Cautious praise to Ireland closing Apple tax loophole

A move by Ireland to shut a heavily-criticised corporation tax loophole that has benefited multinationals like Apple received lukewarm praise Wednesday, as politicians and experts stressed its limitations.

In a budget speech Tuesday, Irish Finance Minister Michael Noonan said he would publish legislation so that Irish-registered companies would be liable to pay at least some corporation tax, if not Ireland's 12.5-percent rate.

Under the proposed change, ?stateless? companies registered in Ireland must declare a tax residency.

Apple, the multi-billion dollar technology giant, is incorporated in Ireland but has no tax residency at all for non-US profits.

Two US senators, who criticised Ireland?s tax laws, even describing the eurozone nation as a ?tax haven?, have said Noonan?s announcement was ?encouraging?.

Senators Carl Levin and John McCain held a hearing in May that examined offshore profit shifting and tax avoidance by Apple through the use of three Irish subsidiaries that claimed they were not tax residents anywhere and thereby saving tax on $44 billion of non-US income.

In a statement, Levin and McCain noted the progress but warned much still remained unknown.

?Important questions do remain..." they said, "including whether the new rules will continue to allow Irish subsidiaries to dodge taxes by, for example, excluding substantial income from the 12.5-percent Irish tax rate, calculating taxable income in ways that produce a lower effective tax rate, or simply declaring tax residency in a tax haven with no corporate tax.?

Jim Stewart, tax expert at Trinity College Dublin, said Noonan?s announcement followed recent international condemnation of Irish tax laws.

?I think the move was inspired by all the negative press but also it?s a recognition that Ireland is regarded as having the features of a tax haven for multinationals," he told AFP.

"It?s Ireland bowing to the inevitable and doing something fairly minor," he said.

However, the proposed changes will not likely yield much change, as targeting ?stateless? companies does not address the most common tax loophole used by multinationals in Ireland, known as the ?Double Irish?.

Under this loophole, companies can be registered in Ireland but domiciled in low-tax countries allowing the movement of profits to the low tax jurisdictions to save money.

Noonan said Ireland?s corporate tax rate, one of the lowest in the EU, was a cornerstone of economic policy and was not up for negotiation.

More than 1,000 international companies, employing an estimated 285,000 people, are located in Ireland.

IDA Ireland, the agency responsible for attracting multinationals, welcomed Noonan's announcement.

"Ireland?s tax offering continues to be highly attractive to overseas companies and we believe that the changes to the residency rules will not impact on our overall competitive position," it said.

Pearse Doherty, opposition finance spokesperson for the Republican party Sinn Fein, said Noonan's plan was "one small step in dealing with tax avoidance in Ireland".

He told AFP: ?This measure won?t deal with the ?Double Irish.? The ?Double Irish? will continue to be an anomaly that exists within the Irish tax code.