Editing Corporate haven (section)

===IP and post-tax margins===

The sectors most associated with IP (e.g., technology and life sciences) are generally some of the most profitable corporate sectors in the world.  By using IP-based BEPS tools, these profitable sectors have become even more profitable on an after-tax basis by artificially suppressing profitability in higher-tax jurisdictions, and profit shifting to low-tax locations.<ref name="zuc"/>

For example, Google Germany should be even more profitable than the already very profitable Google U.S.  This is because the marginal additional costs for firms like Google U.S. of expanding into Germany are very low (the core technology platform has been built).  In practice, however, Google Germany is actually unprofitable (for tax purposes), as it pays intergroup IP charges back to Google Ireland, who reroutes them to Google Bermuda, who is extremely profitable (more so than Google U.S.).<ref name="google1"/><ref>{{cite news|url=https://www.theguardian.com/commentisfree/2017/dec/11/tech-giants-taxes-apple-paradise-corporation-avoidance|title=The tech giants will never pay their fair share of taxes – unless we make them|newspaper=The Guardian|date=11 December 2017|access-date=21 May 2018|archive-url=https://web.archive.org/web/20180522041315/https://www.theguardian.com/commentisfree/2017/dec/11/tech-giants-taxes-apple-paradise-corporation-avoidance|archive-date=22 May 2018|url-status=live|df=dmy-all}}</ref>  These intergroup IP charges (i.e. the IP-based BEPS tools), are artificial internal constructs.

Commentators have linked the cyclical peak in U.S. corporate profit margins, with the enhanced after-tax profitability of the biggest U.S. technology firms.<ref>{{cite web|url=https://gabriel-zucman.eu/files/Zucman2014JEP.pdf|title=Tracking Personal Wealth and Corporate Profits|publisher=Journal of Economic Perspectives|date=2014|access-date=2018-05-21|archive-url=https://web.archive.org/web/20180412225500/http://gabriel-zucman.eu/files/Zucman2014JEP.pdf|archive-date=2018-04-12|url-status=live}}</ref><ref>{{cite web|url=https://www.gsb.stanford.edu/insights/why-corporate-tax-shifting-bigger-you-think|title=Why Corporate Tax Avoidance Is Bigger Than You Think|publisher=Stanford Business|date=24 May 2016|access-date=21 May 2018|archive-url=https://web.archive.org/web/20180512025739/https://www.gsb.stanford.edu/insights/why-corporate-tax-shifting-bigger-you-think|archive-date=12 May 2018|url-status=live|df=dmy-all}}</ref><ref>{{cite web|url=https://www.marketwatch.com/story/ibm-earnings-beat-is-a-product-of-tax-avoidance-and-its-nothing-new-2017-10-18|title=IBM earnings beat is a product of tax avoidance, and it's nothing new|publisher=Marketwatch|date=October 2017|access-date=2018-05-21|archive-url=https://web.archive.org/web/20180522041428/https://www.marketwatch.com/story/ibm-earnings-beat-is-a-product-of-tax-avoidance-and-its-nothing-new-2017-10-18|archive-date=2018-05-22|url-status=live}}</ref>

For example, the definitions of IP in corporate tax havens such as Ireland has been broadened to include "theoretical assets", such as types of general rights, general know-how, general goodwill, and the right to use software.<ref name="acox">{{Cite web|title = Ireland as a Location for Your Intellectual Property Trading Company|url = http://www.arthurcox.com/wp-content/uploads/2015/04/Arthur-Cox-Ireland-as-a-location-for-your-IP-Trading-Company-April-20152.pdf|publisher = Arthur Cox Law|date = April 2015|access-date = 2018-05-13|archive-url = https://web.archive.org/web/20180323092245/http://www.arthurcox.com/wp-content/uploads/2015/04/Arthur-Cox-Ireland-as-a-location-for-your-IP-Trading-Company-April-20152.pdf|archive-date = 2018-03-23|url-status = dead}}</ref>  Ireland's IP regime  includes types of "internally developed" intangible assets and intangible assets purchased from "connected parties".  The real control in Ireland is that the IP assets must be acceptable under GAAP (older 2004 Irish GAAP is accepted), and thus auditable by an Irish [[International Financial Services Centre, Dublin|International Financial Services Centre]] accounting firm.<ref name="rev1"/><ref>{{Cite web|title=Capital Allowances for Intangible Assets "Specified Assets"|url=https://www.revenue.ie/en/companies-and-charities/reliefs-and-exemptions/capital-allowances-for-intangible-assets/index.aspx|publisher=Irish Revenue|date=September 2017|access-date=2018-05-27|archive-url=https://web.archive.org/web/20180324101652/https://www.revenue.ie/en/companies-and-charities/reliefs-and-exemptions/capital-allowances-for-intangible-assets/index.aspx|archive-date=2018-03-24|url-status=dead}}</ref>

A broadening range of multinationals are abusing IP accounting to increase after-tax margins, via intergroup charge-outs of artificial IP assets for BEPS purposes, including:
{{ordered list|type=lower-roman
|Amazon, a retailer, used it in Luxembourg.<ref name="amzn"/>
|Starbucks, a coffee chain, also used it in Luxembourg.<ref>{{cite news|url=https://uk.reuters.com/article/us-britain-starbucks-tax/special-report-how-starbucks-avoids-uk-taxes-idUSBRE89E0EX20121015|title=Special Report: How Starbucks avoids UK taxes|newspaper=The Guardian|date=15 October 2012|access-date=27 May 2018|archive-url=https://web.archive.org/web/20180527201658/https://uk.reuters.com/article/us-britain-starbucks-tax/special-report-how-starbucks-avoids-uk-taxes-idUSBRE89E0EX20121015|archive-date=27 May 2018|url-status=dead|df=dmy-all}}</ref>
|Apple, a phone manufacturer, used it in Ireland.<ref name="rotten apple">{{Cite journal|title=The Rotten Apple: Tax Avoidance in Ireland|journal=The International Trade Journal|volume=32|pages=150–161|date=2 August 2017|doi=10.1080/08853908.2017.1356250|last1=Barrera|first1=Rita|last2=Bustamante|first2=Jessica|s2cid=158385468}}</ref>
|
}}

It has been noted that IP-based BEPS tools such as the "[[patent box]]" can be structured to create negative rates of taxation for IP-heavy corporates.<ref>{{cite web| url=http://ftp.zew.de/pub/zew-docs/dp/dp13070.pdf| title=Intellectual Property Box Regimes: Effective Tax Rates and Tax Policy Considerations| publisher=ZEW Centre for European Economic Research| date=2014| access-date=2018-05-22| archive-url=https://web.archive.org/web/20160304113437/http://ftp.zew.de/pub/zew-docs/dp/dp13070.pdf| archive-date=2016-03-04| url-status=dead}}</ref>