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.