Buckley, O'hUiginn had time between 1979 and 1992, roughly at the same Haughey's authority to "persuade, bully . time as Margaret Thatcher in the UK. whatever needed to be done to get the other government departments on board." An Irish Haughey owned a large yacht, racehorses, the analyst, via email to TJN, said O'Huiginn's private island of Inishvickillane, and a Georgian main legacy was "to politicise the civil service mansion with 250 acres near Dublin – yet few so no-one critical of government policy was could understand where this great wealth had ever promoted. O'Huiginn did his master's come from. Haughey's personal financial manager, bidding (Haughey) and twisted all sorts of rules, Des Traynor, was chairman , a Cayman bank which, along with various trusts and shell companies, was a part of an offshore Padraic White, then head of the Industrial web that constituted Haughey's personal finances. An inquiry (the McCracken report) of 1997 into democratic processes were shunted aside for corrupt payments to Irish politicians came up stonewalling from the Cayman Islands and was hampered by the fact that John Furze, the former "Within the public service, new MD of Ansbacher Deposits who faced questioning initiatives tend to develop slowly. over Haughey's finances, died in Cayman weeks These are advanced, after much before a key tribunal appeal in the case. The consultation, and refined, usually tribunal eventually found large-scale corrupt by committees. So before a policy and suspicious payments to and from Haughey proposal finally emerges as government running through secrecy jurisdictions including policy, it must survive a high degree Switzerland, Cayman, London and the Isle of Man. of scrutiny via checks and balances. Finlan O'Toole described Haughey as . . In this instance, the composition of "a self-procliamed patriot whose spiritual home the IFSC committee made the vital was in the Cayman Islands' and ‘[a] lover of his difference. So when O'hUiginn [see box] country who could treat it like a banana republic. turned to any departmental secretary . a man who called for sacrifices from his people and gently enquired, ‘I presume this is but was not prepared to sacrifice one tittle of the possible,' there was no place to hide.j" trimmings" [pp 127 and 131] Tax incentives were created for the IFSC to Haughey's pestilentially complex financial affairs are laid bare .
money management, foreign currency dealing, In 2006 Depfa, which had a tiny sliver of just equity and bond dealing, and insurance – and €2.98 billion in equity bootstrapping nearly the finance minister was given leeway to allow €223 billion in gross assets, collapsed when services "similar to or ancillary to those" – a very its Irish subsidiary could not get short-term broad net. The laws were fully in place within funding. Later, the head of the German financial just three months of the new government being regulator Bafin said that the rescue of Hypo formed, once again highlighting how normal had "prevented a run on German banks and processes of scrutiny had been steamrollered.
the collapse of the European finance system." A Bear Stearns holding company, Bear Stearns The IFSC was marketed aggressively abroad Ireland Ltd., was similarly leveraged, with a with a showpiece seminar in the City of London ratio of one dollar of equity underpinning $119 on St Patrick's Day, 1988. For financial sector in gross assets. Even so, almost no analyses of players Dublin had suddenly become, like this and other episodes involving the likes of – and in tune with the Irish corporate Lehman Brothers, AIG and others, investigated tax system – a Wild West of financial regulatory the core role Dublin played in the problems that indulgence. Almost immediately the world's subsequently emerged. banks descended on Ireland; by the end of that year fifty banks had applied for licences, Ireland, it seems, had not been interested in including Chase Manhattan and Citicorp., tackling or even investigating the dangers. The Commerzbank, Dresdner Bank and ABN. Irish financial regulator has been quoted as saying Financial services activity in Ireland exploded, that it had no responsibility for such entities: its notwithstanding the somewhat remit extended only to banks headquartered taken by the Fine Gael government of in Ireland. If the relevant documents were 1994-1997 towards what was seen as a Fianna provided to the regulator by 3 p.m., Stewart Fail project. Ireland, as one a fund would be authorised by start of business the next day (a prospectus can run to "began to see itself as an outpost of 200 or more pages; it can hardly be assessed American (or Anglo-American) free- between 3 pm and the close of business at 5 market values on the far edge of a pm.!) Even years after the global financial crisis, continent where various brands of Ireland's regulator says that financial-vehicle social democracy were still the political corporations such as those that helped bring Depfa down are not regulated: its role, it says, is to regulate firms but not specific financial Perhaps the only detailed academic examination products, and in 2013 that only of Ireland's regulatory laxity comes from two employees at the Central Bank oversee the entire trillion-dollar industry. Again, this kind of The IFSC, he reveals, formed a core element in turning of a blind eye is a classic and deliberate the toxic global "shadow banking" system that led to the global financial crisis. For example, hedge funds would typically be listed in Dublin, Another financial commentator managed in London and domiciled in a classic Ireland as "Germany's Offshore Tart," and noted tax haven like the Cayman Islands. to tap funds of ‘various shades of shadiness' from the former Soviet Union: When the global financial crisis hit, many Dublin-listed structures collapsed. Germany's Sachsen German banks used to fly their people Bank, IKB, West LB and Hypo, for instance, all from Germany to Ireland in order to do required massive state aid after luxuriating in deals that were not allowed in Germany. Dublin's regulatory permissiveness. Hypo Bank . This is known in the financial world was bailed out with €102 billion in German as jurisdictional arbitrage. You and I state loans and guarantees after it took over would call it cheating if we were feeling Ireland-registered Depfa Bank based in Dublin. charitable and lying if we weren't. . I have spoken to such people. Usually I officials often operating in secret, collaborating can hear the sweat coming off them as closely with global offshore financial sector they ask how I got their number and interests, and frequently leading to corrupt where did I get my information.
