Government to use diplomatic corps to reject tax haven accusations

The Government is set to officially reject accusations by US senators this week that the country acts as a tax haven for multinationals.

It will also launch a diplomatic offensive in a bid to repair the damage done to its reputation abroad.

Ministers have been forced to defend the country’s low corporate tax rate after the US Senate said last week that Apple paid little or no tax on tens of billions of dollars in profits channelled through Irish subsidiaries and that it had effectively negotiated a special corporate tax rate of less than 2%.

Michael Noonan, the finance minister, said Ireland would not be the “whipping boy” for the Senate subcommittee.

The Government will likely put its response on the record this week, two sources said, and will tell the committee, led by veteran tax sleuth Senator Carl Levin, that the country is not a tax haven, nor did it cut Apple a special tax deal.

“Undoubtedly there’s a risk of reputational damage if we don’t defend our corner and set out the facts, so of course that’s happening,” European Affairs Minister Lucinda Creighton told Reuters, referring to the response being drafted.

“I’ve no doubt there will be a strong response, and we will strongly defend Ireland as a safe, a legally sound and a good place to do business.

“What you see is what you get, and that is why so many global companies are headquartered in Ireland.”

She was speaking from Dublin Airport ahead of a four-day trip to Washington and New York where she will meet business leaders and politicians and address Columbia University.

While the trade mission was planned long before last week’s revelations on Capitol Hill, Ms Creighton said she and her fellow ministers would use every opportunity to put right the “misinformation” heard in the Senate last week.

After the 2010 bailout, the Economic Messaging Unit was set up to coordinate communications between all Government agencies, departments, and embassies.

Embassies from Beijing to Buenos Aires were issued rebuttal points last week, a normal practice for major stories, while the Irish ambassador in Washington held a conference call with government departments and the state agency charged with attracting investment to discuss the next steps.

Within weeks of coming to office in 2011, Taoiseach Enda Kenny summoned all the country’s ambassadors to Dublin to brief them on how best to restore a reputation he said was in tatters.

The fresh assault will be similar, one diplomatic source said, adding that the key focus would be liaising with a strong network of contacts in the US administration and on Capitol Hill.

While the Government was able to call on former president Bill Clinton to tell US companies last year that they would be “nuts” not to invest in Ireland, the task could be trickier this time with criticism emanating from an ally.

“That was a blindside for Ireland Inc because we always thought we were on the same page as Anglo- American capitalism. We thought it would stick up for us,” said Hugo Brady, senior research fellow at the Centre for European Reform in Brussels.

“The PR side of it is really bad for Ireland because Ireland and tax haven are going together in mainstream conversation in Brussels. It hasn’t done our image much good when people start making dinner jokes about Apple being an Irish company.”

The Government will have to keep an eye out for any backlash in Europe where the 12.5% corporate tax rate has drawn criticism in the past.

One influential member of the European Parliament said while the country should be given time to adjust, it should adopt a standardised EU tax system and ultimately a minimum rate of corporation tax.

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