Question

“stateless income ”is a strategy used by some companies operating in Ireland.

Discuss：

Which companies can take advantage of this strategy;
Tax regulations that promote the strategic
Tax reduction due to the strategy.

（200 words）

Answer 1

"Stateless Income" is a strategy used by many Multi National Companies including giants like Apple Inc. This is based on the fact that Ireland has a tax policy that says it will tax only those companies who are resident of its country. The definition of a company as a resident depends upon is management and control in Ireland. Now companies carefully plan their taxation to avoid taxes using this condition.

For example Apple Inc. is chartered in Ireland whereas it is managed and controlled in the US. As per Ireland definitions it is not taxed in Ireland because its not a resident company. Similarly US tax laws states that a company will be taxable in the US if it is chartered there, no matter where it is managed or controlled. So it Apple Inc. escapes taxes there as well.

This tax saving strategy is helping such huge companies in avoiding taxes completely and thus increasing their profits. Although such tax policies are criticized but nothing much has been done. Since there are other countries like Bermuda, Panama, Cayman Islands etc which are tax havens, so one way or another a company can save its taxes.