Discussions in the US over the tax practices of multinational corporations (MNCs) are "gridlocked", attendees at a seminar at Trinity College Dublin heard yesterday.

Addressing the aggressive tax planning practices of MNCs, Frank Barry, professor of international business and development at the school of business, TCD, said the US's efforts to require US MNCs to pay taxes on all their profits stretches back to 1962. However despite recent discussions at the Senate's subcommittee on topics such as Apple's tax practices, and efforts by the Obama administration to amend the current regime, Mr Barry said that the US authorities have an interest in continuing to allow MNCs to retain their profits overseas, because it gives the US a form of "soft power" in the jurisdictions in which US MNCs invest.

Treaty
The presentation took place as part of the Trinity International Development Initiative, and Mr Barry also illustrated how MNCs can take advantage of a clause in the Ireland-Zambia treaty. MNCs have used this treaty to route loans through Ireland, despite being borrowed in the Zambian currency and repaid via a bank account held by an Irish company in Zambia. According to Mr Barry, such a structure, which ActionAid earlier this year said in a report was used by Associated British Foods, prevents the Zambian government from imposing withholding taxes on such interest payments.