Ireland refuses to be US 'whipping boy' over Apple tax claims

Ireland refuses to be US 'whipping boy' over Apple tax claims

Summary: In response to U.S. Congressman allegations, European member state Ireland says it will not bow down and become America's "whipping boy."


Ireland's finance minister has blasted recent a recent Congressional report which investigated Apple finances, calling the research "flawed" and insisting that the country will not be the U.S.'s "whipping boy."

Apple CEO Tim Cook testified in front of the U.S. Senate Permanent Subcommittee this week, to explain why the firm has not brought billions in profit back to U.S. soil. Congress found that Apple created a complex web of subsidiaries worldwide in order to dodge hefty tax bills, using subsidiaries ran only by executives to declare the majority of the firm's profits in countries with low taxation rates.

The finger was pointed mainly at Ireland, which allowed Apple to obtain the "holy grail of tax avoidance."

The Senate says that due to a past deal with the Irish government, Apple has paid only two percent in tax on profits of $74 billion, far lower than the 35 percent markup imposed in the United States for fund transferred back to the iPad and iPhone maker's home soil. Apple claims it does not use "tax gimmicks" and pays roughly $6 billion into U.S. coffers, but Sen. Carl Levin believes that as the Cupertino, Calif. firm is one of the largest American firms, based on the company's profit margins, this simply means Apple is one of the country's "biggest tax avoiders."

At Tim Cook's hearing, Ireland's EU affairs minister Eamon Gilmore said that the Ireland was "not to blame" for Apple's tax tactics. Now, Irish finance minister Michael Noonan has defended the country further, saying that senators have got their figures wrong, as reported by Reuters.

At a parliamentary committee meeting, Noonan claimed that repeating the accusations was putting Irish jobs at risk, and that he does not want "to be the whipping boy for some misunderstanding in a hearing in the U.S. congress."

"The central point the committee proceeded to speak of was an Irish special tax rate of two percent or less. The two-percent annual rates are got by dividing the tax charged by branches in Ireland by the entire profit of the companies concerned. This is clearly wrong and misleading."

While the Senate subcommittee railed over three Irish-registered Apple subsidiaries which have no tax residency in Ireland -- one of which that has paid no tax whatsoever -- Noonan stated that Apple simply used a tax loophole present between two different tax jurisdictions. When asked whether Apple's tax planning was akin to magic, the finance minister commented:

"Maybe there was a magician, but the magician wasn't living down in Cork. Because they are not tax resident in Ireland, they are not liable to Irish tax."

Apple is simply the latest corporation to have its tax practices scrutinized by governing bodies. In the U.K., Google, Starbucks and Amazon have come under the spotlight due to the little or no capital tax the companies pay on British soil, and opposition Labor party leader Ed Miliband has accused Google in particular of going to "extraordinary lengths" to avoid paying tax.

Next month at the G8 summit, tax avoidance is likely to be a priority topic for European leaders to debate.

Topics: Apple, Government US, Government UK, iPhone, iPad

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  • Microsoft, Intel, Google and others ALL have Irish distribution ...

    ... companies. This is because the taxes there are favourable.

    Nothing to see in this. More importantly, that on all money that earned in the USA, Apple pays full taxes. Their effective corportate income federal tax rate for last year was 30.5% -- slightly lower than nominal 35% because of deductions like investments in the datacenters and such.

    No any money shifts, not off-shore accounts, not schemes, no nothing. Fair, square and honest: in USA, Apple generated last year $22 billion of profits before taxes, $3-4 billion deduction on huge investments and viola: $6+ billion of federal corporate income tax paid (effective rate 30.5%). Just do the mathematics, there is no way to hide any schemes for that.

    As to abroad money, Apple pays all needed Irish taxes (12% on income) and does not employ practices by moving money/income to multiple tax-heaven island states -- unlike what was discovered about Google's practices recently.


    This is from Apple's testimony for the Congress:

    Apple does not use tax gimmicks. Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”)
    • Fair, square and honest

      Something neither you nor apple can ever claim to be.
      Little Old Man
      • Both myself and Apple -- at least for now

        You can not argue with mathematics. All taxes paid for all actual USA's earnings. But you can not deal with facts and reality, so you only can come up with bitter comments that does not dispute anything.
        • It amazes me...

