Irish Revenue using with ‘managed and controlled’ rule to turn a blind eye on tax

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US senator Carl Levin, chairman of the subcommittee which has been investigating tax loopholes used by US companies like Microsoft, HP and Apple has a made comment recently about closing these loopholes to help reduce the US deficit.
He summarises some of the research done by the subcommittee indicating how Apple manage to avoid their US tax bill.
“Apple managed what we consider the Holy Grail of offshore tax avoidance, setting up subsidiaries, which hold a large part of the $100 billion in cash Apple holds offshore, that are literally invisible for tax purposes. These subsidiaries are incorporated in Ireland but controlled from the United States. Because U.S. tax law bases tax residency on the place of incorporation, and Irish tax law bases tax residency on where a corporation is controlled, Apple says these subsidiaries are tax resident nowhere and therefore paid almost no corporate income tax to any country. For tax purposes, they’re ghost companies.”  
This is arguably incorrect. The rule about  basing tax residency where a corporation is controlled has to be applied consistently, yet in Ireland it is not.
The following is taken from Jim Stewart’s July 2013 paper on whether Ireland is a tax haven.
The Senate subcommittee Report quotes Apple (2013a, p. 23) as stating that AOI (Apple Operations International) although incorporated in Ireland since 1980 “has not declared a tax residency in Ireland or any other country”. Similarly ASI (Apple Sales International “is incorporated in Ireland, is not a tax resident in the U.S., and does not meet the requirements for tax residency in Ireland” (Senate Subcommittee, 2013b p. 24). Hence it is of interest to examine other available evidence in relation to other subsidiaries that state that they are not located in Ireland for tax purposes.
Earlier research identified a number of companies that used a ‘bi?location strategy. That is that the firm itself or its parent was ‘bi?located’ that is registered in Ireland, but located for
corporate tax purposes in another country (Stewart, 2013, Table 10)7. For example, one firm (Synopsys (Ireland) Ltd.), although showing some corporate tax payments in Ireland in its annual accounts, as in the case of Apple Sales International8, also states in the directors report that “the company operates from its business address, 2 Church St. Hamilton, Bermuda”.
Table (1) shows some features of these subsidiaries who are bi?located9. The first point to note is that some of these companies pay other taxes in Ireland such as VAT. Some companies report employees in Ireland and hence pay employer’s PRSI. Hence it is not correct to state that the “companies concerned are not tax?resident in Ireland” (See letter from Irish Ambassador to the U.S.). They are tax resident in Ireland for some tax purposes, but are not tax resident for corporate tax payments.
A second point is that in most cases secretarial services are provided where the company is located for corporate tax purposes, for example Bermuda. In a number of cases secretarial services are shown in company accounts as being provided by an independent firm. These are not employees of the firms for which those services are provided. Such corporate structure arrangements are often associated with ‘brass plate ‘ or ‘letterbox companies’10.
In other cases, such as Abbott Laboratories Vascular Enterprises, and Google Ireland Holdings, the company secretary is located in the U.S., and in other cases such as McAfee Ireland Holdings and Adobe Software Trading Company, the company secretary is located in Ireland.
This latter point is important because it is difficult to argue that the location of secretarial services offshore is the main criteria for deeming a firm to be “managed and controlled” offshore for corporate tax purposes.
A third point is that in all cases bar one, company records are not located where the company is deemed to be managed and controlled for corporation tax purposes. Company records are either held where the registered office is located or where the parent company is located.
Finally in all cases accounts were audited by a firm based in Ireland. In conclusion the available evidence indicates that these firms are not ‘managed and controlled’ in another jurisdiction, but rather have the same level of management and control as other subsidiaries of MNC’s in Ireland that are subject to Irish corporation tax.
That is, the large cases division of Irish Revenue is choosing which companies it considers to be ‘not tax resident’ in order to allow them avoid paying corporation tax on profits moved through Ireland.