Enda Kenny (Mayo, Fine Gael) | Oireachtas source

I met Governor Brown when he called here a couple of years ago and we had a discussion about the changes taking place in California and the economic difficulties he faced as Governor, not for his first time in office. He had to make some very difficult decisions about the economic position of his state, one of the strongest economies in the world.

The Governor is very well versed in Ireland and its situation. He is acutely aware of the number of American companies that have invested here and what that means, particularly those from Silicon Valley and other locations in his own state, which have substantial workforces here, as distinct from the perception that they are brass-plate entities. He did make his comment, as the Deputy says, in a knockabout fashion about the extent of US investment in Ireland. That was repeated by some European leaders at various meetings I have attended recently about the attractiveness of this country as a location for foreign direct investment.

The well-known case that was the subject of some discussions in the US Senate concerning Apple, which employs over 4,000 highly-paid skilled workers in Cork, with a strong innovative ethic, was what highlighted this matter in the beginning. On 11 June this year the European Commission opened formal state aid investigations into certain multinational companies in several EU member states. In respect of Ireland, the House is aware that the Commission focused on advanced opinions provided to the Apple corporation several years ago which addressed the calculation of the taxable base of profits in the company. That was a perfectly normal procedure. More recently, the Commission published the formal letter it had issued in June to the Irish authorities, setting out the opening decision in this case. This is the next routine procedural step in the state aid investigation. It is intended to give interested parties the opportunity to submit their comments directly to the Commission.

The Commission has not formally decided that state aid is involved here. It is formally examining the case. The State responded to the detailed letter and addressed the concerns and a number of misunderstandings that were contained in the opening letter of decision issued by the Commission. The Irish response clarified several important issues about the applicable tax law in this case and explained that the company concerned did not receive selective treatment and was taxed fully in accordance with the law.

The inquiry relates to a technical tax issue in respect of one company. It does not relate to Ireland’s corporation tax rate or to the Irish corporate tax system generally. The Commission is not investigating the Irish tax system, the 12.5% corporation tax rate or that there was a special tax rate deal done with the company involved. Last year the Government abolished the stateless concept in the budget because of perception and reputational damage and has followed through this year with the abolition of the so-called “double Irish”. The Government has set out its position which has been accepted by countries in the Organisation for Economic Cooperation and Development, OECD, area, by the American Chamber of Commerce, many of the financial houses and entities here as being the right and proper thing to do and will now move to the next step, the consultations necessary to set up an appropriate information box which would allow for the incorporation of intellectual property here at an appropriate rate of tax. That will be of benefit to Ireland, making it an even stronger location for investment, an even more competitive entity and therefore more attractive for investment from abroad.

These are some of the areas I discussed with Governor Brown. He is well-versed in the history of Ireland and the Irish connections with the United States and California. It might be some time before the European Commission makes its decision on the question of state aid. The Government is very happy to defend this and it is happy that no state aid applies in the case on which the Commission has issued its formal opening letter.

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