Ireland rejects blame for Apple's low tax rate

Tue May 21, 2013 12:55pm EDT
 
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By Conor Humphries and Padraic Halpin

CORK/DUBLIN (Reuters) - Ireland said on Tuesday it was not to blame for Apple Inc's low global tax payments and had no special rate deal with the company after the U.S. Senate said it paid little or no tax on tens of billions of dollars in profits stashed in Irish subsidiaries.

The Irish government, which has seen the luring of U.S. multinationals with low taxes as a key part of its economic policy since the 1960s, said its system was transparent and other countries were responsible if the tax rate paid by Apple was too low.

"They are issues that arise from the taxation systems in other jurisdictions, and that is an issue that has to be addressed first of all in those jurisdictions," deputy prime minister Eamon Gilmore told national broadcaster RTE on Tuesday.

In a 40-page memorandum released ahead of an appearance by Apple Chief Executive Tim Cook before Congress on Tuesday, a Senate subcommittee identified three subsidiaries that have no tax residency either in Ireland, where they are incorporated, or in the United States, where those companies are managed.

The main subsidiary, a holding company that includes Apple's retail stores throughout Europe, has not paid any corporate income tax in the last five years, the report said.

Apple's arrangement has allowed it to pay just 1.9 percent tax on its $37 billion in overseas profits in 2012, despite the fact that the average tax rate in the countries of the Organisation for Economic Co-operation and Development (OECD), its main markets, was 24 percent in 2012.

The report said "Ireland has essentially functioned as a tax haven for Apple".

Gilmore said Ireland was pursuing the issue of international tax avoidance "very strongly" at the European Union and the OECD, which is spearheading initiatives.   Continued...

 
Apple Operations International, a subsidiary of Apple Inc, is seen in Hollyhill, Cork, in the south of Ireland in this October 6, 2011 file photo. REUTERS/Michael MacSweeney/files