US Senate hearing generates negative publicity for Ireland

The accusation at a Senate hearing that technology giant Apple used Irish companies to avoid billions of dollars in US taxes generated plenty of negative publicity for Ireland's corporate reputation.

US media reported extensively on the testimony of Apple chief Tim Cook before a congressional panel and the company's use of Irish companies to shelter $102 billion (€79 billion) from US taxes and avoid paying income taxes on $74 billion of profit generated plenty of unwanted publicity for the country.

Sharp criticism
The New York Times reported on its front page that "Ireland came under sharp criticism for its attractiveness as a pied-a-terre for American companies doing business in Europe".

Referring to Apple’s tax rate of 2 per cent that Senate investigators say was agreed with the Irish tax authorities, the newspaper said the Senate was “hardly Ireland’s only critic on tax matters” noting that “Britain, France and other European countries have long been annoyed by Irish tax policies”.

Reports focused on how Apple exploited a tax loophole by channelling its profits outside the Americas through Irish subsidiaries – making them exempt from US taxes – but also made them exempt from Irish taxes because those companies were managed and controlled from Apple's head office in California.

Apple said that its tax arrangements in Ireland dated back to a tax incentive agreement reached with the Irish government in 1980, an agreement that was renewed in 2008, the company told the Senate panel.

“Ireland seems to have been very clever,” wrote New York Times business columnist Floyd Norris. “It offers the benefit of ‘stateless subsidiaries’ only to companies that have actual operations in Ireland.”

Noting how Apple set up its European headquarters in Ireland and employed a lot of people there, he wrote: “In effect, Ireland pays companies to come to Ireland by offering to let them avoid taxes in their home countries.”

The Wall Street Journal reported that Apple’s tax status has “become politically toxic” as austerity policies in Europe has “sharpened the focus on corporate taxes”.

Dropping corporate taxes
The Washington Post pondered whether there was a case for the US dropping corporate taxes altogether but leaned against it, saying: "It would cause problems in international relations, as the United States would become the low-tax haven to the rest of the world, supplanting Ireland."

The Financial Times said the Senate was “likely to put Ireland under the spotlight” at a time when “profit shifting” is coming into focus and “Europe is again muttering about unfair competition”.