IRELAND: U2 rattled by claims of tax dodging

The band that loves to rail against global corporate malfeasance is being criticized at home over allegations of tax dodging.

U2,
whose new album, "No Line on the Horizon," is being released Tuesday in
the United States, has lately found itself the focus of protests in
Dublin over global tax avoidance.

The controversy stems from
2006, when the band moved its publishing company to the Netherlands to
avoid a potential multi-million-euro tax bill after the Irish
government capped artists' tax-free earnings at €250,000 ($315,000). By
basing its operations in Amsterdam, U2 is only liable for a nominal
royalty tax.

"U2 might publicly support development aid to
Africa, but it is taking advantage of the same tax avoidance schemes
that multinational companies use to deprive developing countries of
important revenue," says Hans Zomer, director of Dóchas, an association
of Irish development organizations. A report by Christian Aid, titled
"Death and Taxes," estimates that developing countries lose $160
billion per year through multinational corporations' shifting of
profits to avoid tax.

Locals might be proud of U2's global reach
- most recently at the "We Are One" concert before President Barack
Obama's inauguration, when lead singer Bono referred to his thrill at
"four Irish boys from the north side of Dublin" honoring the US
president-elect. But as the Irish budget deficit increases daily, there
is also resentment - even among its most diehard fans - that the band
is not paying its fair share.

"They are living in Ireland, so
they should pay Irish taxes, especially now that the country needs the
money," says Dave Coughlan, one of hundreds lining up in Dublin's
Grafton Street last Thursday night for the first copies of U2's new
album, which was released Friday.

Bono and fellow band member The
Edge broke their silence on the issue last week in an exclusive
interview in The Irish Times newspaper. They pointed out that the band
pays millions of dollars in taxes worldwide and is fully tax compliant.

"The
thing that stung us was the accusation of hypocrisy for my work as an
activist," Bono said in the interview. He claimed that Ireland's Celtic
Tiger boom was partly fueled by government tax breaks and sweeteners in
the financial services sector.

"What's actually hypocritical is the idea that then you couldn't use a financial services center in Holland," Bono said.

• 104 Globalization
• 180 Media & Entertainment
• 208 Regulation