New Laws Meant to Close Down Tax Havens and Shut Loopholes Could Have the Opposite Effect
Jay Darby was quoted in the article "New Laws Meant to Close Down Tax Havens and Shut Loopholes Could Have the Opposite Effect," which was published in Fortune on January 8, 2020.
The article explores the impacts of a recent change in Irish law that enabled business tax avoidance strategies. Under this law, U.S.-owned companies such as Google transferred ownership of intellectual property to wholly owned subsidiaries in low- or no-tax regions and then licensed the material back to the rest of the company. Profits turned into "license fees" and thus avoided taxes. One of the Irish laws that made the tactic possible expired on Jan. 1, 2020 due to international pressure from many countries that were tired of losing tax revenue to low-tax Ireland, among other havens.
According to Jay, "back in the 90s, the U.S. was much more cavalier about letting U.S. companies move their intellectual property offshore." But once American companies found that "intellectual property and money are interchangeable," they found ways to license their own property and legally shift profits.