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State resists pressure to end controversial corporation tax loophole

THE Government will resist pressure to amend tax laws to close a notorious loophole used by big companies to legally avoid billions of euro in corporation tax.

It is coming under increasing pressure to end the loophole – but sources last night said it was unlikely any change would happen soon.

Ireland's tax regime hit worldwide headlines last week when Apple bosses said the company got a special tax incentive agreement to set up in this country in 1980.

Despite the Government denying the existence of any special deals, the Department of Finance yesterday refused to comment on a report in the 'Sunday Business Post' that Charlie Haughey's government did a "special deal" with Apple in 1990.

"We don't comment on Sunday newspaper stories. But on the issue of tax planning structures, by their very nature they often seek to take advantage of differences in or mismatches between different countries' tax systems," a spokesman said.

And Social Welfare Minister Joan Burton claimed yesterday that Coca-Cola got a special deal when it opened its Irish business in the 1970s. A Coke spokesman could not be reached for comment.

The Coalition has been under pressure to change the law to end the so-called "Double Irish" tax scheme used by companies such as Google, Apple and Facebook.

The scheme plays on a quirk in Irish law which allows a company to be registered in Ireland, even though it can be based anywhere in the world.

In practice, this allows big firms to legally funnel profits from around the world into Ireland and on to a tax haven, thus avoiding tax on profits.

However, the Department of Finance insisted any changes to tax law must be made at an international level.

"Ireland is fully committed to working with other countries to tackle these issues and is an active participant in the OECD base erosion and profit shifting project, which is specifically designed to achieve this," said a department spokesman.

At hearings in Washington last week on Apple's use of Ireland to avoid tax in the US, Senator Carl Levin repeatedly called Ireland a "tax haven", even though the US does not officially class us as one.

Government ministers continued to insist Apple did not get a special deal on tax from Ireland, despite mounting evidence to the contrary.

Multinational companies employ about 150,000 people in Ireland. The head of the IDA, which has been instrumental in bringing many of those firms here, said it would be dangerous for the Government to change its tax law unilaterally.


"It would be very, very wrong for Ireland to change on its own," said Barry O'Leary.

Mr O'Leary said comments made in the US were "unhelpful" and added the IDA will go on a tour of international media in an effort to undo the damage caused by Mr Levin's words.

The Government is also expected to write to Mr Levin to formally rebut his comments.

Irish Independent