French and German firms 'notorious tax avoiders'
Published 02/06/2011 | 17:00
A LEADING official at the Industrial Development Authority (IDA) claimed French and German companies in Ireland were "notorious" for avoiding tax, according to a leaked US embassy cable.
Enda Connolly, who was a spokesman and R&D manager at the IDA, also accused French and German commentators of being hypocrites for criticising Ireland's low corporation tax rate.
The comments emerged in a leaked cable, classified 'confidential', written by former American Ambassador to Ireland James Kenny.
Embassy officials spoke to Mr Connolly -- now chief executive of the Health Research Board -- in December 2005 to seek reassurances that Ireland would maintain its approach to grants and incentives for foreign firms with operations here.
At the time, fears were being expressed of possible EU obstruction of grant aid to US companies. Pressure was also growing for tax harmonisation across the EU.
Mr Connolly reassured embassy officials that Ireland would "resist any move" within the EU to push the country's 12.5pc corporation tax rate higher.
According to the cable, Mr Connolly "added that German/French complaints about Ireland's low tax rates were hypocritical, since German and French firms in Ireland, particularly those that were family owned, were notorious for tax avoidance".
The cable continued: "These firms," said Mr Connolly, "were expert in sheltering revenues through tax-haven arrangements in former colonies and Switzerland in order to minimise their profitability, and thus their tax burden, in Ireland."
The importance with which US investment is viewed in Ireland is abundantly clear in the cable.
Mr Kenny wrote: "Ireland recognises that a corporate tax hike would likely send investors to the exits, so the GOI [government of Ireland] has made clear that it would fight to the last man to block moves towards EU tax harmonisation."