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.