Ireland promises to close tax loophole used by Apple
Ireland will no longer be “holy grail of tax avoidance” but critics say that isn’t enough
Ireland is to close a tax loophole used by Apple to protect $40bn of its profits from taxation. The technology giant has funnelled income into Irish subsidiaries which have no declared tax residency.
The Irish government announced yesterday that it plans to make it illegal for a company to have no tax domicile. Ireland's Finance Minister Michael Noonan said his country was “committed to reform”.
"Let me be crystal clear. Ireland wants to be part of the solution to this global tax challenge, not part of the problem", he told parliament.
His announcement came after a US Senate committee singled out Dublin for tolerating Apple’s tax avoidance. According to the Financial Times, the report accused Dublin of allowing Apple to pay a corporation tax of 2 per cent or less, far short of the usual 12.5 per cent rate. Senator Carl Levin called the arrangement the "holy grail of tax avoidance".
However, Chas Roy-Chowdhury, head of taxation at global accountancy body ACCA told Reuters these changes will be ineffective at tackling the global problem of tax avoidance. “It won't make that much difference”, he said, as firms will still be allowed to nominate any country as their tax residence, including Bermuda, which offers zero tax rates.
Apple will still have subsidiaries that are registered in Ireland which then “pay large, tax-deductible sums of money in royalties to their Bermuda tax-resident affiliates, ensuring that profits are channelled to the zero-tax jurisdiction,” according to Reuters.
Apple says it is committed to following the tax laws of every country it operates in. ·