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Apple controversy lays bare complex Irish tax web

Reuters/ AFR | July 15, 2013
Companies, investors and some lawmakers argue it is a firm's duty to keep its tax bill as low as possible so it can invest to grow and return money to shareholders.

"In each Budget and Finance Bill the government introduces a range of measures to support key sectors in the Irish economy," the spokesman said in an emailed statement.

Ireland's Office of the Revenue Commissioners, which assesses and collects taxes, said in a statement it did not do special deals on tax rates for any company.

Apple's ability to pay tax of just 2 per cent of its $US74 billion in overseas income over the past three years hinged on an unusual loophole in the Irish tax code that allowed it to channel profits into Irish-incorporated subsidiaries that had no declared tax residency anywhere in the world.

US rules that allow companies incorporated abroad not to pay US taxes complemented the arrangement.

Apple, which employs about 4,000 people in Ireland, is just one of many companies that route money through the country to cut taxes on company profits and fund investments.

PepsiCo Global Investment Holdings Ltd, which provides financing to other companies in the drinks group and is one of 14 Irish subsidiaries, made a profit of almost $US6 million in 2011 and paid tax of $US215 to Curacao, giving it a rate of 0.004 per cent, Irish company records show.

A spokeswoman for PepsiCo said it fully complies with the tax laws where it operates and pays all taxes owed.

Company records also show that an Irish holding company of medical device manufacturer Boston Scientific, one of the country's top multinational employers, paid $US60 million tax on profits of $US1.4 billion in 2011, or about 4 per cent.

Boston Scientific declined to comment.

Pharmaceutical company Bristol-Myers Squibb said in US Securities and Exchange Commission (SEC) filings that it had favourable tax rates in Ireland and Puerto Rico under grants not scheduled to expire before 2023.

Ireland's Industrial Development Agency (IDA), tasked with attracting foreign firms to the country, said it offers grants for employment, research and development, and training.

Ireland's Office of the Revenue Commissioners said it did not comment on the tax affairs of individual companies.

At least 206 of America's largest 500 companies by market capitalisation have one or more subsidiaries in Ireland, Reuters research showed.

Drugmaker Pfizer leads the way with 32 Irish-registered companies. Pfizer makes some of it drugs in Ireland, employs 3,200 people and has invested $US7 billion there in the last 45 years. It did not reply to Reuters request for comment on the number of subsidiaries it has in Ireland.

SEC filings also showed hundreds of S&P 500 subsidiaries are based in the Netherlands and Luxembourg as well as more opaque jurisdictions such as the British Virgin Islands and Bermuda.


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