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Updated, 17:01
TWO LEADING MEMBERS of the US Senate committee investigating tax avoidance among major multinationals have repeated their assertion that Ireland is a tax haven – despite a letter from the Irish ambassador claiming otherwise.
Senators Carl Levin and John McCain, the leading Democratic and Republican members of the US Senate sub-committee on investigations, made their claim after Ireland’s ambassador Michael Collins sought to address claims made about Ireland’s corporate tax system during the committee’s hearings on Apple.
Collins’ letter – written with the blessing of the Irish Government, and published on the Department of Finance website – took issue with the characterisation of Ireland as a tax haven at the Apple hearings.
The communication marked the first time that the Irish authorities have contacted the United States directly to challenge the depiction of Ireland as a low-tax jurisdiction willing to strike deals with multinationals to tax them at lower rates than would be levied elsewhere.
“Ireland’s tax system is set out in statute – so there is no possibility of individual special tax rates being negotiated for companies,” Collins wrote in the letter, which is dated from last Wednesday.
All tax resident companies in Ireland are liable to corporation tax on their chargeable income at a rate of 12.5% on trading income, and at 25% on non-trading income.
Collins said the tax rates attributed to Ireland in the sub-committee’s report (PDF) appeared to be calculated as if Ireland was entitled to tax a company’s entire global profit – when, in fact, the report itself acknowledged that the companies concerned “are not tax-resident in Ireland”.
The ambassador also said the characterisation of Ireland as a “tax haven” was incorrect, as Ireland did not fulfil any of the OECD’s four criteria for being so designated.
This afternoon, however, Levin and McCain issued a joint statement to repeat their assertion.
“Records obtained by the subcommittee clearly reflect that, for years, Apple paid Irish tax authorities a nominal rate, far below Ireland’s statutory rate of 12.5 percent, on trading income,” they said.
They added that testimony given by Apple executives, including chief executive Tim Cook and its head of tax operations Philip Bullock, corroborated that Apple had “a special arrangement with the Irish government that, since 2003, resulted in an effective tax rate of 2 per cent or less”.
They concluded:
Most reasonable people would agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven.
The joint statement from Levin and McCain stresses the bipartisan frustration at the aggressive tax avoidance strategies pursued by large corporations – and by the perception that Ireland is willingly assisting those companies to avoid larger tax liabilities.
Collins’ letter had outlined how Ireland was using its EU presidency to try and address aggressive tax planning and profit-shifting among major companies.
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Ireland is being used here as a scapegoat. The REAL issue here is that both Google and Apple have REFUSED to buy into the US Senate lobbying groups. As such, they have and will continue to be punished. Microsoft were the same until they ponied up the 10 million, then suddenly all their tax issues went away.
There was a very interesting discussion on Reddit last week that made it’s front page with posters including IRS officials, senators, lobbyists and some other US government officials which went into great detail explaining the scandal surrounding this and some were openly apologising to Ireland for us being caught up in it all and being used as a scapegoat for the sake of lobbyists who haven’t been paid their backhanders.
The whole thing can go away if Google and Apple pony up the required millions to pay off the corrupt lobbyists and (mostly) US Republican senators involved.
Far as I know, Russia Today are working on a piece about it all, probably be on “breaking the set” or Max Kaiser.
It’s also worth noting that there are some US states where they have a ZERO tax rate for corporations/business who locate there. So much of an effect this has had that even Fox News ran a piece two weeks ago on it showing the influx of workers out of their home states to these other low tax US states, including the relocation of massive amount of business.
All of these states are predominantly US Republican states with US Republican senators enacting the zero or low tax laws.
Google/Apple etc., however do NOT and have NOT gone out of their way to do such a thing even within the USA. They pick a location not just for tax benefits but for many other reasons and Ireland is a perfect EU base of operations – the low Corporation tax helps matters sure but it’s not the only reason they’re here and remain here.
For corporations looking to break into Europe, Ireland is the best choice and our government should be doing MORE to encourage this and open up bigger and better tax breaks and incentives to push things even further.
Low or Zero tax encourages MASSIVE growth and jobs. We don’t have to be a tax haven (and we certainly are not at the moment) to do this but it does require strong politicians who will not be bullied or stand for abuse from other EU states.
Encourage corporations, lower the tax rates and all associated charges required to operate a business (both native and incoming) and reap the rewards for our people with the real jobs created, not massaged unemployment figures tainted by slave labour jobsbridge.
It was a pleasure to read such a sensible, well worded comment. Hear, hear!
A sensible, well written comment. Good work, Popeye!
This whole thing is more about a dysfunctional senate and the US tax system than anything in Ireland. Sure General Electric pay no tax in America, or anywhere else for that matter.
I was speaking with Brian Hayes TD about this a few hours ago when he visited my school today. I asked about apple’s tax dealings, and like any good politician he answered the question without answering the actual question.
