17th Mar 2018

Ireland on the defensive in Apple tax row

  • Apple has paid just two percent tax on its profits made abroad (Photo: Valentina Pop)

An EU summit on the issue of tax co-ordination on Wednesday (22 May) is likely to put more pressure on low-tax countries like Ireland amid revelations in the US that Apple and other large corporations are using EU-based subsidiaries to avoid paying taxes.

Irish Prime Minister Enda Kenny on Tuesday rejected allegations made in a US senate inquiry that Apple had paid only two percent tax in Ireland and insisted all foreign corporations registered in his country pay a rate of 12.5 percent.

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"Reports of lower effective tax rates appear to arrive at their figures by running together the profits earned by group companies in Ireland and in other jurisdictions," Kenny said.

Foreign minister Eamon Gilmore, speaking in Brussels after a meeting of EU ministers that same day, said it is also not Dublin's fault that existing loopholes in international tax agreements have allowed Apple not to pay any tax at all on three subsidiaries registered in the Irish town of Cork.

The US committee inquiry found that these subsidiaries avoided taxes because they have no tax residency anywhere in the world, being dubbed "iCompanies" from imaginary or invisible companies.

"They are not issues that arise from the Irish taxation system," Gilmore said in Brussels.

Meanwhile, Apple chief Tim Cook appeared in the US Senate on Tuesday to defend his company, saying it did nothing illegal.

"We pay all the taxes we owe every single dollar. We don't depend on tax gimmicks," he said.

Ireland however is not alone in offering tax relief to large American corporations.

Amazon, Google and Starbucks also paid just a few million US dollars in tax on their overseas sales thanks to special deals with the British government.

Luxembourg, with its low-tax regime, is also a preferred destination for US corporations when setting up their European headquarters.

Amazon and Skype have set up bases there, where their profits are taxed at just 4.5 percent.

But Ireland, currently chairing the EU presidency, is not used to being in the negative spotlight.

After being celebrated as the "Celtic tiger" for its booming economy in the 2000s, it also gained sympathy at the EU level for having stomached the financial crisis and making its citizens pay for its failing banks.

Ireland is also the first euro-country about to exit a bailout programme after it got more time to repay its debt.

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