Apple's tax dealings in Ireland "obviously deficient" - Stiglitz

Nobel laureate Joseph Stiglitz has blasted the tax practices of tech giant Apple, telling Bloomberg TV that the US law that allows the company to hold cash abroad is "obviously deficient".

In an interview, Stiglitz said that the fact that Apple can report its huge earnings to a small overseas unit in Ireland is a "fraud".

“Our current tax system encourages companies to keep their money abroad, opens up a vast loophole through what is called the transfer-pricing system that allows them not only to keep their money abroad but, effectively, to escape taxation,” Stiglitz said.

The Nobel prize winning economist is an advisor to Hillary Clinton's presidential campaign, and was responding to a question about the actions of policymakers in correcting the legislation.

Apple is making use of existing gaps in the U.S. tax system to shift its U.S. taxable earnings overseas to low-tax Ireland. Ireland charges one of the lowest corporation tax rates in the developed world at 12.5%.

“Here we have the largest corporation in capitalization not only in America, but in the world, bigger than GM was at its peak, and claiming that most of its profits originate from about a few hundred people working in Ireland -- that’s a fraud,” according to Stiglitz.

He said that the policy should not be allowed to be exploited as it takes jobs away from US citizens.

“A tax law that encourages American firms to keep jobs abroad is wrong, and I think we can get a consensus in America to get that changed.”

The European Commission is currently investigating whether Ireland has gone against the bloc's regulations with regards to Apple's taxable income.