Morning business news - July 25

Friday 25 July 2014 11.13
Morning business news - July 25
Morning business news - July 25

US president Barack Obama has been talking about Ireland, and about tax, saying firms that come here for tax reasons are "gaming the system".

He said this kind of strategy undermines people's confidence in how companies are thinking about their responsibilities to the country as a whole.

He accepted that executives are paid to make a profit – but said they are also paid to be good corporate citizens. 

According to Mark Murnane of ETX Capital, the process of moving tax base has become increasingly popular in recent times.

“Inversion is a move by a company to move their tax domicile to a country with a lower effective tax rate than where they are based,” he said.

“They tend to do this through the takeover of a smaller company in a lower tax based jurisdiction.”

He pointed out that the corporate tax rate in the US is currently around 35% - this compares to 12.5% in Ireland and 20% in Britain.

“It’s obviously very attractive for these large companies to move to somewhere with a lower tax rate and we’ve seen a number of examples recently,” Mr Murnane said, citing the pharmaceutical industry as a particular area of inversion activity.

Asked whether Mr Obama’s comments will make much of a difference to corporate America, Mr Murnane said the pressure was ramping up as the top gained more attention, which could ultimately force some kind of change.

“One can only speculate as to what is likely to happen but I’m sure there will be some extremely high-level discussions about ways the US government can stop this if it’s possible, “ he said.

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Amazon.com has posted a $126m quarterly loss - much bigger than had been expected by investors.

The company blamed its rapid pace of investment in new businesses, such as digital content and consumer electronics.

Amazon's stock price has dropped 10% so far in 2014, with investors leery of betting on its long-term growth at the expense of little to no profit.

It dropped a further ten percent in late trade in New York last night as people reacted to the poor quarterly results.

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Revenue at Google's Irish subsidiary rose ten per cent last year to €17 billion, with pretax profits up almost 23 per cent to €189.1 million.

The accounts filed for Google Ireland also show administrative expenses of €11.7 billion in 2013, up 7.3% on the previous year.

"Administrative expenses" generally refers to royalties paid to other Google entities, some of which are ultimately controlled from tax havens.

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Passenger figures at Shannon are up 15% for the first six months of the year, according to the airport’s latest figures.

Traffic for the first three weeks of July is also up by 20% according to Shannon chief executive Neil Pakey, who said the airport was well ahead of exceeding its double-digit target increase in passenger numbers this year.