Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Ar dtús báire, gabhaim comhghairdeas leis an Leas-Cheann Comhairle agus í i mbun a céad dualgais sa phost. Is lá iontach é dár dtír agus don Dáil seo ós rud é go bhfuil an chéad bhean, agus Gaeilgeoir líofa, tofa mar Leas-Cheann Comhairle na Dála seo.

On 15 July, the European General Court ruled that the competition commission did not succeed in showing that the requisite legal standard that Apple Sales Ireland, ASI, and Apple Operations Europe, AOE, had been granted illegal state aid through selective tax advantages. It is essential to understand what the ruling of the European General Court did say, what it did not say and what were, and still are, the undisputed facts of the case. The Commission's argument centred on two tax agreements between Revenue and two Irish incorporated Apple subsidiaries, Apple Sales International and Apple Operations Europe. The ruling of the European General Court did not dispute or impugn the fact that the two Revenue rulings, the first in 1991 and the second in 2007, allowed ASI and AOE to attribute their profits to a head office, a shell corporate structure that existed only on paper with no staff whatsoever.

These tax rulings allowed Apple's Irish subsidiary to record European profits of €16 billion in 2011 with only €50 million taxable in Ireland, which is an effective tax rate of 0.03%. These are facts that the European General Court has not disputed or challenged. This arrangement was disclosed by Apple's head of tax operations, Phillip Bullock, at the 2013 hearing of the US Senate Permanent Subcommittee on Investigations as it investigated the onshore operations of Apple. At that hearing, Mr. Bullock confirmed in sworn testimony that the income earned by ASI and AOE was subject to tax "in accordance with the agreement that we have with Ireland", which he confirmed was fixed at a maximum of 2%. Again, these are facts that the General Court did not dispute or challenge.

The fact that Apple's Irish subsidiary paid less than 0.05% in tax is not something this Government should claim as a victory. The Commission lost this case. That does not mean that Ireland has won. Let us start with the Commission. The Commission argued that because the corporate structure in question, which paid less than 0.05% in tax due to an arrangement with Revenue was only on paper with no staff, the profits attributed to it should not have been attributed to that entity. By implication, the Commission argued that the profits should therefore have been attributed to Apple's Irish branches, which were tax resident. The European General Court ruled that it was not enough to show that these profits should not have been attributed to the ghost entity. Instead, the Commission had to demonstrate that the profits should be attributed to the Irish branches, something the court ruled that the Commission failed to do.

The General Court of the European Union found that while the Commission successfully demonstrated that Revenue was often arbitrary and inconsistent in determining where profit should be attributed, this did not prove that these errors provided a selective advantage to Apple. These were the findings of the court. It did not rule that Apple did not receive illegal State aid. That is a ruling it could have made but did not. Instead, it found that the Commission failed to demonstrate that illegal state aid was granted. This distinction matters. The ruling of the court is not likely to be the end of this case. In reality, this is probably just half-time. If the Commission appeals the ruling to the Court of Justice, that court may overturn the findings of the General Court. There is precedent for all of this, especially in state aid cases concerning tax advantage. In 2016, the Court of Justice annulled the General Court's judgment regarding selective tax advantages enjoyed by Santander. In 2018, the Court of Justice overruled the General Court's judgment in a case concerning a Spanish tax lease system.

This State's tax dealings with Apple may be before the Court of Justice before long. At what cost? The judgment of the General Court did not dispute the fact that an Irish subsidiary of Apple paid an effective tax rate of less than 0.05% for more than a decade. This is not a victory for Ireland. Far from it. This has put the spotlight of the Commission upon our tax affairs and strengthened the resolve of some within the Commission to encroach upon what was never at stake in this case; the right to set our own corporate tax rate consistently and fairly.

The issue in this case was never a corporate tax rate of 12.5%, nor was it our tax sovereignty. The Government knew this but justified its appeal of the Commission's original findings by hiding behind this dishonest argument. However, as a result of this case, the appeal and the agreement between Revenue and Apple allowing the company to pay less than 0.05% in tax, our reputation is tarnished and our tax sovereignty is in doubt. That is not a victory for Ireland. Some on the Government benches have used the results of this ruling to attack Sinn Féin, instead of dealing with the facts and consequences of the agreements made between Apple and Revenue in 1991 and 2007.

I will conclude by putting on the record a robust statement on the Government's appeal of the tax ruling made in September 2016. While the Government's decision to appeal the ruling is not surprising, the Cabinet's explanation of that decision is clearly contradictory. On the one hand the Government is saying it will defend a situation in which the richest company in the world was paying 0.05% tax on profits. On the other hand it says that Ireland will take the lead in the fight for international tax justice. By appealing this decision we are standing by the old regime. The days of massive corporate tax avoidance are coming to an end. We could have started to restore our reputation by admitting that the tax loopholes Apple has availed of were inappropriate. Instead we will be stuck in a legal limbo for the next five years, defending the indefensible while at the same time saying we want to do things in a different way. Those are not my words. They are the words of the Green Party leader, the Minister's Government colleague, the Minister for Communications, Climate Action and Environment, Deputy Eamon Ryan.

This may not be the end of the issue. In the event of the Commission appealing the ruling of the General Court of the European Union to the Court of Justice, Ireland will once again be under the spotlight for all the wrong reasons. Whether or not the Commission appeals the ruling, it is clear that moves will now be made to encroach on what was never at stake in this case, our tax sovereignty. I discussed this with the Minister in the Dáil just last week. That sovereignty is worthy of defence. It cannot be denied that the Government's appeal has likely hastened the attack from our European counterparts.

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