Belfast Telegraph

European Commission to probe Republic's 'sweetheart' US taxes

thomas molloy & ailish o'hora

Proposals: Irish Finance Minister Michael Noonan wants to change laws allowing companies to avoid tax

THE European Commission has begun an investigation into allegations the Republic offered special "sweetheart" tax deals to US multinationals.

It is understood the probe will begin looking at any special tax deals offered by Ireland, the Netherlands and Luxembourg.

The Commission said the investigation is at a very early stage.

The new probe follows massive controversy in the United States, Britain, Germany and France about the low taxes charged on US firms with operations in the Republic. A finding against Ireland could mean US companies here would have to pay back billions in taxes.

News of the investigation first emerged in a report in the Financial Times. It came as the Republic's Finance Minister Michael Noonan told a group of business people that there would have to be changes to laws that allow foreign companies to avoid paying taxes in other countries.

While insisting the 12.5% rate of corporate tax here was not up for discussion, Mr Noonan conceded problem in firms reporting profits in other jurisdictions.

Attracting foreign companies to the Republic has been the cornerstone of successive Irish governments' economic policy, but it angers other countries that lose billions in unpaid taxes.

A significant controversy erupted earlier this year when Apple told a US Senate committee investigating corporate tax avoidance that it had a deal with Ireland, sparking outrage in Washington.

Apple later retreated from the original story, but never totally denied the claim of a special tax deal with the Irish government.

Belfast Telegraph