US senators rebuff Irish ambassador’s letter on tax haven claims

The Irish ambassador in Washington has written to a US committee there countering claims that Ireland is a tax haven, but his efforts have been refuted by two of its top senators.

Michael Collins, in a letter to Democratic Senator Carl Levin, chairman of the Permanent Subcommittee on Investigations, said that Ireland's tax system is set out in statute and there was no possibility of individual special tax rates being negotiated for companies.

In a recent hearing the subcommittee examined the tax affairs of Apple and heard claims that it had negotiated a deal with the Irish government years ago that allowed it pay tax rates well below the Irish 12.5 per cent corporation tax rate.

Mr Collins said tax rates mentioned in a memorandum prepared for the committee hearings seemed to be based on their entire profits, as if the companies were tax-resident here.

“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.”

Mr Collins said that, building on this analysis, the memorandum had referred to Ireland as a “tax haven”. However, as Senator Levin would be aware, the OECD had identified four key indicators of a tax haven, none of which applied to Ireland.

He said he was fully aware that the purpose of the committee hearings was to address reform of the US tax code “in which Ireland has no role”. Nevertheless, he said, it was important that he address the points concerning Ireland that arose at the hearings.

Mr Collins also said 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 EU during Ireland’s Presidency, in securing progress on a number of key files in the area of tax evasion and tax fraud.

Responding to the letter this afternoon senators Levin and McCain said that testimony by Apple executives corroborates that the company had a special arrangement with the Irish government to cut its tax bill.

“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.” Levin and McCain said in a reponse to Michael Collins’ letter.

Additional reporting Bloomberg