New MacBook Pros are here! Get the lowest prices anywhere: Apple Price Guides updated Sept 22nd (exclusive coupons)
 


Tuesday, May 21, 2013, 05:32 am PT (08:32 am ET)

Ireland says it's not responsible for Apple's low international tax rate

With Apple under fire for its low international tax rate thanks to corporate subsidiaries housed in Ireland, the Irish government has spoken out on the matter, saying its laws are not to blame.

Cork

Apple's headquarters in Cork, Ireland, via Flickr user Sigalakos.


Ireland's Deputy Prime Minister Eamon Gilmore issued a statement to broadcaster RTE on Tuesday, defending his country from accusations that it has functioned as a tax haven for Apple. The Irish government is not responsible if Apple's tax rate is too low, he said, according to Reuters.

"They are issues that arise from the taxation systems in other jurisdictions, and that is an issue that has to be addressed first of all in those jurisdictions," Gilmore said.

Apple's presence in Ireland has been scrutinized by a report from the U.S. Senate Permanent Subcommittee on Investigations, which found that subsidiaries owned by Apple were used to purposefully avoid paying billions of dollars in domestic taxes. The report alleges that Apple moved billions of dollars in profits to affiliate corporations such as Apple Operations International in Ireland,w here the effective tax rate is less than 2 percent.

For its part, Apple has argued that it pays the appropriate taxes on every product it sells within the U.S. In a testimony published on Monday, the company said its substantial amount of foreign cash, which now exceeds $100 billion, exists because the majority of the company's products are sold outside of America.

While its international tax practices face scrutiny, Apple has pushed for legislators to consider comprehensive tax reform in ways that might allow the company to return some of its $102 billion in international cash to the U.S. at a reasonable tax rate. The company has argued that the current tax code was written for the "industrial era," and that it is actually harmful to businesses in the modern "digital economy."

Of course, Apple is not the only company that has set up operations in Ireland for its favorable tax laws. Other major U.S. corporations with a presence there include Google, Microsoft, Facebook, and Amazon.

Many of those companies were also under fire last year in the U.K., when a report alleged that Apple paid £10 million in corporate tax on estimated sales of £6 billion. Apple and others have a presence in the town of Cork, Ireland, where the local tax rate just 12.5 percent, or about half the 24 percent corporate rate in the U.K.

One analysis of 60 large U.S. corporations conducted earlier this year by The Wall Street Journal found that together they held $166 billion in earnings offshore in 2012. Apple alone accounted for just under a sixth of the analyzed group's total, and that cash sum has only grown in the months since.