          Any time the topic of taxes are brought up most people try to claim that the US is a low taxed country... truth is, we are one of the highest taxed countries and we see very little in return. Kudos to Apple, MS and others.

          I am by all means a very liberal person and I would love to see state sponsored healthcare and many other things, but it will never happen until this country sees some tax reform and honest politicians... I currently live in a state with one of the highest overall tax burdens, yet I don't even have roads without pot holes. we have high unemployment and a dwindling population due to high taxes. Let fix the tax system in this country first then we can start pointing fingers at tax evading people and companies. The tax system is as questionable as the practices of these companies, but there is no method for going after a corrupt and broken tax system.
    • Honest as a US Politician

      "These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”)" - technically correct but as a Reuters report says of Apple Ireland: "Apple's retail units in France, Germany and Britain purchase goods from the Irish units. The prices are set at levels that ensure these units in bigger states do not report much profit. This means the company avoids tax on sales in its bigger markets." As for "Fair, square and honest" - Don't think so. Inflating internal prices to reduce profit margins in countries where taxes are higher is neither fair or honest and DOES qualify as a tax gimmick.

      you wombat.
      • Perfectly legal practice that MS, Intel, Google and others use

        -- they all are in Ireland. All European sales go through Ireland, because they have low taxes. And, of course, the prices are set the way that most of the profits would accumulate in Ireland, not in France, et cetera. But this has nothing to do with USA tax laws (if anything, it saves more money to be taxed when Apple, MS, Intel decide to import it to the country), and still all taxes paid accurately in all countries.
        • ddersss = Perfectly legal practice that MS, Intel, Google and others use



          END OF STORY.....PERIOD
          Over and Out
        • You're missing the point of the discussions now happening...

          It's not entirely a question of what's legal - it's also asking 'Do our laws (and the laws of our partner countries) make sense?'

          Responding with 'we pay every cent we're obligated to' is actually the wrong answer because it leads directly to 'ok - we're going to change your obligations'. The *right* answer is 'here's what changing the rules will cost you.'

          Consider: the US and other countries put heavy pressure on China to change their civil rights attitudes. We do this by deciding to or not to do business with them. It's called 'voting with your wallet'.

          In this case, countries who see their tax revenue go to other countries (or in Apple's case, go into the magic spaces between countries) are getting together and saying 'look - fix your tax laws and get them into parity with the rest of the world or we won't do business with you.' It's EXACTLY the same thing as when we go to other countries and say 'fix your intellectual property laws or we won't do business with you.'

          Now, you can argue that more taxes are bad - but that's not actually germane to *this* issue - that's for the discussion that comes next.
  • What?

    The US is getting bent out of shape because taxes are not flowing back to them? You really have to laugh at the audacity of US lawmakers after the way that the US and US companies have ripped off other countries. This is so two-faced.
    • KPR1950!!!!

      very true!
    • Correct

      Bent out of shape because:

      1. They can't balance their own books.
      2. As was obvious from their questioning, hardly understand the ridiculous tax laws they created.
      3. Looked the other way while Wall St bought the world to near financial collapse.
      4. They should have been following the holy grail of reasonable fiscal policy instead of chastising companies who follow reasonable fiscal policy.

      I can't believe the US is that angry haha.... wow a company isn't paying tax on the money it made OUTSIDE the US... fair play... just like every other company around the world... Its called being smart keeping your money all over the world... means you can pay for stuff all over the world without transfer tax..... why get charged bringing it into America only to get charged goin into the uk to pay some distributer for something.... just leave it in the EU so your not taxed twice....
      • Except... it's not even equitable with how the US treats its own citizens..

        If you're a US citizen and live in another country and earn money there - even if it doesn't come back into the US - you're legally obligated to pay taxes on it. In fact, if it weren't for a tax treaty the US has with many countries - you'd be taxed twice - once by your residential country and against by the US. The US exempts the first $91K.

        If a corporation is really a 'person' for legal reasons - then they should have the same obligations to pay taxes REAL persons have.
  • Think of it this way?

    Intellectual property is how it is done? O% profit on item even though you margin is the highest in the industry? No tax on no profit it all goes to the IP licensed through the foreign company? That is property you will never challenge if its granted no matter if it could be actual trash (rounded corners). Is this the perspective? In other words utter jokeration hidden behind lawyers and papers. The laugh is on the taxpayers. Corporations are lining up! Get it while its good!