DUBLIN, July 25 Ireland defended its tax regime
on Friday against criticism from U.S. President Barack Obama,
insisting that it does not seek to entice U.S. companies to make
the country its domicile to lower their tax bills.
Singling out Ireland for criticism, Obama on Thursday
hammered U.S. companies that avoid federal taxes by shifting
their tax domiciles overseas and called on Congress to pass a
bill to curb such deals, known as "inversions".
Investment from multinationals, whose employees account for
some 10 percent of Ireland's workforce, is a central plank of
Irish economic policy and the head of the country's investment
agency has warned that inversions could damage its reputation.
"Ireland has a very robust strategy for attracting foreign
companies who invest substantively, put real investment into the
ground and provide employment," enterprise minister Richard
Bruton told reporters.
"That is very different from what has been discussed in
recent days around tax inversions. Ireland does not promote such
investments and nor do we want such investments. They actually
cost us money and we derive no benefit from them."
"Inversion" deals occur when a U.S. company acquires or sets
up a foreign company, then moves its U.S. tax domicile to the
foreign company and its lower-tax home country, most often
Ireland, Britain, Switzerland or the Netherlands.
Inversions are still rare, but are becoming more common and
deals like Medtronic Inc's $42.9 billion takeover of
Irish-domiciled Covidien led to a near six-fold rise in
the value of Irish-based M&A in the first half of the year.
Bruton said Ireland derived no benefit from inversions and
that it was an issue that needed to be fixed but could only be
resolved by changes to the U.S. tax code.
Several Democrats have offered bills to curb inversions,
calling for a rule change that would deem any company with half
of its business in the United States to be U.S.-domiciled.
But no new law is likely to result as long as Republicans
contend that inversion rules need to be part of a broader
overhaul of the tax code, policy analysts say.
(Reporting by Padraic Halpin; Editing by Ruth Pitchford)