Dr. Jim Stewart:

There have already been a number of other cases - there will be more - in which profits have been reallocated. I mentioned the Italian case and the Commission mentioned another, but there are likely to be further cases in which profits will be reallocated.

It is difficult to decide on how profit should be allocated within a firm such as Apple. The profits do not arise just from intellectual property, IP. The Cork branches had entered into a contract with Apple so that they have the licence to use that IP. It also results from organisational competence where the Chinese sales of Apple computers are effectively routed partly through Apple Sales International, ASI, in Cork for a few weeks, a few months and then sold on. The profits accrue in Cork.

It relates to other aspects, that is, market power. What market power means is that Apple can charge superior prices for its products. I think the profits resulting from the price of the product should accrue in the countries where the sales take place. This is the reason I am in favour of a common consolidated corporate tax base, CCCTB. I do not think that arm's length transfer pricing can work where most trade is intra-firm. There must be other issues involved. It is a difficult in respect of intra-firm transfer pricing.