Declan Breathnach (Louth, Fianna Fail) | Oireachtas source

This appeal will decide once and for all if the finding of the European Commission confirms whether the activities in question were tax avoidance or loopholes that need to be closed. There should be no preferential treatment of any company or corporate entity. The Revenue Commissioners’ contention is that there was no preference shown in applying the law and that the profits which could be taxed in Ireland were taxed here in accordance with the law at the time. On the ruling, the fact that Ireland is required by law to recover the alleged State aid from the company pending the outcome of such an appeal is to be welcomed and should have been declared by the Minister a week or ten days ago.

This would involve the recovery of additional tax payments over a ten-year period in accordance with the methodology set out in the Commission’s decision. The recovery sums must be placed in a ring-fenced escrow account. If the appeal is successful, the money will be repaid to Apple but if is unsuccessful and the Commission’s decision is upheld, then the sum will be paid to whoever is deemed by the Commission to be entitled to it. Estimates of how much Ireland would get are very much speculative at this point.

Ireland has been working hard on mismatches in the global tax system and agreed to adopt the European Commission’s anti-tax avoidance directive in July 2016. The European Commission states that Ireland is responsible for 60% of Apple’s tax liability. However, the tax liability should be in proportion to the number of people employed. Apple has staff in many countries around Europe. It has in excess of 6,500 in the UK, 2,400 in France, 2,200 in Germany and 5,500 in Ireland. It is obvious that the actual liability would be closer to €5 billion, although that is speculative. The tax liability should be based on where the workers are, the products produced and the value of trade in each region. Under Irish law, non-resident companies are chargeable to Irish corporation tax only on profits attributable to their Irish branches by reference to the facts and circumstances in each case. The Revenue Commissioners have reassured us repeatedly that this is what happened in the case of the Apple companies. Apple has in excess of 4,700 suppliers around Europe, with 23 European countries manufacturing parts. While 5,500 are directly employed by Apple here in Ireland, there are approximately another 2,500 jobs that exist because of Apple, such as security, catering and recruitment. Ireland has around 38,000 app developers, many of which are there directly thanks to Apple and Apple products, with huge growth in the app development sector since 2008.

Apple should pay its taxes wherever they are owed. It is widely recognised that the existing international tax rules were designed 80 years ago and that the international tax framework has not kept pace with global and digitally driven businesses. A global effort is needed to fix these issues. The decision to appeal the ruling of the European Commission is the right one. Why? Not to do so is tantamount to accepting that the Government and Revenue were doing something illegal. The Revenue Commissioners have been fully transparent at all times in applying Irish tax law to Apple Operations Europe. There was no breach of Irish law and no underhand deals. If the appeal is upheld, then whatever money is due to Ireland will be spent where it is needed. As I said earlier, we do not know that figure yet. According to European Commissioner for Competition, Margrethe Vestager, if other countries were to require Apple to pay more tax on profits in their countries over the same period under their own taxation rules, then the amount to be recovered by Ireland would be much lower. The EU Commission decision is in conflict with global thinking on this issue.

There is also an interesting view from the US Treasury on how “impermissible actions” should be viewed in that there should be no retrospective recovery of “avoided tax”. It praises the appeal. It is all very well for certain people to trot out the populist approach of “take the money and run”. This is like chasing fool’s gold. I listened to Deputy Fitzmaurice talk about the golden egg and the goose. A more appropriate analogy is that there is no point in killing the golden goose to grab an imaginary egg.

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