Friday, May 31 17:25:26
Michael Collins, the Irish ambassador to the US has written to the two Senators on a US Senate Committee rejecting their claims that Ireland acts as a tax haven for US firms avoiding US tax.
But this was flatly and promptly rejected today by US Senator Carl Levin, who said he stood by his assertion, citing the Senate subcommittee’s report on Apple's off-shore profit shifting, which it said was "wrong and misleading".
Ambassador Collins’ letter to senators Levin and John McCain said that Ireland's tax system is transparent, according to the text released by the Department of Finance, which echoed points made by Irish ministers and officials.
The Government has been forced to defend its low corporate tax rate after the Senate heard last week that the iPhone and iPad maker paid little or no tax on tens of billions of dollars in profits channeled through Irish subsidiaries and had effectively negotiated a special corporate tax rate of less than 2 percent.
"Ireland's tax system is set out in statute - so there is no possibility of an individual special tax rate being negotiated for companies," Collins wrote in a non-confrontational letter dated May 29 which was also sent to other members of Levin's Senate subcommittee.
"The memorandum to the Permanent Subcommittee refers to Ireland as a '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."
The Irish Government has begun a diplomatic offensive to repair the damage done to its reputation from the allegations and Finance Minister Michael Noonan went on the attack last week, saying Ireland would not be the "whipping boy" for the U.S. Senate.
Apple chief executive Tim Cook told a conference this week that the company does not have a special deal with the Irish government that gives it a 2 percent flat rate of tax.
But the two Senators have rejected this.
Mr Levin and Senator John McCain said that records show Apple paid tax in Ireland far below the 12.5pc Corporation Tax rate and had a "special arrangement with the Irish Government".
"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," Senator Levin said.
However, it has emerged that Senator Levins and others who have criticised Irish tax laws allowed the so-called “check the box” loophole to be passed in to law without amendments.
What began in 1996 as an effort by the Treasury Department to simplify the U.S. tax code mistakenly ended up as a massive tax loophole for corporate America, which seized upon it and has never let go – thanks in part to support among US lawmakers.
Senator Carl Levin of Michigan and Republican Senator John McCain of Arizona, have called for closing the "check the box" loophole.
But even they have voted to keep it alive several times in recent years when it has been inserted into other legislation.