Rev­enue hits Ana­log De­vices with €43m bill

The Irish Times - Business - - BUSINESS NEWS -

Ana­log De­vices is bat­tling a tax de­mand from the Rev­enue Com­mis­sion­ers, in a case that the US chip­maker says could ma­te­ri­ally hurt its earn­ings.

Rev­enue of­fi­cials told the com­pany, an Ap­ple sup­plier, that its Ir­ish tax-res­i­dent unit owed about €43 mil­lion re­lat­ing to in­ter­com­pany trans­fers stretch­ing back to 2013, Ana­log said in fil­ings last month.

This as­sess­ment ex­cludes any penal­ties and in­ter­est, it said. The com­pany’s shares dropped as much as 3.4 per cent on Wed­nes­day.

Rev­enue claims that Ana­log’s Ir­ish en­tity failed to con­form to re­cent OECD trans­fer pric­ing guide­lines.

“The com­pany strongly dis­agrees with the as­sess­ment and main­tains that its trans­fer pric­ing is ap­pro­pri­ate,” it said, while not­ing it had not recorded any ad­di­tional tax li­a­bil­ity re­lated to the 2013 tax year or any other pe­ri­ods.


Ana­log said it would “vig­or­ously de­fend” its po­si­tion and is ap­peal­ing the de­ci­sion. It warned that if it were to lose the case, “such as­sess­ment and any po­ten­tial im­pact re­lated to years sub­se­quent to 2013 could have a ma­te­rial un­favourable im­pact”.

Rev­enue said it would not com­ment on in­di­vid­ual cases.

An Ana­log spokes­woman con­firmed the case was on­go­ing, and said the com­pany would not com­ment beyond that.

Ana­log is tak­ing the case to the Tax Ap­peals Com­mis­sion.

In­ter­na­tional tax au­thor­i­ties are keen to limit trans­ac­tions among cor­po­rate sub­sidiaries, which are some­times seen as ways to shift in­come to low-tax ju­ris­dic­tions.

The State’s cor­po­rate tax rate is 12.5 per cent, while in the US pres­i­dent Don­ald Trump’s ad­min­is­tra­tion has cut the fed­eral rate to 21 per cent.

Es­tab­lished in Ire­land in 1977, Ana­log em­ploys about 1,200 peo­ple at its orig­i­nal and main hub in Lim­er­ick, in ad­di­tion to its de­sign fa­cil­ity in Cork.

Cork is also a base for the Ir­ish op­er­a­tion of Ap­ple, which is fight­ing a Euro­pean Com­mis­sion or­der to pay €13 bil­lion in tax ar­rears to the State.

Ana­log spe­cialises in data con­vert­ers and chips that trans­late real-world things – such as a but­ton press or sound – into elec­tronic sig­nals. Last month, it said its ef­fec­tive tax rate was be­low its blended US fed­eral statu­tory rate of 23.4 per cent. “This is pri­mar­ily due to lower statu­tory tax rates ap­pli­ca­ble to our op­er­a­tions in the for­eign ju­ris­dic­tions in which we earn in­come,” it said. – Bloomberg

‘‘ Ana­log said its ef­fec­tive tax rate was be­low its blended US fed­eral statu­tory rate of 23.4 per cent

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