and insider dealing at the expense of the rest of the population. These insiders successfully According to an article in the Financial Times, ring-fence the sector against local democratic politics, and intimidate tax authorities and "The almost total absence of effective regulators into giving them more or less free banking regulation would be laughable had it not been so serious. Irish business and the Fianna Fáil-led government Jesse Drucker of Bloomberg News enjoyed a long established, cosy one of the key insiders: camaraderie in which peer review or the effective implementation of basic "Feargal O'Rourke, the scion of a regulations was impossible. The result political dynasty who heads the tax was horrific: the bankruptcy of the practice at PricewaterhouseCoopers in entire Irish banking sector involving Ireland. . He persuaded regulators bad debts in excess of €70bn – one of to eliminate a withholding tax on the biggest financial busts in history." profits that corporations move out of the country -- while separately advising Tape recordings released by the Irish his cousin who was finance minister. Independent newspaper revealed that when the government rescued Anglo Irish Bank He was instrumental in creating an Irish based on fictitious calculations of the bank's tax-credit program that subsidizes the bad debts, the executive said those calculations research of companies like Intel Corp. - had been "picked out of my arse;" Anglo Irish's - another client. . O'Rourke sees no Chief executive is said to have urged a colleague conflict in his dual roles representing to respond to anger in Germany, and elsewhere private industry and advising the at the damage spilling over with: government on issues that benefit his clients.
‘ "Stick the fingers up!" To which his colleague responds with a spirited In his book Ship of Fools, the Irish commentator rendition of "Deutschland, Deutschland Finlan O'Toole talks of "a lethal cocktail of global über alles". Both men dissolved in ideology and Irish habits" and, as one reviewer The "captured state"
"All this has been accompanied by a This history constantly provides reminders of culture of corruption so shameless and how Ireland shows all the symptoms of the spectacular that it makes Dublin look ‘financially a phenomenon like Kabul. The former prime minister we've described in so many of our narrative Charles Haughey stole €250,000 from a reports on tax havens and secrecy jurisdictions. fund set up to pay for a liver transplant This involves nepotistic and often corrupt links for one of his closest friends. . as between business and politics and a deference O'Toole points out, bribery, tax evasion to offshore financial services and a society-wide and false evidence under oath have not consensus supporting the system. simply gone unpunished; the very idea of penalising the culprits is viewed by Since 1956, corporate tax and financial policies the governing elite as unsporting or have since 1956 been crafted with little even unpatriotic." or no democratic consultation by affected populations, and instead by small groups of The willingness to brush dirt under the carpet to support the financial sector, and an equating indistinguishable. of these policies with patriotism (sometimes same deference to Big Finance and known in Ireland as the ,) multinational corporations prevails." contributed to the remarkable regulatory laxity with massive impacts in other nations (as well Or, as another observer more colourfully as in Ireland itself) as global financial firms sought an escape from financial regulation in "is the Irish state's legal apparatus whoring for the banks?" The captured state was evident again at the Another FT report in December 2013, entitled height of the financial crisis. Jack Copley of Irish pace of reform blamed on cronyism, Warwick University describes one illustrative highlights how the old ways of the past had episode for the Fools' Gold blog: Experts not been expunged, despite the scale of the from Ireland's National Treasury Management devastation wrought by the financial crisis, Agency were brought to government offices on the ensuing bailout, the public anger, and the the night of the bailout, only to be largest electoral mandate for change in the history of Ireland. As Sinn Féin spokesman while the Taoiseach, ministers and certain bank Pearse Doherty put it, "The golden circle still executives decided to issue a blanket guarantee exists." The article quoted Donal Donovan of of bank liabilities.m the Irish Fiscal Advisory council as saying: The problem appears to have continued almost "The bailout treated the sick patient unabated. A in the Financial Times but didn't tackle the underlying issues describes a meeting in 2011: of political reform, a failure to listen to criticism and a reluctance to look ‘They met under the auspices of the elsewhere for advice. . These factors "Clearing House", a secretive group were at the root cause of the financial crisis and the previous Irish fiscal crisis accountants and public servants formed in the 1980s. Unless we think about in 1987 to promote Dublin as a financial this now it could happen again in 15 hub. . The participants thrashed out years' time".
