Belfast Telegraph

Thursday 25 December 2014

Republic tax laws scrutinised again over Vodafone bill settled in the UK

Vodafone in new tax row
Vodafone in new tax row

THE Republic's low corporate tax regime is again under the international spotlight after it emerged that mobile giant Vodafone settled a tax bill with the UK for one of its Irish subsidiaries.

The UK mobile telecoms giant reportedly paid out a multi-million euro settlement with Her Majesty's Revenue and Customs (HMRC) in 2009 following a dispute over the tax paid by an Irish subsidiary set up to collect royalty fees.

The revelation comes only months after the Republic was branded a tax haven by two US senators after Apple claimed it had a special deal in the country.

The computer giant later claimed there was no such deal.

Vodafone Ireland Marketing Limited, with an address in Leopardstown, Dublin, was set up to promote the Vodafone brand and collect royalty fees from countries excluding the UK and Italy.

In 2009, the year the settlement was made, the subsidiary had a turnover of €402.7m (£343m).

Accounts filed with the Companies Office in Dublin reveal the settlement, but do not state the actual figure.

The Guardian newspaper has claimed that the Irish subsidiary has sent €1bn (£852m) worth of dividends to the low-tax jurisdiction of Luxembourg – profits generated by taking advantage of Ireland's low corporation tax rate.

Ireland was forced to defend its tax regime in May after US senators Carl Levin and John McCain claimed Apple was using Ireland to pay little or no tax, albeit through legal means. One Apple subsidiary incorporated in the Republic paid no tax anywhere on $30bn (£19m) of revenue between 2009 and 2012, the senators claimed.

A second incorporated in Ireland paid a tiny fraction – five-hundredths of 1% in 2011, for example – on income of $74bn (£47.2m) over the same period. In 2012 alone, Apple used Ireland to avoid paying $9bn (£5.7bn) in US taxes, said Mr Levin.

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