U2 frontman Bono has defended Ireland’s tax laws, saying that they have resulted in prosperity for the Irish people.

The European Union is pressuring Ireland to eliminate the tax loophole, which has allowed companies to significantly reduce their tax bill by shifting most of their taxable income to an offshore tax haven.

“We are a tiny little country; we don’t have scale, and our version of scale is to be innovative and to be clever, and tax competitiveness has brought our country the only prosperity we’ve known,” the singer said in an interview with the Observer.

“That’s how we got these companies here … We don’t have natural resources, we have to be able to attract people.”

Calling himself a “natural social democrat” Bono said Ireland benefited from "more hospitals and firemen and teachers because of [our tax] policies.”

“As a person who's spent nearly 30 years fighting to get people out of poverty, it was somewhat humbling to realize that commerce played a bigger job than development," he said.

"I'd say that's my biggest transformation in 10 years: understanding the power of commerce to make or break lives, and that it cannot be given into as the dominating force in our lives."