Did you dare to ask about the effects of the Harrington Road agreement on NQT or the shambles that will be the attempted introduction of altered Junior Cert?
To be honest I’m in the north so I wouldn’t be as clued up on politics in the south as I should be so no. I’d actually never heard of him myself until I was told he was coming to the school. All I know of him is what wikipedia has told me.
South?
The Republic of Ireland, I live in northern Ireland.
@ James
McCain and Levin are using Ireland and the tax situation here to look like the good guys going after tax havens. McCain is one of the biggest attention seeking politicians in America. He’ll be going after Russia or Iran next to get more attention from the media…
McCain and Levin know that what they say is not the most accurate. Remember, they just want to look good to the American people.
Have a look at this: http://www.nytimes.com/2013/05/23/world/europe/europe-pushes-to-shed-stigma-of-tax-haven-with-end-to-bank-secrecy.html?pagewanted=all&_r=0 <
Lets hope they listen!! The consequences of the major multi nationals pulling out of Ireland due to bad press would be unimaginable!
Brace yourselves…
You thought austerity was bad…
Ooops I guess they didn’t listen
Bearing in mind how the sub-prime mortgage practices of some of America’s leading Finance houses wrought economic devastation across the world and specifically in Ireland, they have some nerve lecturing us.
Jesus Vincent! Standing up for your people! Virtual high five man
Careful you don’t “accidentally” miss his hand…..
Absolute nonsense spouted by John McCain and Carl Levin, they can’t admit that the American way of conducting business is inefficient compared to Ireland, I suggest they focus on their own problems.
Good one.
John Mc Cain and Carl Levin, a pair of old fogies, waiting to collect their pensions. Who the hell cares what the think. They ought to put their own houses in order first. The tax laws in the US are not the greatest. Problems, they have, plenty to be going on with in the good old USA, without sticking their noses in Irish affairs.
Well done Ambassador Collins..very glad to see you being proactive..much too important to be left festering..any chance of getting a response?
Someone should tell these Americans to mind their own business.Literally.how many trillions have they wasted in the so called ‘war on terror’? How much have they spent propping up their car industry? Is the lack of regulation in the American business and banking sectors that brought the house of cards crumbling down leading to the present recession.
That precisely what they are doing.
a government minister signed an agreement with the EU/IMF in which he on behalf of the country agreed to merge INBS with Anglo Irish Bank . He did it before Govt could draw down the loan funds . of 67.5 billion. In 2011.
The Govt. told the dail that the agreement even though charging public funds did not require Dail Approval.
They did not object even though elected and paid to act for voters. .
He. minister , decided only a few month ago that merge of INBS and anglo irish and prom notes not working.
and got these TDs to pass legislation to liquidate the banks contrary to the term of the ‘agreement’ without EU consent. As for TD in opposition and on TV all that night when one to then should been in high court to stop it,
Make me sick how Ireland looks on international stage and sicker that electorate willing to ACCEPT THIS TYP OF BEHAVIOUR from the TDS WHO COME TO THEM LOOKING FOR VOTES AND GETTING PAID.
I ask neighbours voters in same constituency to make a complaint put a tweet – misinformation n TD flyer – reply TDs don’t care bla bla bla. Well like writing your own death sentence . – we get what we vote in and message form TDs seem to me – u wont receive unless u demand .
Connection between response from USA and assertion that Ireland is tax havene is – anor example of under the table tactic by govt. and successive govt not only on intnl stage but at home also.
@ Denise
Ireland needs to become a more streetwise country.
Our politicians are some of the most cowardly and naive that I’ve come across…
We’ll be swallowed up if we don’t change.
Brendan very correct, the Irish Politicians don’t have a pair of balls between them, they need to wise up and be mature about governing(god help us), instead of going around like oliver twist with a begging bowl along with acting like a doormat…That image of Kenny and Sarkozy a few years ago makes me cringe, a kiss ass coward is all he is..The problem is though why would they change anything and rock the boat in any way when it affect their salaries and priviledges.
As I said before. Inda Kinny and Michael Noonan are afraid to take a proper swipe at John McCain and the US Senate committee. The silence from them shows us all how cowardly they really are. Kinny and Noonan can only go after the weak and easier targets. I’m enjoying how cowardly Kinny and Noonan are on this issue.
I think the Senators are correct Ireland is a tax haven for forgein companies, but if your Irish company they will tax you to the hilt.
@denise that’s not really true. They will tax you 12.5% on your profits.
Correct Des but if your Irish you wont get the Tax perks like a forgein company. IE. Build an extension, HIre more than 250 people, or promise to stay 12 years.
If you are a high potential start up or expanding company, there are several grants available to Irish companies.
