US senators reject Irish claim over tax haven status

Two top Washington politicians have rejected the contention by the Irish Ambassador to the US that Ireland is not a “tax haven”.

Ambassador Michael Collins wrote to a Senate subcommittee in Washington on Wednesday saying Ireland did not fit any of the four key indicators of a tax haven as identified by the OECD. Yesterday, the two senior members of the subcommittee, Democratic Senator Carl Levin and former presidential candidate Senator John McCain, responded by saying evidence it had heard recently about Ireland met a "common sense" definition of a tax haven.

Contested evidence
Mr Collins, in a letter to the chairman, Mr Levin, contested evidence heard by the Senate subcommittee on permanent investigations during its recent hearings into Apple's tax affairs. During the hearings the subcommittee heard evidence of a "special deal" negotiated years ago by Apple with the Irish government. Mr Levin repeatedly described Ireland as a tax haven.

The Ambassador said a memorandum prepared for the subcommittee's hearings into Apple's tax affairs had calculated the tax rates paid by Apple subsidiaries in Ireland by reference to their entire profits, despite the fact that the same memorandum clearly stated that the companies were not tax-resident in Ireland. "The tax rates attributed to Ireland are wrong and misleading," he said. He said the memorandum went on to refer to Ireland as a tax haven, based on this misleading analysis.

Tax haven
"As you will be aware, the OECD has identified four key indicators of a tax haven. None of these criteria applies to Ireland."

Yesterday, Mr Levin and Mr McCain, issued a response in which they said the records obtained by the subcommittee clearly showed that, for years, Apple paid the Irish tax authorities a nominal rate of corporation tax, far below the Irish 12.5 per cent rate.

"Testimony by key Apple executives, including CEO Tim Cook and head of tax operations Phillip Bullock, corroborates that Apple had a special arrangement with the Irish government that, since 2003, resulted in an effective tax rate of 2 per cent or less. Most reasonable people would agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven."