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Tax inversion
Tech firms' tax shifting 'not an Irish issue': Bruton
Medtronic execs hit with €48 million bill for moving company’s tax from US to Ireland
MAJOR TECHNOLOGY COMPANIES shifting operations overseas to minimise their tax bills is “not an Irish issue”, the jobs minister has said.
The comments follow news that medical manufacturing giant Medtronic will foot a €48 million bill leveled at its leadership for shifting its tax base to Ireland as part of a major merger deal.
The medical device supplier’s top staff were slugged with the levy under a US law which penalises executives for moving a company offshore for tax purposes after Medtronic’s €32 billion buyout of Covidien, a multinational medical-technology player based in Dublin, earlier this year.
The tactic of big companies taking over smaller operations in countries like Ireland and shifting their address to pay less tax – known as an “inversion” – has repeatedly come under fire in the US and other nations.
Medtronic spokesman Fernando Vivanco previously told Bloomberg the company’s board had decided to cover the bill so its executives would not be penalised for making a decision in the organisation’s best interests.
“Not an Irish issue”
But Minister for Jobs, Enterprise and Innovation Richard Bruton has defended Ireland’s tax regimes as a symptom of the digital economy during his five-day trade trip to Australia, the Sydney Morning Herald reported.
“The issue with Google and Apple is – how do you price and identify and tax digital matters?” he said during the visit.
All tax codes have to deal with this. It’s not an Irish issue, it’s not a Dutch issue … it’s an international problem.”
Ireland’s base corporate tax rate is 12.5 per cent – compared to 35 per cent in the US – and several major multinationals including tech giants Google, Apple and Microsoft have shifted large parts of their global operations into the country.
Tax ‘inversions’ draw flack
In July, US President Barrack Obama singled out Ireland in a CNBC interview in which he pointed the finger at US companies “not doing right … by the American people” for switching their bases overseas to cut down on the amount of tax they paid.
If you simply acquire a small company in Ireland, or some other country, to take advantage of the low tax rate, you start saying ‘we’re now magically an Irish company’, despite the fact that you may only have a hundred employees there,” he said.
“And you’ve got 10,000 employees in the United States. You’re just gaming the system. You are an American company.”
Medtronic’s operational headquarters will stay in the US city of Minneapolis.
READ: The €100 billion deals: that’s how much was spent on Irish mergers so far this year
READ: Ireland second to Bermuda as ‘conduit’ for taxable income of US multinationals – IMF staff paper
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