@denise the things you mention are not tax perks. They are grants and so forth. All companies trading in Ireland pay 12.5% corporation tax on profits generated in Ireland
Hear hear – there an old saying every cloud has a silver lining and if any form this will be look to the wealth in our own nation and stop paying (us ) paying multinational corporate to come in and avail of pref. tax rates and under the table special deal – for our benefit . ??? time usa looked at their own tax structure also . Not all wealthy in that country either
“@denise the things you mention are not tax perks. They are grants and so forth. All companies trading in Ireland pay 12.5% corporation tax on profits generated in Ireland”
Except for Apple, Google, etc. Who are paying a lot less. Which is the ble*ding point.
Ha!how can they try and deny that when you see the amount of tax apple pay.why don’t they be open about it,they could attract more multinationals
Tut!
Tut!
Tut!
Bad Boy Ireland.
Bad Boy
Now you must hand over your country’s resources, assets and future to Wall Street.
More snakeoil scam-artistry from the corporatocracy???
An ambassador’s letter eh? That told em.
He should have popped a couple of Ferrero Rocher in there too
Tell the US senators to butt out. Ireland is not USA so none of their business. Imagine the response in US if Ireland tried to influence them in the same way (well, if they deigned to notice).
Looks like some US senators need a scapegoat about now…
Nonsense. They are 100% correct on the facts. Whoring ourselves out to international capital is nothing to be proud of.
They’re wrong, Ireland is not a tax haven, capitalism is a tax haven.
Capitalist corporations know how to pay less tax, simple as.
The system is rotten. Getting Ireland to increase its tax rate will have no effect but to move money elsewhere…
Soon the EU will force states to have similar rates and many companies will leave Ireland Im sure.
All this talk of great infrastructure and highly skilled workforce is kind of a joke if you come from countries like Germany, the Benelux or Scandinavia.
@coffee.. you are correct,, Article 9 of the fiscal treaty (which i was against) which states everyone must work jointly towords Ecomonic policy thats fair on all member states. Corp tax will be hit,, big time
while it is indeed the intention to harmonise tax rates across Europe, the problem is not so much the countries that have low tax rates that don’t want to increase them, but countries like Belgium whose corporate tax rate 33.99% would have to decrease. These governments would have to find alternative sources of income. Based on the way Europe has completely botched the financial crisis, I don’t see them being able to harmonise corporate rates – in fact given the current climate they need to first resolve the complete lack of confidence that the European public has in the institution of the European Union.
Well you got a response..these guys don’t give a monkeys about the legal niceties…this needs the gloves off straight talking approach…show up the inadequacies of their own tax system…divide and conquer…set Republican against Democrat by pointing out that Republican States promote zero corporation tax.
That’s told them then.!!
Tax? Sure what’s all the fuss? Pay 3 months and if the Gardai stop ya, tell them you were off the road for a few months and you’ll back tax first thing Tuesday morning! Job Done!
That’s because it IS.
What’s the mystery?
Do you mean we are supposed to believe that it’s not because the Govt says so?
The same Govt that are incompetent, corrupt and inconsistent in everything they do?
Oh yeah right, I will put on the green jersey and believe what the liars tell me.
How ironic that the US now can cry fowl on Ireland’s tax system when at the same time we are facilitators to their “war on terror”. How many poor unfortunates have been through Shannon on “rendition” flights to appease Washington. That’s the thanks we get for our “neutrality” in favour of one side over the other!
Standards are slipping in Washington considering one Senator asked a serious question could ecoli evolve into a human being ? I mean seriously a U.S Senator! Holy Shit! But as another Senator put it ain’t no iq test required for the Senate.
Also i remember another Senate subcommittee getting rings run around it by George Galloway. Senate- didnt you meet Saddam Hussain twice in person?
Galloway- “yes I did the same amount of times as the Secretary of Defense Donald Rumsfeld but unlike Rumsfeld I wasn’t selling weapons I was there as an humanitarian trying to save lives”.
So I wouldn’t hold too much stock in the Senate or what they come out with! Id say half the Senator’s couldn’t locate Ireland on a map. None of the Republicans had a problem endorsing Mitt”Tax dodger”Romney for the highest office in the USA. Hypocritical much?
James, a republican senator whose name I forget, just recently claimed cyclists contribute to global warming nearly as much as cars, because of the co2 they exhale while cycling!
Shocking stuff Dermot I think the unofficial condition that Senator has is called Megatard.
That’s exactly the same line of thought I’m starting to take on this. The ambassadors letter points out that none of the 4x characteristics of a tax haven as defined by the OECD apply to Ireland but the Senators have decided to come up with their own ‘common sense’ definition.
This clearly a case of two politicians getting some coverage in the media, they’ve got a bit between their teeth and they’re going to milk it.
The US or the UK could remedy this within their own laws but they haven’t done so, easier to make Ireland a scapegoat.
