Taoiseach Enda Kenny speaks at a business conference in Dublin last week.

The reaction of Taoiseach (Prime Minister) Enda Kenny, senior politicians and the IDA boss to the accusation in the U.S. congressional hearing last week that Ireland is a tax haven reminded me of the famous Jack Nicholson line: "You can't handle the truth." 

Our leaders can deny it all they want, but the simple truth is that they've been caught with their trousers down.  Ireland is indeed a tax haven, and it's the tax haven of choice for some of the biggest high tech companies in the world like Apple and Google, most of which are American.

We may not have the sunshine they have in tax havens like the Cayman Islands, but we're an island and we're a tax haven even if we don't have palm trees leaning over the beaches. 

As Apple admitted, they had agreed an effective tax rate of two percent with Ireland when they first set up here over 30 years ago.  And the tax they have actually paid in Ireland in recent years has been a fraction of one percent. 

Okay, so it's not zero.  But what can you call a country that facilitates tax avoidance on that scale except a tax haven?  It's a long way off our declared 12.5 percent corporation tax rate and it's certainly a long way off the 35 percent corporation tax rate in the U.S. 

So, yes, we're a tax haven.  We may not like the connotations that this has with dirty money and criminality, and we may not be the first choice for dodgy people trying to hide money (although it did emerge last weekend that one of the biggest online porn groups in the world is opening an office here for tax reasons).  

But the revelation has blown out of the water our usual publicity about why so many high tech companies set up here.  We've always said it is because of our highly educated young workforce, our agreeable climate, our open economy, our position on the doorstep of the European market, as well as our 12.5 percent corporation tax rate.  We have always insisted that our 12.5 percent rate was "just one of a number of factors" that  enticed these companies here. 

We now know that this is horse manure. 

What has now been revealed is that some of the biggest foreign companies in Ireland were paying only a tiny fraction of the 12.5 percent rate, and that the real reason so many of them have come here is because we help them to minimize their tax down to virtually nothing.  Like any other tax haven. 

Rather than the tax haven label, a better description of Ireland is the one used by a leading U.K. tax expert last week when he characterized us as "a doormat state."  This is a state where foreign companies can wipe their feet of enormous tax obligations in return for a small fee.

Fearful of the fallout from what has emerged at the hearings in the U.S., Kenny and the Minister for Finance Michael Noonan were working overtime last week trying to deny the undeniable. 

Kenny was making statements on our tax regime in that forceful way he uses when he's under pressure, a tone that sounds almost like a threat. 

"Ireland is not a tax haven.  Our corporate tax rate on taxable profits is 12.5 percent and there are no exceptions to that.   We do not do special tax rate deals with companies,” he said.  And there was a lot more of this.

So if Kenny is saying the rate is 12.5 percent and there are no exceptions, and Apple is saying that they pay only one or two percent, surely someone must be lying?  Well, no.

Notice those two little words Enda used -- "taxable profits."  What that means is that tax is not charged on all account profits, just on taxable profits, the amount of profit left after all kinds of concessions, deductions and allowances. 

So you can have a headline corporation tax rate of 12.5 percent but you can end up paying almost nothing if you are allowed to make lots of these deductions.   And that is what Ireland has been doing.  

When we are encouraging companies like Google, Apple, Facebook, Twitter and all the rest of them to come here we explain to them how to work the system.  We may even tailor the system for them.  

Kenny can claim in that outraged and aggrieved tone he uses that Ireland's rate is 12.5 percent and he is not telling lies.  But there's a lot more to our tax system for foreign companies than just the headline rate.  

That's just for starters.   Before we even get to the point of how foreign companies reduce their tax bills in Ireland, there are many other ways they can work the anomalies and contradictions between the tax codes in different countries to minimize their liability.  

Some of these are so basic and blatant they are almost unbelievable.  For example, the U.S. code says that companies must pay tax wherever they are incorporated. 

But the Irish code says that companies must pay tax wherever they are managed and controlled. We
learned last week that this has allowed a good deal of Apple's business to operate in a vacuum between the two codes and end up paying nothing.  

Typically, these big, high tech companies break up their business into smaller companies which separately do manufacturing, marketing, sales, customer service and other functions, and these companies may be in different countries with different tax codes.  The intellectual property rights will always be in a separate company.  

If the intellectual property rights are held in a low tax country like Ireland, the huge profits made elsewhere on products based on the intellectual property can be minimized by charging a great deal for these rights.  

Or if sales and customer service companies in Ireland are producing high profits, they can be minimized by charging the Irish arm a high rate for other aspects of the business based in another country.  

This is called transfer pricing, and it's a basic principle of the tax manipulation carried out by these big multi-national corporations with their armies of lawyers and tax experts.  Some of it is legitimate, but it is wide open to manipulation.    

That is the way it's done at its simplest.  But the same principle is used in much more complex structures across the international business of most of the world's biggest multinationals, including those with operations in Ireland. 

The scale of what is going on -- and the amount of tax being avoided -- is mind blowing. What we learned from the hearing in Congress last week was that Apple had paid little or no tax on $74 billion in foreign sales of its products over the past four years, largely because of the way it can structure business through Ireland.

One of its Irish companies, Apple Operations International, has a brass plate here and nothing else; it received $30 billion in income between 2009 and 2011.  

That a company like Apple which promotes an image of integrity and responsibility behaves in such a way is shameful.  That a country like Ireland facilitates this behavior is also shameful, even it means a few thousand jobs here.

And from Ireland's perspective, of course, the jobs are the primary concern, not just in Apple but in dozens of other foreign companies here. There are now around 150,000 jobs involved in multinationals located here; there used to be over 200,000.  

The jobs are so important to us that they have made us accomplices in this international tax avoidance scam by multi-nationals, the majority of which originally are American.   

One argument is that if we didn't do it the jobs would simply go elsewhere, because other countries are playing this game as well.  

And another argument is that the Americans have only themselves to blame for their failure to collect tax revenue that rightly should be paid in the U.S., where many of these high tech businesses began and were developed.   

The American tax code is such that as long as these companies keep their profits overseas they don't have to pay U.S. tax on them.  The result is that around $1.5 trillion in retained profits is now held overseas by U.S. companies, money that could be creating jobs back in the U.S., and the tax on which could be easing the deficit problem in the U.S. 

So why does the U.S. not do something about it?  Ask the Republicans in Congress. 

Here in Ireland, what this has also exposed is the limitation of our decades old policy of attracting FDI (Foreign Direct Investment) here by all kinds of incentives.   We are hopelessly dependent on the jobs provided by these multinationals who set up here and who can up sticks and take off elsewhere if we upset them by charging them too much tax. 

Why can't we develop more home grown industry to provide jobs?  We manage it in some areas, like the agri-food sector.  We have small software companies which are impressive.   But overall we depend on outsiders to come here and provide jobs for us. 

We pretend they come here because we're so bright and well educated and so damn likable (well, we're Irish!).  

But the reality has now been exposed.  We're a tax haven without the palm trees.  That's the main reason they come.