The Irish ambassador is tangling with two powerful U.S. senators over whether his nation is an illicit tax haven attracting American companies that want to avoid the world’s highest corporate tax rate.
Ambassador Michael Collins complained to Sen. Carl M. Levin, Michigan Democrat, and Sen. John McCain, Arizona Republican, about a Senate staff report that claims Ireland gave special tax treatment to favored U.S. corporations, including Apple Inc.
“The tax rates attributed to Ireland are wrong and misleading,” Mr. Collins said in a letter.
He noted that the Organization for Economic Cooperation and Development has adopted criteria that a nation must meet to be considered a shelter for tax cheats.
Tax havens generally are characterized by a lack of a tax system or a nominal one.
They also hide information about foreign investors and refuse to cooperate with the OECD.
“None of these criteria applies to Ireland,” Mr. Collins said.
Mr. Levin, chairman of the Senate Homeland Security and Government Affairs subcommittee on investigations, and Mr. McCain, the panel’s senior Republican, dismissed Mr. Collins’ complaint.
They insisted that Apple CEO Tim Cook admitted at a subcommittee hearing that his company got special treatment from Ireland and paid about 2 percent in corporate taxes, even though Ireland has one of the world’s lowest rates, at 12.5 percent.
The U.S. has the highest rate, at 35 percent, and applies the tax to overseas earnings as well as domestic profits.
“Most reasonable people would agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven,” Mr. Levin and Mr. McCain said in a statement.
In his letter, Mr. Collins disputed the committee’s findings: “Ireland’s tax system is set out in statue so there is no possibility of individual special tax rates being negotiated for companies.”
Foreign visitors in Washington this week include: