 |
| Japan's Toshiba Corporation and SanDisk Corporation cooperated in the construction of a new 300-millimeter (mm) wafer fabrication facility at Toshiba's Yokkaichi, Japan, operations in order to meet growing demand for NAND flash memory. |
SanDisk Corporation, the US Nasdaq-listed, leading supplier of flash storage card products, which last week announced a 10% planned reduction of its workforce, is reported to have routed revenues of almost $1 billion (€762 million) into an Irish holding company which made more than a quarter of its profits, even though it has only a handful of Irish-based workers.
The Irish Times reports today that SanDisk Manufacturing made a net profit of $105.96 million on revenues of $955 million in the eight months after its Irish unit started business in April 2005, according to new filings in the Companies Office.
The company had no direct staff but employed the resources of an Irish subsidiary which had an average of eight staff at that time. Its parent, SanDisk Corporation, made a net profit of $386.38 million in the same period on revenues of $2.06 billion.
SanDisk ranks among numerous US and other multinational groups that channel large amounts of their international revenues into Irish-registered companies for tax purposes.
Ireland is the world's most profitable country for US corporations and companies such as Microsoft channel billions of dollars in profits from other overseas locations to take advantage of Ireland's 12.5% corporation tax rate and tax exemption on patent income. The payment of corporation tax in Ireland on US firms' overseas profits, is an important windfall for Irish public finances. In 2005, The Wall Street Journal said that Microsoft paid $300 million in tax to Ireland in 2004, on profits from other overseas locations. Ireland has a population of 4 million and under $17 million in taxes were paid to about 20 other governments that represent more than 300 million people.
"It's no different from any other holding company," Hugh Connolly of SanDisk told the Irish Times. "Most international companies have that kind of holding company structure."
SanDisk outsources its manufacturing operations to factories in Asia and according to Connolly, the cost of such manufacturing activity and the revenues from it were booked in the accounts of the Irish-registered holding company. This company was established in April 2005 and its operations were previously located in the Netherlands.
He said it was not the case that there was no substance to SanDisk Manufacturing, which employed an average of four staff but had no direct employees. The company made use of an Irish-subsidiary, SanDisk International, which had an average of eight direct staff in the period after it set up in April 2005. The business now employs 35 people in Ireland.
SanDisk indicated last year that the total cost of setting up its Irish operation was less than $500,000. It said then that tax "certainly was part of the consideration" when moving here but that tax "certainly was not the determining factor". Other factors included the availability of skilled multilingual sales, marketing and finance personnel.
SanDisk announced a worldwide reduction in its workforce of up to 10% of headcount, or approximately 250 employees last week, in response to a price fall in the flash memory market, of approximately 50%, in the past two months.
RELATED
Ireland top location for US Multinational Profits
