Ireland Says It's Not Its Fault Apple, Google And More Use Its Tax System

Apple is under fire from the U.S. government for not paying U.S. tax on its overseas income, which is the majority of its revenue, and Ireland is one of the nations it uses for its tax breaks. Now the European nation has responded to U.S. criticism of Apple's tax position back home, saying Ireland isn't to blame if the IRS can't grab Apple's taxes.

Ireland's Deputy Prime Minister Eamon Gilmore is quoted by Reuters as saying that the issues facing companies like Apple, Google and others using Ireland as a regional headquarters "arise from the taxation systems in other jurisdictions, and that is an issue that has to be addressed first of all in those jurisdictions." Furthermore Ireland says it doesn't allow Apple to use a lower local tax rate, which is a direct contradiction to an allegation raised by Congress.

Apple has responded to the allegations by saying the vast majority of its income is made from selling products like the iPhone overseas—and that it's already the largest payer of corporate tax in the U.S. Since these are products that are made overseas, shipped by foreign firms, and sold via regional stores staffed with local employees, it's hard to argue with Apple's position—and that's more or less what the Irish government's position seems to be.

Separately, Amazon and Google have recently been scolded by the British government for their low local tax payments, and France has considered levying an "Apple tax" on goods like smartphones and tablets, as it says these devices may erode French culture.

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  • Ronan Furlong

    Ireland actually has higher effective rates of corporate tax than many locations (where sweetheart deals reduce the headline rates that the French for example claim they charge). The fact is that Ireland's corporation tax regime is transparent and open to scrutiny. More importantly, Ireland's IP regime (in terms of accounting for royalty payments and R&D tax credits), is highly attractive to globalised next generation companies, who leverage their IP capabilities on a transnational basis.

    The problem here relates to offshore havens and US domestic loopholes which allow companies like Google, Apple et al to transfer the royalties paid to their Irish holding companies (in which the global IP is vested) to places like Bermuda.

    Meanwhile congress, the EU authorities and the british commons select committee are looking for headlines and a 'bogeyman' to blame..... and little old Ireland is an easy target to kick.

    If all the loopholes were closed off internationally, Apple and most other MNC's would remain in Ireland due to the embedded nature of their operations there and the advantages (beyond a stable and transparent corporate tax regime) that they can derive from locating there.... such as access to talent, low labour costs, responsiveness of Government to their needs, good quality of life etc.

    Hopefully Ireland will respond to this fiscal handwringing by incompetent international politicians by supercharging its already attractive IP regime. If less competitive economies want to remove Ireland's tax advantages, then they should aim to wipe the floor with them in terms of IP advantages.

    The irony is that if the US and Europe go to war with the MNC's, they will just move to China and all the jobs, innovation, payroll taxes etc will disappear in a puff of smoke, while politicians who have never created any wealth anywhere, congratulate themselves over their phyrric victory.