Apple Tax Mess: Ireland Says It’s No Holy Grail

Ireland is refusing to take blame for tax laws the government says are completely transparent following a Senate hearing in which Apple (NASDAQ:AAPL) was accused of keeping cash in subsidiaries located in Ireland to avoid paying taxes.

The Irish government claims that its transparent tax code is not “the Holy Grail of tax avoidance” as Senator Carl Levin (D-Mich.) called it during Apple’s hearing. The report from the Irish government went on to say that if U.S. companies are using the country as a tax haven, its because loopholes in U.S. tax law allow them to. Ireland’s Deputy Prime Minister Eamon Gilmore said the problems “are not issues that arise from the Irish taxation system,” and need to be addressed first in the U.S.

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Ireland has used its pro-business tax code to attract multinational corporations including Apple, Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and Facebook (NASDAQ:FB) to set up camp in the country. According to the American Chamber of Commerce, U.S. firms invested $30 billion in Ireland last year, more than all of Asia combined. This has helped Ireland fight growing unemployment. Many Irish feel that if Ireland raises taxes for these companies, they will only move on to countries in Asia and leave Ireland with higher unemployment than the country already has.

According to the Senate report, Apple purposefully exploited a loophole in tax law so it wouldn’t have to pay income taxes on cash kept in Apple Operations International, which is located in Cork, Ireland, and received dividends comprising 30 percent of Apple’s global profits between 2009 and 2012. The report stated that “Ireland has essentially functioned as a tax haven for Apple.”

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While Ireland claims that U.S. companies keeping funds in the country is essentially not their problem, it might become an issue for the country if American companies start pulling out in the aftermath of Apple’s Senate hearing, and in the face of more scrutiny of money being kept there.

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