David Axelrod, a former adviser to Barack Obama, admitted that he is not resident for tax purposes in the UK, reports The Telegraph.
Labour confirmed it pays Mr Axelrod in dollars through his consultancy and that he “lives in the US, works in the US and pays taxes in the US”.
While it is unclear how much tax Mr Axelrod will pay in the US, the rates of tax for companies are often significantly lower than for individuals.
The admission comes after Ed Miliband put a crackdown foreigners who pay lower rates of tax at the heart of his election manifesto.
Critics said that there is a “moral case” for Mr Axelrod to pay tax on his consultancy fees in the UK even if he does not need to do so under the law.
It comes amid growing concern among Labour MPs that Mr Axelrod has been “invisible” in the run up to the election despite his high levels of pay.
They complained that he appears to have spent more time promoting his biography – which does not mention Mr Miliband or Labour once – than supporting the party.
One Labour MP said: “I don’t understand what we are getting for the £300,000, I think it is an obscene amount, I don’t think he brings anything to the party. I have heard nothing from him and I don’t want to. He’s totally invisible.”
Speaking at a book launch in Iowa, Mr Axelrod insisted that he is in contact with Mr Miliband “all the time”. He said: “It isn’t always by phone – sometimes we email and sometimes we text.”
Asked whether he pays tax in Britain on his consultancy fees for Labour, Mr Axelrod said: “I don’t do my accounting so I don’t know but I’m not in residence there.”
