Monday 23 April 2018

Biggest Irish companies paid tax at eight times Apple's rate

15 firms listed on ISEQ were levied at 16.5pc versus US giant's 2pc

Apple CEO Tim Cook
Apple CEO Tim Cook

Peter Flanagan New Technology Correspondent

THE biggest public companies in Ireland paid their taxes last year at an effective rate more than eight times higher than what Apple paid in Ireland.

A review of the most recent company accounts for 15 of the biggest firms listed on the Irish Stock Exchange by the Irish Independent shows the firms paid an effective tax rate of 16.5pc, compared with the 2pc rate paid by Apple in Ireland over five years.

The companies, which include the likes of CRH, Kerry Group and Glanbia, paid €478m in tax on combined profits of €2.9bn.

That contrasts sharply with Apple, which, according to a US Congressional investigation, apparently paid 1.9pc in tax on $37bn (€29bn) worth of profits it "earned" in Ireland in 2012.

STANDARD RATE

Only two firms – the mining company Kenmare Resources and Irish Ferries owner Irish Continental Group – paid less than the standard tax rate of 12.5pc on their profits, but they had significant losses on previous years that could be offset against their taxes due now.

Construction firm Grafton had the highest effective tax rate at a little over 27pc.

Ryanair, meanwhile, handed over €81.6m tax on profits of €650.9m – an effective rate of 12.54pc.

The tax rate paid by Irish companies varies for a number of reasons. They can write off tax against past losses in many cases, especially in the oil and gas business. The effective tax rate is also based on a mix of both corporation and income tax.

In Glanbia's case, the dairy foods and nutritionals giant reported €24m in taxes paid on profits of €149.3m.

That only tells half the story, however. The firm paid €18.6m in corporation tax – an effective rate of 12.5pc.

Glanbia also paid an additional €19m to cover the difference due in overseas tax rates.

That total of €37.6m was reduced by adjustments due on previous years and other differences including the likes of expenses that cannot be deductible for tax purposes.

Not all companies provide such a level of detail on their tax policies. Kerry Group lowered its effective tax rate during 2012 to 16.5pc from 17.1pc a year earlier. In its annual report, the company said this was mainly due to differences in tax rates between different jurisdictions.

Kenmare Resources had one of the lowest effective tax rates in 2012. The company which mines a number of 'rare earth' materials used in electronics such as a form of titanium known as ilmenite, paid an effective rate of 6.25pc on its €52.7m profits in 2012.

The miner, however, paid no corporation tax. The €3.3m it paid in tax was a deferred charge.

CORPORATION TAX

A newly profitable company like Kenmare not paying corporation tax is common, especially in the exploration and mining sector. That is because these companies can write off their tax bill against past losses.

A company such as Kenmare can spend millions of euro developing a mine or oil well, over several years.

That means by the time the company starts producing goods in commercial quantities, it can offset its profits against past losses for tax purposes.

Irish Independent

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