THE war of words between the Government and two powerful US senators went into overdrive yesterday as the senators slapped down government claims that Ireland is not a tax haven.
The two-week battle took a new turn when the Department of Finance decided yesterday to publish a letter sent to Senators Carl Levin and John McCain which was sent by Ireland's ambassador to Washington.
Ambassador Michael Collins rejected claims by Senator Levin, a formidable 78-year-old Democratic senator from Michigan, and John McCain (76), who was the 2008 Republican presidential challenger to President Barrack Obama. In the letter, Mr Collins said the senators were wrong to brand Ireland a tax haven and wrong to claim that Apple got a special deal on its taxes.
The Department of Finance's decision to publish the letter yesterday sparked a fast and seemingly furious response from the two men who went out of their way to repeat their claims that Ireland is a tax haven and insisted once again that Apple had a special tax deal with the Government here.
"Most reasonable people would agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven," the senators wrote.
The public exchange is the latest salvo in an unusually fierce battle between two countries that have traditionally enjoyed good relations. The repeated claim that Ireland is a tax haven appears to rankle with the Government here although there is no official definition of a tax haven.
In his letter, Ambassador Collins said Ireland did not meet any of the four criteria used by the Paris-based Organisation for Economic Co-operation and Development when classifying tax havens.
The senators rejected this, simply arguing that Ireland is a de facto tax haven.
"Testimony by key Apple executives, including CEO Tim Cook and head of tax operations Phillip Bullock, corroborates that Apple had a special arrangement with the Irish Government that, since 2003, resulted in an effective tax rate of 2pc or less," the senators said in their statement.
"Most reasonable people would agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven," they added.
The senators' investigations have previously found that Apple avoided paying income taxes on billions of dollars of profit during the past four years in part by moving patent rights to a web of offshore subsidiaries that pay virtually no income taxes.
Earlier this week Apple chief executive Tim Cook said there was no "special deal to give Apple a flat tax rate of 2pc" in Ireland, apparently refuting what he had told the committee under oath last week. Mr Cook added at a conference this week that the company doesn't use "tax gimmicks".
He has not, however, said if there was an agreement on what income the Government would charge tax on. In that case, there would not need to be a flat tax rate – the key issue would be how much of Apple's income would be deemed taxable by the State.