The Wall Street Journal, May 22, 2013
The Irish government denied it shelters some of the world’s largest corporations, such as Apple, from paying taxes, saying that its long standing low corporate tax regime is transparent and doesn’t make it a tax haven. An investigation by the U.S. Senate has revealed that, through the technicalities in Irish and U.S. tax law, Apple has paid little or no tax on at least $74 billion over the last four years. The investigation found no evidence that Apple did anything wrong.
The Irish government said it hadn’t negotiated special treatment with Apple or any other company. “Ireland does not do, let me repeat, does not do special tax [relief] for companies,” Prime Minister Edna Kenny told lawmakers. Mr. Kenny said that companies do exploit loopholes that arise from the interaction of different national tax systems. “Differences do arise in the legal and tax systems between countries. International tax planning takes account and advantage of these differences in national systems and rules … rather that the law practices of any individual country,” he said. He added that the best way to close those loopholes was through international agreements.
Ireland’s tax system has attracted huge investments from pharmaceutical and computer manufacturers, and more recently, Internet firms such as Google and Facebook. Last year, the American Chamber of Commerce in Ireland estimated that U.S. owned companies in Ireland produced goods and services worth $55 billion in 2010. “In no other nation in the world are U.S. multinationals as prevalent as they are in Ireland,” the chamber said. “Such is the strategic importance of Ireland to corporate America, and the depth of the economic ties that bind the two nations together.”
Comment: Controversy surrounding Ireland’s taxation of foreign companies isn’t new. The revelation of Apple’s foreign income tax situation brought out by the U.S. Senate investigation may result in probes in other U.S. based international companies such as Google and Facebook. These probes could result in closing loopholes through international agreements between the U.S. and Ireland.
By Roger Eigsti
Institute for Business, Technology, and Ethics