I’m not often disappointed by a Google image search, but I must admit the phrase ‘Double Irish with Dutch Sandwich’ did fail to excite. With my finger poised over the ‘safe search’ button I was expecting images of people displaying the right combination of velour and athleticism during the Nixon Administration. What I saw however were flags joined by arrows and middle aged white men appearing before Senate inquiries on corporate tax avoidance.
The phrase relates to how corporations minimise their tax liabilities by shifting profits around. The process is so complicated (and boring) that ordinary people don’t want to hear about it. The practice, however, leaves multi billion dollar holes in federal budgets all around the world. In Australia for example that figure is at least $8bn. In third world countries it’s estimated the UN’s Millennium Development Goals to halve world poverty by 2015 could be met several times over if taxation laws were tighter.
Australia recently set up an inquiry into corporate tax avoidance to investigate the practices of transfer pricing, profit shifting and tax ‘minimisation’. What, if any, legislative changes this inquiry might lead to is anyone’s guess, particularly given the strong links of this topic to political donations.
How do individual sovereign nation tax laws adapt to business that is increasingly global? And how do those laws keep up with technological change?