Dáil debates

Wednesday, 7 September 2016

Government Appeal of European Commission Decision on State Aid to Apple: Motion

 

10:55 am

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The Commission says that the Revenue rulings endorsed a way to establish taxable profits for the two Irish incorporated, but non-resident companies of the Apple group that "did not correspond to economic reality". This begs the obvious question - where is the economic reality in a finding that requires Apple to pay tax on all of its profits outside of the Americas to Ireland? The truth is that there is no economic logic to this. That is why the Commission has opened the door to other countries to claim their share.

Ireland's strong economic relationship with the US is also central to this debate and should not be forgotten. US companies directly employ more than 140,000 people in Ireland and a further 100,000 indirectly. In 2015, 80% of all corporation tax in Ireland was paid by the multinational sector. The US is furious at the Commission's decision, as its Administration believes that these profits would ultimately be subject to US corporation tax upon repatriation.

We must take the long view. We want to live in a country that continues to attract the world's top companies. Ireland is a world leader in sectors such as ICT, pharma, financial services and life sciences. This was not an easy achievement and it must be protected.

We respect IDA Ireland and support it in its work. It has a difficult task to do in a landscape that is becoming more competitive by the day. The headlines in the UK newspapers on the day following the Apple ruling, inviting multinationals to move to the UK, will not have gone unnoticed by IDA Ireland and should not go unnoticed by us. Listening to the chief executive of IDA Ireland, Mr. Martin Shanahan, on "Morning Ireland" on Monday one got a clear sense of the seriousness of this issue for Ireland. We have achieved success in inward investment that makes us the envy of Europe. Let us not forget that. Corporation tax and certainty around it are vital ingredients in that inward investment offering and we should not kid ourselves by thinking otherwise.

Companies operating in Ireland should pay, and do pay, 12.5% corporation tax on profits that are properly taxable in Ireland in accordance with Irish law. We agree that profits should not go untaxed anywhere. Multinationals should pay their fair share of tax. Profits should be taxed where the economic activity that generated the profits took place. This is what lies at the heart of the recent reforms in how multinational profits are taxed internationally. Ireland should continue to move in tandem with other countries to implement the OECD's base erosion and profit shifting, BEPS, reforms. We cannot achieve tax justice on our own but we should continue to play our part through these international reforms.

In terms of domestic politics, it is striking that the Commission's finding on Apple has been seized upon by those who would normally disagree with every word from the Commission. Let us be honest, Ireland's corporation tax regime has been targeted by Europe on several occasions and in several guises. Powerful member states eyed our corporation tax rate during some of the lowest points of the economic crisis in this country. Ireland was forced to secure binding legal safeguards for its corporation tax rate during treaty negotiations. The European Commission has tried and so far failed to secure agreement in the common consolidated corporate tax base, CCCTB, and will come at it again in the coming months.

I believe the Commission is now encroaching on our national sovereignty in the area of corporation tax through its mandate over competition policy. The Government's lack of preparedness for this decision deserves criticism and will be criticised in today's debate but my focus is on the vital issue of the national interests at stake. It must be stated in this debate that Apple's presence in Ireland is not brass plate in nature. Apple employs almost 6,000 people in Ireland and is continuing to invest here. Apple made the decision to locate in Cork in the dark economic times of 1980, when jobs were being lost hand over fist in our economy and when large companies were not exactly queuing up to invest in Ireland. That investment and ongoing investment by Apple and other companies is welcome.

Recent announcements by Apple include a new facility in Cork which will provide over 1,000 new jobs and an €850 million investment in a data centre in Galway. Since 2012, Apple has invested almost €150 million in Cork, supporting 2,500 additional jobs locally and providing services such as facilities, catering, security, recruitment, printing, fulfilment and maintenance. We welcome Apple's commitment to Ireland. Long may it continue. If we want to be in a position to win similar investment opportunities in the future, now is not the time to equivocate. There is too much at stake. We must hold firm and defend our right as a sovereign nation to set our own corporation tax policy and to defend the capacity and competence of our independent Revenue Commissioners to apply that policy in a fair and consistent manner.

I look forward to the remainder of the debate and, hopefully, a decisive vote in favour of the motion to repeal the ruling.

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