Despite claims to the contrary, Ireland Ambassador Michael Collins this past week penned a letter to US Senators Carl Levin and John McCain exclaiming that Ireland has no special tax deal with Apple.
The letter reads in part:
First, Ireland's tax system is set out in statute - so there is no possibility of individual special tax rates being negotiated for companies. All tax resident companies in Ireland are liable to corporation tax on the chargeable income at the rate of 12.5% on trading income and at 25% on non-trading income. The tax rates attributed to Ireland in the Memorandum appear to be calculated by reference to the companies' entire profits, as if those companies are tax-resident in Ireland. 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.
Second, building on this analysis, the Memorandum 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.
Understandably, many politicians are upset over Apple and other multinationals leaving billions upon billions of profits overseas. However, in their ostensible effort to paint Apple as the bad guy, they are not only ignoring the tax code which allows Apple to do what it does, but have also gotten a number of key facts wrong.
For instance, Carl Levin initially stated that Apple's operation in Ireland was nothing more than a ghost operation with no employees. Come to find out, Apple actually employs upwards of 4,000 employees in Ireland.
In any event, both Carl Levin and John McCain responded to Collins' letter wherein they disputed his assertions.
Their statement reads:
Records obtained by the subcommittee clearly reflect that, for years, Apple paid Irish tax authorities a nominal rate, far below Ireland's statutory rate of 12.5 percent, on trading income. Testimony by key Apple executives, including CEO Tim Cook and Head of Tax Operations Phillip Bullock, corroborates that Apple had a special arrangement with the Irish government that, since 2003, resulted in an effective tax rate of 2 percent or less. 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.
Well, this clearly isn't a topic that's going to die down anytime soon. Note, though, that until Congress changes the law in some regard, Apple will continue to keep its $100 billion cash hoard overseas.