updated 04:55 pm EDT, Tue October 15, 2013
Change expected to have little practical benefit for government budgets
The Irish government is considering the elimination of a tax loophole exploited by a number of foreign corporations, most notably Apple, reports say. Currently, Apple's Cork-based subsidiaries -- including Apple Operations International (AOI), Apple Operations Europe, Apple Sales International, and Apple Distribution International -- are "stateless" for Irish tax purposes, since they're managed and controlled from outside the country. This has allowed Apple's to dodge Ireland's 12.5 percent standard corporate tax rate, and pay less than 2 percent in taxes in the US. Between 2009 and 2011 Apple funneled billions of dollars through AOI without paying taxes to any government.
According to a new statement from the Irish government, one proposed measure for the country's 2014 Finance Bill would institute "a change to our company residence rules aimed at eliminating mismatches -- that can exist between tax treaty partners in certain circumstances -- being used to allow companies to be 'stateless' in terms of their place of tax residence." The government also says that it's working with the European Union and the Organization for Economic Co-Operation and Development on stopping "aggressive tax planning" within Ireland.
Speaking with Reuters, a Department of Finance spokesman denied that the change is being made because of US political pressure. The person in fact notes that Apple will probably be able to find a new loophole, since they can choose any country they like as their tax residence, including zero-tax regions like Bermuda.
Earlier in 2013 Apple faced scrutiny from the US Senate for its tax dodges, which have kept hundreds of millions of dollars out of federal budgets and public services. CEO Tim Cook commented in testimony, however, that the company's practices are fully legal. A Securities and Exchange Commission probe ultimately decided not to take any action.