| 13.6°C Dublin

IDA challenges 'tax haven' claim

THE Industrial Development Agency (IDA) is to formally challenge remarks by a US senator that Ireland is a "tax haven".

IDA chief executive Barry O'Leary said they will try to counter the allegation by Senator Carl Levin, who was critical of computer giant Apple's tax arrangements in Ireland.

Mr Levin – a Democrat from Michigan and chairman of an influential US senate subcommittee investigating tax avoidance – said Apple had "quietly negotiated" an income tax rate of less than 2pc with the Irish Government, far below the statutory rate of 12.5pc.

Mr O'Leary said Irish officials will "definitely" be clarifying the country's corporate tax regime and making sure US senators are "up to date".

"Clearly the description he (Mr Levin) used, I don't think anybody else would (have used it)," he said.

Government officials and the IDA will now put together a formal reply to Mr Levin.

Communications Minister Pat Rabbitte reiterated the Cabinet's response, saying: "We don't enter into any such deals with corporations."

He said if there are monies channelled through Ireland "that is what is allowed by the US tax system".

Google, another global tech company with extensive operations in Ireland, has also been criticised over the amount of tax it pays, but boss Eric Schmidt said he is "perplexed" by the controversy.

Politicians in the UK have been putting pressure on the company for avoiding paying billions in taxes by routing profits through Ireland.

But Mr Schmidt insisted Google paid everything it was legally required to pay.

The company is reported to have paid only £10m (€11.7m) in corporation tax in the UK between 2006 and 2011, despite revenues of £11.9bn (€13.9bn).

Mr Schmidt said what they are doing is legal and added: "I'm rather perplexed by this debate."

He said: "I view that you should pay the taxes that are legally required. It's not a debate. You pay the taxes."

Appearing before the senate subcommittee in Washington last week, Apple chief executive Tim Cook faced criticism over the firm's tax affairs.

The committee revealed Apple's Irish companies, some of which are not tax resident in any jurisdiction, allowed the group to pay no tax on much of its overseas earnings in recent years.