Revenue hits Analog Devices with €43m tax bill

US chipmaker says demand could materially hurt earnings

Analog plans to appeal the case to the Tax Appeals Commission. Photograph: Joe St Leger

Analog plans to appeal the case to the Tax Appeals Commission. Photograph: Joe St Leger

a
 

Analog Devices is battling a tax demand from the Revenue Commissioners, in a case that the US chipmaker says could materially hurt its earnings.

Revenue officials told the company, an Apple supplier, that its Irish tax-resident unit owed about €43 million relating to intercompany transfers stretching back to 2013, Analog said in filings last month. This assessment excludes any penalties and interest, it said. The company’s shares dropped as much as 3.4 per cent on Wednesday.

Revenue claims that Analog’s Irish entity failed to conform to recent OECD transfer pricing guidelines.

“The company strongly disagrees with the assessment and maintains that its transfer pricing is appropriate,” it said, while noting it had not recorded any additional tax liability related to the 2013 tax year or any other periods.

Massachusetts-based Analog said it would “vigorously defend” its position and is appealing the decision. It warned that if it were to lose the case, “such assessment and any potential impact related to years subsequent to 2013 could have a material unfavourable impact”.

Revenue said it would not comment on individual cases. An Analog spokeswoman confirmed the case was ongoing, and said the company would not comment beyond that. Analog is taking the case to the Tax Appeals Commission.

Corporate subsidiaries

International tax authorities are keen to limit transactions among corporate subsidiaries, which are sometimes seen as ways to shift income to low-tax jurisdictions. The State’s corporate tax rate is 12.5 per cent, while in the US president Donald Trump’s administration has cut the federal rate to 21 per cent.

Established in Ireland in 1977, Analog employs about 1,200 people at its original and main hub in Limerick, in addition to its design facility in Cork.

Cork is also a base for the Irish operation of Apple, which is fighting a European Commission order to pay €13 billion in tax arrears to the State.

Analog specialises in data converters and chips that translate real-world things – such as a button press or sound – into electronic signals. Last month, it said its effective tax rate was below its blended US federal statutory rate of 23.4 per cent.

“This is primarily due to lower statutory tax rates applicable to our operations in the foreign jurisdictions in which we earn income,” it said. – Bloomberg

a