Obama blasts US firms for 'magically becoming Irish' in controversial tax switches
US President Barack Obama has blasted American multinationals that move to Ireland to cut their tax bill.
In his toughest comments yet on the subject, he accused big US corporations of trying to play “the system” by “magically becoming Irish” through so-called tax inversion deals.
“I don't care if it's legal, it's wrong,” Mr Obama said. “It sticks you for the tab to make up for what they're stashing offshore.”
There has been a raft of such deals in recent months which have seen big American companies become “Irish” for tax purposes through buying smaller firms registered here. The same trend is happening in the UK and Switzerland.
Fears America is losing out on taxes have made the deals controversial.
Last night Mr Obama singled Ireland out – something that is certain to set off alarm bells in government circles here.
“If you are basically still an American company but you simply change your mailing address in order to avoid paying taxes then you are |really not doing right by the country and its people,” he said in an |interview with CNBC before he |spoke at a technical college in Los Angeles.
“If you simply acquire a company in Ireland or some other country to take advantage of the low tax rate, you start saying we are now magically an Irish company despite the fact that you may only have a hundred employees there and you've got 10,000 in the United States; you are just gaming the system. You are an American company, you continue to benefit in all kinds of ways from being an American company,” he said.
Recent multi-billion euro deals by US firms for smaller Irish companies show the scale of activity.
In the first six months of this year it helped drive the value of Irish mergers to a record €65bn.
Critics say such deals have little to do with what is really happening in the Irish economy.
They are about allowing corporations to be taxed at Ireland's |12.5pc rate rather than America's 35pc on international earnings, they claim.
The same trend is being seen in the UK and Switzerland, prompting fears the US is losing vital tax revenues.