U2 reject attack by 'tax justice' campaign

Band insist they 'invest in Ireland' amid claims of hypocrisy

A Bono impersonator outside the Department of Finance in Dublin to highlight a campaign for 'global tax justice'. Campaigners claim millions of euros are lost from impoverished countries each year due to tax avoidance and tax evasion

Ciaran Byrne

U2 have hit back at critics who have accused the band of setting up intricate foreign tax avoidance schemes to avoid paying high taxes in Ireland.

On the eve of their new album launch, the band's manager, Paul McGuinness, last night rejected accusations of hypocrisy and said Bono, Larry Mullen, Adam Clayton and the Edge were all "personal investors and employers" in Ireland.

Addressing the issue of their tax affairs for the first time, Mr McGuinness said much of U2 paid different taxes in different countries.

Hypocrisy

He was speaking after a group of Third-World campaigners accused the band of hypocrisy over their tax affairs, claiming "tax avoidance" schemes in general impacted on the world's most impoverished countries.

The Debt and Development Coalition (DDCI), whose members include Concern, Trocaire, Oxfam and a string of Catholic missionary orders, yesterday attacked the band's use of a tax base in the Netherlands.

The DDCI confronted Finance Minister Brian Lenihan outside his offices yesterday and told him U2 was depriving the State of revenue needed for social services and aid to foreign countries.

But Mr McGuinness last night insisted the band is "fully compliant" with Irish tax legislation. "U2 is a global business and it pays taxes globally," he told the Irish Independent.

"At least 95pc of U2's business -- including record and ticket sales -- takes place outside of Ireland and as a result the band pays many different kinds of taxes all over the world.

"They continue to remain Ireland-based and are personal investors and employers in the country.

"Like any other business, U2 operates in a tax-efficient manner."

U2 moved their publishing arm to Holland in 2006 after the Government capped tax-free earnings for artists at €250,000. The band was one of the biggest beneficiaries of the royalties scheme.

Nessa Ni Chasaide, of the DDCI, told Mr Lenihan millions of euro were being lost through similar tax-avoidance schemes which she claimed kept cash, in the form of foreign aid, from the poorest people in society.

As a Bono impersonator sang U2 numbers in the background, Ms Ni Chasaide told Mr Lenihan that tax-avoidance schemes such as the one used by U2 had a detrimental effect on impoverished countries.

"There is nothing illegal about what they have done in taking advantage of more favourable tax laws but, given Bono has invested so much in promoting an end to poverty, we see a contradiction there."

She told Mr Lenihan: "Impoverished countries lose millions every year because of tax avoidance and it's essential that our aid programme is not undermined by a lack of action by rich countries, including Ireland."

Mr Lenihan said the Government had abolished the "Cinderella rule" where people could say they had not spent a day in Ireland if they left by midnight. "There is a problem with smaller countries that have set up deliberate tax havens and we are debating that at EU level."