Ireland Rejects Blame for Apple’s Tax Evasion

Ireland on Tuesday said it was not to blame for Apple’s low U.S. tax payments and had no special rate agreement with the company, a day after the a U.S. Senate committee accused the technology giant of shielding at least $74 billion in profits from U.S. tax officials by setting up subsidiaries – which had no employees or physical offices – in Ireland.

Ireland on Tuesday said it was not to blame for Apple’s low U.S. tax payments and had no special rate agreement with the company, a day after the a U.S. Senate committee accused the technology giant of shielding at least $74 billion in profits from U.S. tax officials by setting up subsidiaries – which had no employees or physical offices – in Ireland.

Ireland, which has attracted U.S. multinationals including Google and Microsoft with low taxes as a key part of its economic policy since the 1960s, said its tax system was transparent and other countries were responsible if the tax rate paid by Apple was too low.

“They are issues that arise from the taxation systems in other jurisdictions, and that is an issue that has to be addressed first of all in those jurisdictions,” Deputy Prime Minister Eamon Gilmore told national broadcaster RTE on Tuesday.

U.S. Senate investigators alleged that between 2009 and 2012, Apple paid little or no corporate taxes on at least $74 billion through the use of Irish subsidiaries that have no tax residency in Ireland, where they are incorporated, or in the United States, where those companies are managed.

In its defence, Apple said it had struck “cost-sharing agreements” with its Irish subsidiaries and that the arrangement was regularly audited by the U.S. Internal Revenue Service.

According to the U.S. report, Apple’s chief of tax operations Phillip Bullock told congressional investigators that the company had obtained a special low tax rate of 2 percent or less for the last 10 years through negotiations with the Irish government.

Related: Apple Accused of “Highly Questionable” Tax Avoidance

Ireland’s Prime Minister Enda Kenny, however, denied there was any special rate agreement. “Ireland does not, I will repeat, does not do special tax rate deals with companies; we don’t have any special extra-low corporate tax rate for multinational companies.”

“Differences do arise in the legal and tax systems between countries. International tax planning takes account and advantage of these differences in national systems and rules … rather than the law or practices of any individual country,” he said, adding that the best way to close those loopholes was through international agreements.

A spokeswoman for the Office of the Revenue Commissioners said she could not comment on individual cases as that would breach taxpayer confidentiality, but she also denied that the tax authority agreed special low tax rates with multinationals.

“All companies in Ireland pay the standard 12.5 percent rate on their trading profits arising in Ireland, and they pay a corporation tax rate of 25 percent on their Irish non-trading income,” she said.

U.S. firms invested $30 billion in Ireland last year, more than in China and the rest of emerging Asia combined, according to data from the American Chamber of Commerce.

Controversy surrounding Ireland’s taxation of foreign companies is not new. In 2011, former French president Nicolas Sarkozy called on Dublin to raise its corporate tax rate. Kenny refused, insisting the actual tax rate charged on companies in Ireland is closer to its headline tax rate than in many other countries, and its effective tax rate largely comparable.

Related: EU to Clampdown on Tax Havens