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		</div><p>The taxation of multinational companies continues to generate headlines.</p>
<p>For various reasons the focus is on US technology companies and, within that group, the primary focus is on companies that have consumer brands.</p>
<p>People interact with Apple, Facebook, and Google on a daily basis and it seems much easier to generate a media headline with various claims about their tax structures.</p>
<p>However, there are many more companies whose name doesn’t match a well-known consumer brand, such as those providing business-to-business services and those in the pharmaceutical sector.</p>
<p>They surely hope the current tax focus stays on the big-brand companies.</p>
<p>Engie, the pattern is clear.</p>
<p>That’s not to say there aren’t legitimate reasons to look at the tax affairs of these companies, but it does look like a skewed list.</p>
<p>And even with all the attention put on them, it is not clear that a full picture of their tax affairs is put on display.</p>
<p>For example, in the seven years since 2012 Apple has paid $75bn (€65.7bn) in corporate income taxes. That is around 17% of the company’s pre-tax profits over the period.</p>
<p>In its most recent annual financial statement published earlier this month, the company set out the additional $37bn of tax it will pay on profits earned up to 2017 as a result of the Tax Cuts and Jobs Act passed by the US Congress late last year.</p>
<p>This will bring the effective cash tax rate on Apple’s profits to almost 25%.</p>
<p>This is not to say that this is the ‘right’ amount of tax but it is a long, long way from the 0.05% rate that the European Commission claims the company is paying.</p>
<p>In fact, if the commission’s €13bn finding is upheld by the courts it might not even add 1c to the company’s tax bill; it could merely transfer the payments from the US to Ireland.</p>
<p>The evidence of the $100bn of tax payments that the company sets out in its accounts rarely makes it into the public discourse.</p>
<p>And part of this gets to the heart of much of the political bellyaching about the taxation of these companies: European politicians don’t necessarily want these companies to pay more tax.</p>
<p>They just want more of the tax paid in their countries.</p>
<p>By far the lion’s share of the $100bn of tax set out in the above is for Apple, and the further $12bn to $15bn that the company will pay each year if it maintains its current level of profits, is paid to the US.</p>
<p>That Apple pays the bulk of its tax in the US should not really be a surprise.</p>
<p>It is a US company and most of the activities that generate its profits are located in the US.</p>
<p>Selling phones is not a high-profit activity.</p>
<p>Designing, producing and branding a phone that people want to buy, is.</p>
<p>The current system attributes the taxing right to the country where the profit-making activities are located.</p>
<p>Several European countries are arguing that more tax should be paid to the country where the customers are located.</p>
<p>An EU-wide digital sales tax is one initiative in this direction being pushed by countries such as France.</p>
<p>For these countries, it is attractive as their existing tax base isn’t reduced, even from local companies with lots of foreign sales, but they get a new revenue stream from companies whose main operations, and tax payments, are located elsewhere.</p>
<p>There is no doubt that the approach to taxing cross-border profits set up in the 1920s has not kept pace with economic developments and the rulebook needs to be updated for the digital age.</p>
<p>However, the outcome will hopefully be a bit more nuanced than a revenue grab from some of the bigger countries.n UCC economist Seamus Coffey is also the chair of the Irish Fiscal Advisory Council.</p>
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