The Australian Financial Review reported on Thursday that Apple “shifted $8.9bn in untaxed profits through a tax haven structure in Ireland over the last decade.” The Irish Times also reported that Apple paid only €36m on $7.11bn profits at its Irish unit.
However, UCC economics lecturer, Seamus Coffey said both figures are incorrect. The $8.9bn was generated through sales in Australia and is not subject to corporate tax because Apple’s headquarters is in California and that is the point at which corporate tax is applied, he said.
The ‘Irish unit’ through which $7.11bn was allegedly routed is Apple Sales International, which is incorporated in Ireland but has no physical presence in this country, nor is it tax resident here so consequently it is not liable for Irish corporate tax, he added.
But because Apple Sales International is incorporated here, under US tax law, it avoids paying corporate tax in the US, said Mr Coffey. A spokesman for the Department of Finance said: “The extremely low effective rate figures that have been quoted recently and attributed to Ireland are based on a flawed premise. The figures are estimated by dividing the amount of Irish tax paid by a total profit figure that includes substantial profits made by companies that are not tax resident in Ireland.
“They are running together the profits earned by group companies in Ireland and in other jurisdictions and incorrectly suggesting that Irish tax does or should apply to both. Ireland cannot tax profits that are properly attributable to other jurisdictions,” added the spokesman.
The Minister for Finance Michael Noonan, in last October’s budget, closed down the loophole that enabled multinational companies to incorporate in Ireland even though they are not tax resident in any other jurisdiction.