US software giant Oracle took a dividend of more than €800 million from its Irish unit last year in an apparent move to take advantage of a once-off tax concession in its home market.
The huge dividend resulted in a post-tax loss of €426 million at Oracle EMEA, the group's main vehicle in Ireland. At the same time, a smaller Irish-registered company called Oracle East Central Europe paid out a €30 million dividend.
Oracle is among a large number of US corporations that route money from their international operations through Ireland to take advantage of the 12.5 per cent corporate tax rate, which compares favourably with the prevailing rate in other jurisdictions.
The flow of money to Oracle's parent in California came as the Bush administration made moves to tighten rules that allow big US groups cut their tax bill at home by reporting profits in jurisdictions such as Ireland.
In an effort to encourage US multinationals to move their money home, US president Bush introduced a concession that allowed such groups to repatriate the earnings of their foreign subsidiaries at a reduced tax rate of 5.35 per cent for a period of one year. The normal maximum tax rate is 35 per cent.
Oracle did not respond when asked yesterday whether the dividends its parent received from Ireland were designed to make use of that concession, which was part of a package to encourage use of the returned money to create jobs in the US. Such funds can also be used for research and development, capital expansion or mergers and acquisitions in the US market.
However, new accounts for Oracle EMEA show that the €803.3 million dividend it paid out in the year to May 2005 was significantly higher than the €517.31 million it returned home in the previous year.
While the company's turnover rose to €2.25 billion in the same period from €2.03 billion, operating profits fell to €427.84 million from €553.23 million.
Other Irish-based subsidiaries that took advantage of the concession include the drug-maker Forest Laboratories, whose parent received €1.05 billion from its Irish subsidiary in 2004, and computer group Dell, whose parent received €84.17 million from its Irish unit.
The domestic banking sector cashed in on that trend, with AIB taking out adverts last year to declare that it extended a $60 million (€46.78 million) loan to US pharmaceutical group Stiefel to enable it benefit from the scheme.
Oracle's latest filings here indicate that the Galway-based subsidiary of US tech company Siebel Systems was valued at €724.02 million when Oracle acquired its parent last January.
