DUBLIN — Ireland said Tuesday that it is not to blame for Apple’s low global tax payments and that it has no special rate deal with the company after a U.S. Senate report said it paid little or no tax on tens of billions of dollars in profits stashed in Irish subsidiaries.
The Irish government, which has viewed the luring of U.S. multinational companies with low taxes as a key part of its economic policy since the 1960s, said that its system is transparent and that other countries are responsible if Apple pays too little in taxes.
“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 Tim Cook, Apple’s chief executive, 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 past five years, the report said.
Apple’s arrangement has allowed it to pay a tax rate of 1.9 percent on its $37 billion in overseas profits in 2012, despite the fact that the average tax rate in the countries of the Organization for Economic Cooperation and Development (OECD), its main markets, was 24 percent in 2012. The report said that “Ireland has essentially functioned as a tax haven for Apple.”
Gilmore said Ireland is pursuing the issue of international tax avoidance “very strongly” with the European Union and the OECD, which is spearheading initiatives. The issue was to be discussed at a meeting of European Union officials on Tuesday, he said.
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 enables them to obtain low tax rates on billions of dollars in overseas sales.
According to the congressional report, Apple’s head of tax operations, Phillip Bullock, told the subcommittee that the company had obtained a special low tax rate through negotiations with the Irish government below the already low standard rate of 12.5 percent. Apple said this had been 2 percent or less for the past 10 years.
Prime Minister Enda Kenny denied that there is any special rate agreement. “Ireland does not, I will repeat, does not do special tax-rate deals with companies; we don’t have any special extra-low corporate tax rate for multinational companies.”
A spokesman for Ireland’s finance department said Ireland’s tax system is determined by law, so there is “no possibility of individual special tax rate deals for companies.”
A spokeswoman for the Office of the Revenue Commissioners also denied that the tax authority agreed to provide special low tax rates for multinationals. “All companies in Ireland pay the standard 12.5 percent rate on their trading profits arising in Ireland,” she said.
Ireland’s tax structures have attracted such U.S. multinationals as Google, Microsoft and Facebook, big employers that have helped offset an unemployment rate stuck above 14 percent. Apple said last year it would add 500 more people to its Cork workforce of 2,800. But its corporate tax rate of 12.5 percent has drawn criticism elsewhere in Europe.
The government regularly promotes its success in attracting international investment as one of its main achievements, and multinationals, which account for almost 10 percent of Ireland’s workforce, have taken the sting out of austerity measures prescribed under an international bailout by creating jobs.
U.S. firms invested $30 billion in Ireland last year, more than in China and the rest of emerging Asia combined, according to the American Chamber of Commerce.
A raft of mainly U.S. companies have taken advantage of Ireland’s tax regime to minimize their tax bills. Microsoft’s Irish base, along with another operation in low-tax Singapore, helped the company pay a tax rate of 9.4 percent on $21 billion in non-U.S. earnings last year. Google channels most of its overseas profits through Ireland, a practice that allowed it to pay taxes at a rate of 2.6 percent on $6 billion of foreign profits in 2012.