Main Website
  Events
  Views & Forecasting
  The Business Forums

   Global Business      South Africa Business      UK Business      Ireland Business      Views and Forecasting

Ireland rescinds blame for Apple

Apple

Apple

Ireland said on Tuesday it was not to blame for Apple Inc’s low global tax payments after the U.S. Senate said the company paid little or nothing 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.

The issue will be discussed at a meeting of European Union officials on Tuesday, he said.

The Senate report said a subsidiary with a mailing address in Cork, Ireland’s second-largest city, received $29.9 billion in dividends from lower-tiered offshore affiliates from 2009 to 2012, comprising 30 percent of Apple’s global net profits.

It said it exploited a difference between Irish and U.S. tax residency rules.

SPECIAL RATES

Apple said in a comment posted online on Monday it did not use “tax gimmicks”. It said the existence of its subsidiary Apple Operations International in Ireland did not reduce Apple’s U.S. tax liability, and the company would pay more than $7 billion in U.S. taxes in fiscal 2013.

A number of U.S. multinationals including web search leader Google, online retailer Amazon.com and coffee chain Starbucks have come under criticism for arranging their affairs in a way that leaves them liable to low rates of tax on billions of dollars of overseas sales.

Apple’s auditor, Ernst & Young, which also audits Google and Amazon.com, declined immediate comment.

According to the congressional report, Ireland had also agreed a special 2 percent rate for Apple’s Irish taxable profits instead of the normal 12.5 percent, but a spokesman for Ireland’s finance department, when asked how and why this had come about, said: “Ireland’s tax system is statute based, so there is no possibility of individual special tax rate deals for companies.”

A spokeswoman for the Office of the Revenue Commissioners said she could not comment on individual cases as that would breach taxpayer confidentiality, but she also denied that the tax authority agreed special low tax rates with multinationals.

“All companies in Ireland pay the standard 12.5 percent rate on their trading profits arising in Ireland, and they pay a corporation tax rate of 25 percent on their Irish non-trading income,” she said.  source Reuters

Speak Your Mind

*