21 separate taxation and legal incentives sought by the financial industry at the meeting, which took place in room 308 read more
in the prime ministers' offices. .
The lobbying was done in secret behind closed doors," says Nessa Childers, an Irish member of the European parliament, who got minutes of the Fools' Gold Blog / Naked meeting using freedom of information Capitalism, March 10, 2015.
laws last year. "The bankers and hedge fund industry got virtually everything they asked for while the public got hit Prof. Jim Stewart, Trinity College Dublin, with a number of austerity measures".' IIIS Discussion Paper No. 420, Jan 2013- A September 2013 editorial by the Irish political magazine highlights how Tax Justice Focus, Vol. the offshore financial consensus continued to 4 Number 2, 2008. Jim Stewart's article provides pervade politics thereafter.
a much shorter summary of his subsequent paper.
"Never have two political parties Eichengrw the single market boosted paper, September 2011 property prices: "Claims on the Irish banking system peaked at some 400 per cent of GDP . . this was Progressive Tax Blog, Feb 23, 2011 (scroll an exceptionally large, highly leveraged banking system atop a small island. It grew out of the high mobility of financial capital within the single market. Sullivan, Forbes.com, Nov 6, 2013 It reflected [among other things] the freedom with which Irish banks were permitted to establish and acquire subsidiaries in other EU countries. It 2000. An uncritical yet informative chapter in reflected the ease of accessing wholesale funding the book The Making of the Celtic Tiger: the given the perception that the exchange risk that inside story of Ireland's boom economy, by Ray would have otherwise been associated with making MacSharry, Padraic White, 2000. local-currency loans to Irish banks was absent in a monetary union. It reflected the perception (more accurately, the misperception) that bank failures, like sovereign defaults, had been rendered a thing of the past." With thanks to Jim Stewart, Sheila Killian and Tom McDonnell for their help with this article. p13, Sheila Killian, submitted to Critical Perspectives in Accounting, 2006. Separatelythis ‘capture' may cause long-term trouble for Irish people. "As a country grows more and more dependent on one source of revenue, be it mining or aid, the government a The term "shadow banking" is attributed to the becomes less and less dependent on, and so U.S. financier Paul McCulley, who described it as accountable to the people of the country. Instead, "the whole alphabet soup of levered up non-bank it focusses on meeting the needs of the sector or investment conduits, vehicles, and structures." It group which is essentially supporting its ability to generally refers to banking activity that lies outside remain in power. If this logic can also be applied the purview of normal banking regulations. to a relentless singleminded policy of using tax to b Bono's comment came in response to criticism attract FDI, the implications for Ireland are obvious of him for calling for more tax-financed foreign aid while his band U2 had been benefiting from various g For example, Liechtenstein plans for artificial tax-dodging arrangements.
a 12.5% across-the-board corporation tax rate, c O'Hearn, D. (2000) Globalization, "New Tigers," and explicitly to match Ireland's. The United Kingdom the End of the Developmental State? The Case of the has more recently competing tax Celtic Tiger. Politics & Society. Vol. 28(1): 67-92 and Kirby, P. (2010) Celtic Tiger in Distress: Explaining h PwC the situation as "the absence of the Weaknesses of the Irish Model.Second Edition. local regulations and scrutiny prior to the 2010 Basingstoke: Palgrave Macmillan. Finance Act." The changes in 2010 do not apply to investors already in Ireland; and they are restricted Jack Copley, Fools' Gold blog, May 5, 2015 to those profits that are subject to Ireland's 12.5 percent tax rate. Fools' Gold Blog / Naked i There has been plenty of myth-making in Ireland Capitalism, March 2015, and associated sources on about the corporate tax rate. Studies cited by the Irish Times and others suggest that the effective tax e (To be more precise, as Jack Copley of Warwick rate is close to the headline 12.5 percent rate. But University , this was a tale of two booms: this is a fictional result based on a widely derided first, a real FDI-based boom lasting from the early result obtained by PWC, theoretical ‘standard firm 1990s to 2001; then a second property-based with 60 employees which makes ceramic flower one from 2001-2007.) The U.S. economist Barry pots and has no exports: it is entirely inapplicable to transnationals. See , Jim Stewart, IIIS Discussion Paper No. 442, Feb 2014. Though there are various ways to calculate effective tax rates, find rates of just 2.5-4.5 percent.
