Marian Harkin (Sligo-Leitrim, Independent) | Oireachtas source

I congratulate the Leas-Cheann Comhairle on her new role. She described herself yesterday as a bean láidir. I would like to add that she is a bean láidir ón iarthar. Déanaim comhghairdeas léi. I also congratulate the Minister, Deputy Donohoe, on his appointment as chair of the Eurogroup. It is certainly a very prestigious appointment for him personally and for Ireland. I suspect the issue we are discussing here may be raised at some point in those meetings.

As far as I am concerned, there are two aspects to this situation. It is complex. First there is the judgment in itself, but second there is the wider implication of tax justice at a national and global level. While those two issues are connected, they are not the same in this instance. The judgment itself is quite definitive in that it says the European Commission did not succeed in showing that Irish tax authorities had granted Apple Sales International, ASI, and Apple Operations Europe, AOE, a selective advantage. It also delivered a stinging blow in that the European Commission must pay all costs.

Apple and Ireland defended the case on nine grounds and some of them were successful. The Commission failed to show that state aid rules were breached. They also wrongly attributed the €13 billion to the ASI and AOE branches so the story of this pot of gold, as my colleague, Deputy Mattie McGrath, referred to, was just that. Even if the Commission had found otherwise, that money would not have come here. A portion of it might have but it was not ours as such.

The Commission was also wrong when it came to Irish tax law. It is worth noting that the European Commission in its statements at the time of bringing its case was highly political. Margrethe Vestager spoke of illegal tax benefits to Apple of up to €13 billion. That is a very strong statement and a very political one, especially from a high-profile Commissioner like Vestager, who has such a global reach. It was a serious blow. The stakes were high. In this, the Commission got it wrong. It is not wrong to say that Apple avoided paying tax by using various tax mechanisms in Ireland. It did, as we know. We are now afraid of the double Irish, for example, and for good reason. That kind of system facilitated multinationals to avoid paying corporation tax. However, the Commission was wrong to say that competition law and state aid rules could be used to prevent this from happening. The Commission was right in saying that Apple paid an effective tax rate of 1% on its European profits in 2003, but it was wrong in saying that these profits could be attributed to the two Irish subsidiaries. Ireland did not act illegally in this instance. The Minister stated that there is a mismatch in international tax law and that state aid law does not create an appropriate mechanism to tackle this issue. That is true. However, it is also true that our tax laws allowed Apple to evade paying tax. The premise always was that Apple at some point would eventually repatriate its profits to the US and pay tax there. The truth is that no taxpayer in this country could behave in that way, saying we will pay tax on the never-never in the future, whenever we get around to it.

Ireland is a small country, of course, and we have to look to our competitive advantages. Like many other small European countries, including the Netherlands and Switzerland, we have used loopholes in international tax law to facilitate large multinationals to evade paying their taxes, at least for now, on the never-never. The Revenue in Ireland has seen to it that the corporate tax receipts in Ireland are substantial, and indeed by European standards our per capitatake on corporate tax is one of the highest. That is our dilemma. We have a system that delivers significant corporate tax revenues to Ireland, no matter what people say. However, our tax laws still allow multinationals to evade paying tax. The double Irish comes to an end at the end of 2020, and in truth it should have come to an end sooner. Our new tax arrangements allow multinationals to receive capital allowances for expenditure on intangible assets such as intellectual property. Given that most of the large multinationals are now digital companies, this mechanism may be used to evade paying their fair share of tax. That is why the EU is pursuing a digital tax. We have worked with the OECD but the US is pulling out, so that is not working.

Initially I said that this is a political issue because tax justice is a political issue. I believe Ireland will have to be more proactive in ensuring large multinationals pay their fair share of tax. We cannot be responsible for fixing the international tax system but we must work with our European partners and let Europe take the lead on tax justice. We need to reassess. We need to protect our revenues but we also need to find ways with our European partners to tax multinationals. The common consolidated corporate tax base, CCCTB, would not work for us because of the formula used to decide where the tax was paid. There would be more tax paid but we would get less of it.

The country-specific recommendations from the Commission for the past two years tell us that we have to deal with aggressive tax planning. As I said, this is complex. We have to protect our revenues and at the same time promote tax justice. Perhaps, in that context, the suggestion from the Labour Party that a standing commission on taxation could play a significant role in teasing out these issues and arriving at an equitable system is something that we should consider.

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