- Investigators found Apple cut a special deal with Ireland to apply a tax rate of less than 2 per cent on any profits
- Ireland is being drawn into an acrimonious debate on tax avoidance by politicians in London and Washington
- U.S. technology giant Apple employs 4,000 people at its international headquarters in Cork
Dublin has rejected allegations contained in a US Senate committee report that it is a tax haven which has helped Apple avoid paying billions of dollars in taxes around the world.
Eamon Gilmore, Ireland's deputy prime minister, told Irish radio on Tuesday that Ireland was "a highly tax compliant country" and loopholes in other countries were to blame for multinational companies' use of complex tax avoidance strategies.
"They are not issues that arise from the Irish taxation system. They are issues that arise from the taxation system in the other jurisdictions and that is an issue that has to be addressed in those jurisdictions," said Mr Gilmore, who is due to attend a meeting in Brussels on Tuesday where tax avoidance is on the agenda.
The US Senate permanent subcommittee on investigations has accused Dublin of being at the centre of a complex tax avoidance strategy devised by Apple, which enabled the US technology giant to save US tax on $44bn in "otherwise taxable offshore income".
The committee said in a report that Apple used non-tax resident subsidiaries in Ireland, through which the bulk of the company's international profits are funnelled. Investigators found Apple cut a special deal with Ireland to apply a tax rate of less than 2 per cent on any profits that are taxable in the country, well below the 12.5 per cent Irish corporate tax rate.
"A number of studies show that multinational corporations are moving 'mobile' income out of the United States into low or no tax jurisdictions, including tax havens such as Ireland, Bermuda, and the Cayman Islands," the Senate report said.
Tim Cook, Apple's chief executive, and Peter Oppenheimer, chief financial officer, are due to appear before the US Senate committee later on Tuesday.
Ireland is being drawn into an increasingly acrimonious debate on tax avoidance by politicians in London and Washington. Last week British MPs criticised Google's use of "smoke and mirrors" and an Irish subsidiary to avoid paying tax in the UK. Last year the US Senate focused on Microsoft's use of Irish subsidiaries to avoid paying tax in the US.
Peter Vale, a tax expert with Grant Thornton in Dublin, told the FT that under Irish tax law an Irish incorporated company can avoid being treated as Irish tax resident provided that another group company has Irish operations. "Clearly Apple ticks the box here with its substantial Cork site," he said.
Asked if Dublin was placed in a difficult position because of the US report's findings on Ireland's role in Apple's tax strategy, Mr Gilmore said it wasn't.
"No, the Irish taxation system is very transparent and very clear. We have a rate of corporation tax that applies to all companies and the OECD has confirmed that Ireland is a highly tax compliant country.
Apple employs 4,000 people at its international headquarters in Cork.