For what it’s worth I think we’re overly dependent on FDI and MNCs but there’s no reason we should apologise for competing for investment.
Wake up and smell the coffee people, If these companies were paying their fair share of taxes? Then we ordinary citizens, wouldn’t be fleeced every day with taxes!
”If these companies were paying their fair share of taxes? Then we ordinary citizens, wouldn’t be fleeced every day with taxes”
well said – but too many seem to go along with the idea that Ireland should prostitute itself – and take part in the race to the bottom – for many – while giving tax breaks and subsidies to the ” Free Market ” capitalists .
Free market !!!!!!!!- they are the most subsidised people on the planet .
They simply wouldn’t be here.
Of course we’re a tax haven. How else can we have a corporate tax rate of 12% and Apple only pay 2%? Do our politicians think that people in other countries are as stupid as those that elect them here?
The 2% they paid in Ireland was 2% of their global profit, which equates to 12.5% of profits made in Ireland.
But they’ve channeled their global earning through an Irish registered company and don’t pay tax on it anywhere.
They don’t think that maybe their massive 35% corporate tax rate might be partly at fault here? shifting the blame to Ireland- great. Although Apple seem to be trying to pass the buck to us as well.
Because We are!
Simple
Isn’t true the word came from the states that we were to pay the bondholders to protect them from downfall, well if so and they have some cheek going on about us trying to keep jobs in the country
The ambassador’s next letter should read:
Dear Senator McCain,
Do you know the five lamps?
Yours etc….
@fred. Quality. +100
I knew there had to be at least one Dub on here
He said, she said… Soon enough someone’ll say something unflattering about an opponent’s ma.
Complete stupidity. Accusations, denials, but where’s the objective evidence to back up or deny this?
Your ma has it
I took the trouble to E mail these two gentlemen today with the following message:
Dear Mr Levin/McCain,
I am an Irish citizen resident in Spain.
I have followed the controversy with regard to the taxation of multi-national (American) companies based in Ireland for tax mitigation purposes.
You are probably aware that Ireland is a very dysfunctional nation which is now bankrupt due to the lack of competent, effective oversight of it’s pillar banks by the government’s “financial regulator”.
This so called “light touch” approach, is the norm, with regard to all economic activity in Ireland.
It certainly extends to the aforementioned companies.
I have no doubt that they are running rings around a government which depends for it’s very existence upon heavily taxing the workers who are employed in these companies.
We have-for example-an entity called the IFSC (Irish Financial Services Centre) in our capital city.
This is a “Brass plate” banking centre which was created by a former (now deceased) corrupt, Prime Minister Charles Haughey.
This instiution has a nickname in International banking circles:”Liechtenstein on the Liffey”
(Liechtenstein is a notorious tax haven on the European mainland.
The Liffey is the river which runs through our capital city)
The saddest thing is that many families in Ireland are now being targeted with a plethora of new taxation to pay for the incompetence/criminality of former governments.
If companies like Abbot,and Apple and Google (and many others) were forced to pay the proper corporation tax in Ireland, which they are supposed to pay; the ordinary people of Ireland would not be victimized as they are today by the two principal political parties which take turns in swopping deck chairs on the Titanic.
Ireland is now divided as never before.
Highly influential Public Sector Unions, who represent more than half a million workers,(out of a population of less than 5 million) are highly organized and influential,as the political party they sponsor(the Labour Party) is a coalition party in the current government.
This party’s sponsors are virtually immune to the austerity/hardship which is being delivered upon those who work in the private sector.
I wish you well in forcing these highly profitable companies to pay more taxes to one nation or another.!
yours faithfully,
John McDermott
The senators are correct. The Irish government’s response was typical disingenuous civil servant speak. The OECD criteria are irrelevant. The 12.5% tax rate is also irrelevant. The key point is that the Irish tax laws allow foreign companies to minimise taxable revenue by using Irish tax laws which are attractive to companies seeking to minimise their global tax burden. If we raised our tax rate to 50% these companies would still stay here as long as the key tax statutes remained in place.
John mc Cain… Shut up
Expect a global tax policy to emerge from this apple / google / Ireland / uk tax haven bluster. This is an agenda IMO and not just news
“Hey senators, f**k off!” Hopefully we’ll just attract more American multinationals with all the publicity and Enda will pass on the message to the senators that they can bitch and moan all they want, we won’t be bullied by them.
I don’t see what’s the big deal. They think Ireland is tax heaven, we think Americans are not the sharpest tools in a box, can we just let everyone to have their opinion?
I would ban Apple products in Ireland.
Would you ban google, amazon, Dropbox, Cisco and HP, too? They all do the same thing, you know…
Just because all of them doing this. It doesn’t mean we have to just sit and watch. Something have to be done about it.
And banning product in a tiny country is going to resolve the issue? Imagine all the well paid jobs that would be lost…
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