Ireland to close huge Apple tax loophole - but will it make any difference?

Ireland’s finance minister, Michael Noonen, has pledged to close a widely-criticised tax loophole that has allowed technology giant Apple to avoid paying tax on more than $40bn (£25bn) of income.

Noonen said on Tuesday that he would move to make it illegal for any company registered in Ireland to pay no tax domicile.

Apple as well as other firms had been able to siphon off profits into Irish subsidiaries, known as “ghost companies”, that declared no tax residency anywhere in the world.

In a budget speech to MPs, Noonen said: “Let me be crystal clear, Ireland wants to be part of the solution to this global tax challenge, not part of the problem… I want Ireland to play fair, as we always have done. And I want Ireland to play to win.”

However, firms will still be able to nominate any country as their tax residence, including places such as Bermuda where there is a 0% tax rate. This will mean that the amount of tax paid by Apple is unlikely to change. Both Microsoft and Google have Irish subsidiaries that legally channel money to Bermuda where they don’t pay any tax.

The arrangement has become known in the tax avoidance industry as the “double Irish”.

In May, a US Senate committee investigation said Apple had used “a complex web of offshore entities” to avoid paying billions of dollars in US income taxes and said that the company had achieved the “holy grail of tax avoidance”. 

Tim Cook, Apple’s chief executive, said that the company, which has not acted illegally, paid “all the taxes we owe - every single dollar”, and added that the company paid more than $6bn in tax last year.

Readers' comments (1)

  • The entire discussion around Apple (and others) international tax is based upon lack of understanding or misinformation about completely legal tax planning. Ireland is simply responding to the prior unfounded attack upon it by making a meaningless gesture which gives it wonderful pr in this environment.

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