The Irish tax system is under the microscope after US Senator Carl Levin called the country a ‘tax haven’ and this despite the fact that the US government does not officially class Ireland as one.
The Senator is clearly unhappy with the fact that Apple Inc, the computer technology company, is reported to only pay as little as 2% tax on its profits by registering its business in Ireland. By doing this the profits can be funnelled through Ireland and then on to an actual tax haven country, thus avoiding a big tax bill in the US.
It is clearly not unreasonable for the US Senate to be unhappy with this situation. Huge companies such as Google and Apple have for many years now avoided paying large amounts of tax in their homeland by the use of these schemes.
The Irish government are furious and have repeatedly denied that any special deal was provided for Apple. The standard rate of corporation tax in Ireland remains at 12.5%. Most of the foreign multinational companies based in Ireland are American and employ about 150,000 people in the country. The IDA (Industrial Development Authority) of Ireland intends to write to Senator Levin about his comments.
Barry O’Leary of the IDA:
Irish officials will definitely be clarifying and making sure he (Senator Levin) is up-to-date on exactly what happens in Ireland ……the description he used (tax haven), I dont think anybody else would.
His annoyance with the US Senator was echoed by Government Minister Pat Rabbitte:
If there were monies channelled through Ireland (by US multi-nationals) then that is a function of what is allowed by the American tax system.
It has been suggested that the US authorities could easily close off this tax arrangement by changing their own tax law. Putting the ball back in the US Senator’s court is unlikely to reduce the pressure that the Irish Government is under and not just from the US. Fellow EU countries, especially France and Germany, are also unhappy with Ireland’s 12.5% tax rate for corporations and have mad several attempts over the last few years to have the rate upped.