Renewed focus on tax is not a fatal threat to our global appeal
A rose by any other name may smell as sweet, and a tax haven by any other name can be just as sweet for your tax bill. Traditionally, the definition of a tax haven was somewhere one could hide money on which tax should have been paid; or which should not have been there in the first place, as with various dictators and criminals.
That is certainly not what is meant by calling Ireland a tax haven. By coincidence, this week the spotlight was on Austria and Luxembourg for their tax secrecy, at the same time as it was on Ireland for low corporate taxation.
The other two euro countries have held up an EU law which would allow revenue authorities more power to see who had what in their banks. They fear that money would flow out looking for greater secrecy elsewhere.
There is no secret about the way in which Ireland makes it attractive for high-value, high-growth companies to locate operations here. There is, however, a lot of deliberate confusion.
This came to a head when executives of the Apple corporation told a US Senate hearing that they had a "deal" with the Irish government to pay only 2pc profits tax.
There were stout denials from the Taoiseach and the Minister for Finance. But, as with a tax haven, when is a "deal" a deal?
We do know how Apple manages to pay so little tax on almost €80bn of profits. It is because Irish tax law allows it to do so. Almost certainly, the tax law was written so that Apple, and companies like it, could benefit.
Part of Ireland's sales pitch to foreign companies has been that its government will listen carefully to any problems or desires they may have, and amend legislation if necessary.
In this case, the law says that only companies managed and controlled in Ireland are liable for Irish tax. Apple has such operations, employing 4,000 people. Profits from these would be liable for Ireland's famous 12.5pc tax rate – itself too low for the liking of many foreign governments.
But Apple could establish companies in Ireland which own the priceless secrets of iPads and iPhones, but which are not managed and controlled here. Remarkably, they are not liable for profits tax in Ireland or anywhere else.
One can call that a deal or not as one pleases, but it is the model which Ireland has pursued for more than 50 years.
There is no particular reason to feel guilty about it. It is not our responsibility to secure revenues or investments for other jurisdictions.
Nor does it deprive the Irish citizen. Corporation tax of €4bn last year amounted to more than 10pc of total tax revenue. Much of it came from multinationals.
However, this compares with 16pc of revenues at the peak of the dotcom bubble. The intellectual property giants have even more scope to massage their tax bills than the hardware manufacturers did.
The real question is whether Ireland can continue to get away with it. The heat is on as governments everywhere struggle with budget deficits. But tax avoidance and hypocrisy go hand-in-hand.
It is a US decision to allow its companies avoid tax on profits earned overseas. Many believe this is not just to benefit the business lobby but is part of a long-standing national policy to have a global corporate presence.
Britain's House of Commons has been leading the charge against low tax payments by global companies in the UK. But its government is aping Irish strategies; especially by offering 10pc tax on profits from intellectual property – just the kind of stuff used by Apple.
Honesty will not come into it, as countries jockey to increase their revenues and investments by multinationals. Ireland's best hope of maintaining its regime lies in the past failure to overcome the jockeying and get any international agreement.
Perhaps the biggest threat comes from the long-standing proposals from the EU commission to change the way corporation tax is calculated.
It is ready to roll if member states ever agree. The 10-year hiatus on the savings directive suggests they may not and, if economies and budgets improve, that the whole issue may fade away.
But we cannot count on it.