US drops reference to Ireland as a tax haven

THE White House has dropped any reference to Ireland from a fact sheet that accompanied President Barack Obama’s announcement of his crackdown on tax havens.

Ireland was explicitly linked to havens that the fact sheet said helped corporations evade taxes. But by late on Tuesday, the reference to Ireland, and two other countries, had been removed.

The fact sheet originally cited Ireland, the Netherlands and Bermuda as three small countries where, in one year, a third of all foreign profits of US corporations came from.

That led to some in the US focusing on Ireland and a regime that allows the biggest multinational companies to significantly reduce their overall tax rates.

It was clear from the fact sheet, and from comments made by administration officials, that Ireland is in the cross hairs of the Obama administration and its drive to sharply reduce loopholes that allow corporations to cut their taxes.

The Irish Government bristles at any suggestion Ireland is a tax haven.

Officials claim the situation is entirely different from other pure tax havens because US multinationals do so much business and employ tens of thousands of people in Ireland.

However, Ireland is a favourite place for corporations to park, indefinitely, huge amounts of profit, which are not taxed in the US until or unless the money is repatriated back home.

The White House has proposed limited tax breaks and benefits to companies that continue to post profits under the name of foreign-based subsidiaries.

The Government is still mulling over what impact the proposals will have if implemented.

It, through the IDA and others, will join what is expected to be an aggressive lobbying campaign against the new measures.

This will be led by the major multinationals, including Microsoft.