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US, Ireland Continue Argument Over Apple's Tax Arrangements

05 June 2013   (0 Comments)
Posted by: Author: Mike Godfrey
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Author: Mike Godfrey

Following the recent hearing that examined and criticized the tax affairs of Apple Inc, the Irish ambassador in Washington Michael Collins has written to the United States Senate Permanent Subcommittee on Investigations to counter its reference to Ireland as a "tax haven".

In the letter, Collins pointed out that Ireland's tax system is "set out in statute" and imposes a strict 12.5 percent tax on trading income and 25 percent tax on non-trading income. As such, "there is no possibility of individual tax rates being negotiated for companies."

In addition, he noted that the tax rates attributed to Ireland in a memorandum prepared for the Subcommittee "appeared to be based on the companies' entire profits, as if those companies were tax-resident in Ireland. This is despite the fact that the memorandum clearly states that the companies concerned are not tax-resident in Ireland. The tax rates attributed to Ireland are wrong and misleading."

Collins added that, building on this analysis, the memorandum had referred to Ireland as a "tax haven". However, he confirmed that Ireland was "fully supportive of international efforts to address aggressive tax planning and was an active participant in the OECD project addressing Base Erosion and Profit Shifting." It was also "committed to playing a leading role within the European Union during (Ireland's) Presidency, in securing progress on a number of key files in the area of tax evasion and tax fraud."

He concluded that Ireland is also committed to working with the US through the operation of their existing bilateral double taxation agreement, and has become one of the first countries to sign an inter-governmental agreement with the US Treasury to implement the Foreign Account Tax Compliance Act.

However, in their reply to the Ambassador, Carl Levin (D – Michigan), the Subcommittee's Chairman, and John McCain (R – Arizona), the Subcommittee's Ranking Member, insisted that "records obtained by the Subcommittee clearly reflect that, for years, Apple paid Irish tax authorities a nominal rate, far below Ireland's statutory rate of 12.5 percent, on trading income."

"Testimony by key Apple executives," they continued, "corroborates that Apple had a special arrangement with the Irish government that, since 2003, resulted in an effective tax rate of 2 percent 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."



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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