Business Irish

Monday 19 March 2018

Dell pays just €1.5m tax -- despite sales of €9.6bn

Top five multinationals pay €183m

Dan White

Dan White

DELL Products, one of Ireland's biggest multinational companies, paid a tax rate of just €1.5m despite clocking up sales of €9.6bn.

The top five multinationals in Ireland including Dell, Google and Microsoft, paid €183m tax, less than 0.5 per cent of their sales of over €45bn, according to analysis by the Sunday Independent.

The multinationals are also paying taxes at a far lower rate than their parent companies back in the US, indicating that margins generated in Ireland are extremely tight.

Last week TD Richard Boyd Barrett revealed that while Irish-based companies, both foreign-owned and indigenous, declared taxable profits of €61bn in 2010, they paid tax of just €3.9bn, an effective tax rate of 6.4 per cent as against the headline corporation profits tax rate of 12.5 per cent.

Dell Products, the computer giant's key Irish firm, recorded pre-tax profits of €9.7m. It paid tax of €1.5m on those profits. These indicate a pre-tax profit margin of just over 0.1 per cent. If Dell Products, which accounts for a fifth of Dell's total sales, achieved its parent company's 5.4 per cent margin then it would have recorded pre-tax profits of €518m.

Microsoft Ireland had sales of €13.3bn in 2011 and recorded pre-tax profits of €593m, based on filings. It paid taxes of €76m on those profits, an effective tax rate of 12.8 per cent. However, Microsoft Ireland's pre-tax profits, a mere 4.4 per cent of its total sales, are in stark contrast to parent company Redmond, Washington's 2011 pre-tax margin of 30 per cent. If Microsoft Ireland had recorded a similar margin it would have reported 2011 pre-tax profits of €4bn.

Google Ireland is the second-largest Irish-based multinational with 2011 sales of €12.4bn on which it recorded pre-tax profits of just €24m and paid €22m in taxes, an apparent tax rate of over 90 per cent. A comparison with the Californian parent company is instructive. In 2011, Google's pre-tax profits were the equivalent of 36 per cent of its sales while those of Google Ireland, which accounted for about half of those sales, were a mere 0.19 per cent of sales. If Google Ireland had returned a pre-tax margin comparable to that of its parent, it would have recorded pre-tax profits of almost €4.5bn.

Other multinationals where the Irish profit margins fail to match those at their parent company include Larry Elisson's Oracle. Oracle EMEA lost €39m on total sales of almost €5.8bn in 2011 and paid tax of €38m. By comparison, the parent company recorded a pre-tax margin of 32 per cent over the same period. A similar margin would have translated into pre-tax profits of €1.85bn at its Irish subsidiary.

BSC International, the Irish-based subsidiary of pharmaceutical company Boston Scientific, recorded pre-tax profits of €295m on sales of €4.07bn in 2010. It paid taxes of €45m on those profits. However, its parent company recorded losses of €822m on sales of €6.04bn in 2010.

Sunday Indo Business

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