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Ireland is to close a tax loophole used by Apple

Apple storefront
Image caption Apple has been criticised for its tax arrangements

Ireland plans to shut a tax arrangement used by Apple to shelter $40bn (£25bn) from taxation.

Apple, and other firms, have been able to funnel profits into Irish subsidiaries or "ghost companies" that had no declared tax residency anywhere in the world.

On Tuesday, the Irish government said it planned to make it illegal for a company to have no tax domicile.

But firms would be able to nominate any country as their tax residence.

That includes countries such as Bermuda which offer zero tax rates.

Because of that, tax experts say that the change announced on Tuesday will not make much difference to the amount of tax paid by Apple.

Google and Microsoft have Irish subsidiaries that legally channel money to Bermuda where they pay zero tax.

But Ireland's Finance Minister Michael Noonan said his country was committed to reform.

"Let me be crystal clear. Ireland wants to be part of the solution to this global tax challenge, not part of the problem," he said.

Back in May, a US Senate committee said Apple had used "a complex web of offshore entities" to avoid paying billions of dollars in US income taxes.

Google, Microsoft and Apple say they follow tax rules in every country where they operate.

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