For some more examples of the Double Irish, see Jesse Drucker's reporting , or his looking at the drug Lexapro, which also used the Double Irish scheme. In 2014 it was announced that the Double Irish is being phased out: to see the kind of thing now replacing it see Leonid Bershidsky, Bloomberg, Oct 15, 2014j , by Ray MacSharry, Padraic White, 2000. k Our "" document explores this ‘capture' as a widespread phenomenon of tax havens and large financial centres.
l One reason for the regulators' laxity was the societal consensus that had built up, buttressed by active intimidation. As one player : "I remember once sitting in a meeting with the management of an Irish bank, who were chortling at the foolishness of the Irish Financial Regulator employee who had asked for details of all the mortgage loans they had made above 85% loan-to-value. Apparently they had called his boss and asked for the details of the warehouse that they were meant to send three lorries of paper files to. This sort of regulator intimidation — of course they could have sent a couple of CDs and I bet today they wish they had done — really did used to go on.)"m Jack Copley, Fools' Gold blog, May 5, 2015 Part 2: IrELaND'S SECrECY SCOrE
TRANSPARENCY OF BENEFICIAL OWNERSHIP – Ireland Banking Secrecy: Does the jurisdiction have banking secrecy? Ireland partly curtails banking secrecy Trust and Foundations Register: Is there a public register of trusts/foundations, or are trusts/ foundations prevented?Ireland partly discloses or prevents trusts and private foundations Recorded Company Ownership: Does the relevant authority obtain and keep updated details of the beneficial ownership of companies? Ireland - Secrecy Score
Ireland partly maintains company ownership details in official records KEY ASPECTS OF CORPORATE TRANSPARENCY REGULATION – Ireland Public Company Ownership: Does the relevant authority make details of ownership of companies available on public record online for free, or for less than US$10/€10?Ireland partly requires company ownership details to be publicly available online Public Company Accounts: Does the relevant authority require that company accounts are made available for inspection by anyone for free, or for less than US$10/€10?Ireland requires company accounts to be available on public record only for a fee Country-by-Country Reporting: Are all companies required to publish country-by-country financial reports? Ireland partly requires public country-by-country financial reporting by some companies EFFICIENCY OF TAX AND FINANCIAL REGULATION – Ireland Fit for Information Exchange: Are resident paying agents required to report to the domestic tax administration information on payments to non-residents? partly requires resident paying agents to tell the domestic tax authorities about payments to non-residents Efficiency of Tax Administration: Does the tax administration use taxpayer identifiers for analysing information efficiently, and is there a large taxpayer unit? Ireland partly uses appropriate tools for efficiently analysing tax related information Avoids Promoting Tax Evasion: Does the jurisdiction grant unilateral tax credits for foreign tax payments?Ireland partly avoids promoting tax evasion via a tax credit system Notes and Sources Harmful Legal Vehicles: Does the jurisdiction allow cell companies and trusts with flee clauses? Ireland partly allows harmful legal vehicles The ranking is based on a combination of its secrecy score and scale weighting to see our full methodology).
INTERNATIONAL STANDARDS AND COOPERATION – Ireland The secrecy score of 40 per cent for Ireland has been computed by assessing its performance on 15 Anti-Money Laundering: Does the jurisdiction comply with the FATF recommendations? Key Financial Secrecy Indicators (KFSI), listed on the Ireland partly complies with international anti-money laundering standards left. Each KFSI is explained in more det Automatic Information Exchange: Does the jurisdiction participate fully in multilateral Automatic Green indicates full compliance on the relevant Information Exchange via the Common Reporting Standard? indicator, meaning least secrecy; red indicates non- Ireland participates fully in Automatic Information Exchange compliance (most secrecy); and yellow indicates partial compliance.
Bilateral Treaties: Does the jurisdiction have at least 53 bilateral treaties providing for information exchange upon request, or is it part of the European Council/OECD convention? This paper draws on data sources including regulatory reports, legislation, regulation and news As of 31 May, 2015, Ireland had at least 53 bilateral tax information sharing agreements available as of 31.12.2014 (with the exception of complying with basic OECD requirements KFSI 13 for which the cut-off date is 31.05.2015). International Transparency Commitments: Has the jurisdiction ratified the five most relevant Full data on Ireland is available here: international treaties relating to financial transparency? Ireland has ratified the five most relevant international treaties relating to financial transparency All background data for all countries can be found on the Financial Secrecy Index website: International Judicial Cooperation: Does the jurisdiction cooperate with other states on money laundering and other criminal issues?Ireland cooperates with other states on money laundering and other criminal issues
N o v e m b e r CONTENTS / SUMARIO 38th International Trophy for Quality / XXXVIII Trofeo Internacional a la Calidad Forty companies have been awarded with the International Trophy for Quality 2010. This Trophy for Quality has been created by Editorial OFICE through the Trade Leaders' Club and is