It was the largest tax avoidance tool in history and by 2010 was shielding US$100 billion annually in US multinational foreign profits from taxation, and was the main tool by which US multinationals built up untaxed offshore reserves of US$1 trillion from 2004 to 2018.
Former Finance Minister Michael Noonan closed the Double Irish BEPS tool to new entrants in October 2014 (existing schemes to close by 2020), but expanded the CAIA BEPS tool as a replacement in 2011–2016, and infamously told an Irish MEP who alerted him to the Single Malt BEPS tool, to “put on the green jersey”.
Despite US knowledge of the Double Irish for a decade, it was the EU that in October 2014 forced Ireland to close the scheme, starting in January 2015. However, users of existing schemes, such as Apple, Google, Facebook and Pfizer, were given until January 2020 to close them.
- Single malt is almost identical to the Double Irish, and was identified with Microsoft (LinkedIn), and Allergan in 2017;
- CAIA can provide up to twice the tax shield of Single Malt, or Double Irish, and was identified with Apple in the 2015 leprechaun economics affair.
US tax academics showed as long ago as 1994 that US multinational use of tax havens and BEPS tools had maximized long-term US exchequer receipts.
They showed that multinationals from “territorial” tax systems, which all but a handful of countries follow, did not use BEPS tools, or tax havens, including those that had recently switched, such as Japan (2009), and the UK (2009–12). By 2018, tax academics showed US multinationals were the largest users of BEPS tools and Ireland was the largest global BEPS hub or tax haven.
The US switch to a “territorial” tax system in the December 2017 Tax Cuts and Jobs Act (“TCJA”), and caused US tax academics to forecast the demise of Irish BEPS tools and Ireland as a US corporate tax haven.
However, by mid-2018, other tax academics, including the IMF, noted that technical flaws in the TCJA had increased the attractiveness of Ireland's BEPS tools, and the CAIA BEPS tool in particular, which post-TCJA, delivered a total effective tax rate (“ETR”) of 0–2.5% on profits that can be fully repatriated to the US without incurring any additional US taxation.
In July 2018, one of Ireland's leading tax economists forecasted a “boom” in the use of the Irish CAIA BEPS tool as US multinationals close existing Double Irish BEPS schemes before the 2020 deadline.
Last Updated on 2 years by pinc