Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

It is very interesting to hear this debate and I thank the Senators for having it this evening. The appeal is being prepared by the Office of the Attorney General. She has got two months and ten days to prepare it and then it will be lodged. The procedure in Europe is that there is the European ordinary court, if I might call it that, which will hear the appeal in the first instance, and then there is the European Court of Justice, which is the court of appeal. Whoever loses will, I presume, appeal it in the ordinary court. The process will go on for four years or so, or maybe longer.

There are other issues which arise as well in the European Court of Human Rights in Strasbourg. If one looks at the European Convention on Human Rights, section 6 or section 7 lays down principles of law under which one cannot be the judge, jury and prosecutor in one's own case. It seems to me that the competition Commission arrived at a decision in 2014, had a process which was supposed to be semi-judicial and arrived back at the same position again two years later. Under the European Convention of Human Rights, it seems to me that process is not correct.

One is not allowed to apply civil or criminal law retrospectively under the European Convention of Human Rights. and, yet in this case, criteria which were only agreed in 2010 were applied retrospectively. The case being made is that Ireland is owed all of this tax. In the decision itself, as a number of Senators have said, as well as saying that Ireland did not collect the required amount of tax from Apple and that there are a lot of arrears which are now the responsibility of the Irish authorities to collect, it goes on to say in the accompanying press statement that some of this may not be Ireland's tax at all and maybe it should be that of other European countries. If Apple paid more tax or returned more income to the US, maybe it was US tax. My view of law is fairly simple. One cannot have it both ways. If the Irish authorities are being required to collect arrears, then the Commission has decided that this money in arrears is appropriate to the Irish Exchequer. I never signed on in Europe to be the tax collector for Austria or Spain, both of whom are suggesting now that some of the tax may be theirs for iPhones and iPads that were sold from their jurisdictions. Much of this decision just does not make an awful lot of sense. It is something that has to be appealed to ensure that we protect our position and our sovereignty.

The wider issues are fairly straightforward as well. Under the European treaties, tax matters and especially tax rates are a matter for sovereign Governments. That is what the European treaties say, that is what we decided in 1972 and that is what is has remained after the various amendments to the treaties that have occurred. Yet, now the suggestion is that the rules on state aid are superior to the treaties. That is like saying that statutory rules, which we will promulgate here, are superior to the Irish Constitution. There has to be a primacy in law where the treaties are primary and anything else is subsidiary to that. The commission is turning the legal position on its head. By the way, I am not proposing, or suggesting, that at this stage, we appeal to the European Court of Human Rights in Strasbourg. However, I am saying that there are other flaws in the approach and we reserve our right to pursue them at a future date, if necessary. In the meantime, we are going to appeal this decision in the interests of the people.

At a meeting of ECOFIN that was extensively reported, the president of ECOFIN said that these were historic and legacy issues as far as Ireland was concerned. He name checked both the Taoiseach, Deputy Enda Kenny, and myself and said that the two of us were at the forefront of OECD tax reform. As far as he was concerned, legacy issues should not be pursued, we should work forward when we reform tax law and that Ireland was at the forefront of the reforming movement on OECD.

When the head of taxation at the OECD in Europe, a French socialist lawyer, Pascal Saint-Amans, visited Dublin the week before last, he made it very clear that, as far as he was concerned, if there was a tax liability it was to the US and not to Ireland. The reason he formed that view is simple. It is true to say that Apple paid very little tax and the figures that have been put forward by Commissioner Vestager are correct. However, Apple paid its full tax liability for its Irish activities. It is probably the biggest corporate tax payer in Ireland. It did everything necessary in Ireland. What is being charged is that we should have collected tax from Apple's profits in other jurisdictions. In the ruling, the Commission makes no distinction between resident and non-resident companies. Under Irish law, the Irish tax authorities have no liability to collect tax on non-resident companies. That is for the jurisdiction in which they are resident. That is one reason I think the European competition Commission is wrong in law.

The position on US tax law is that while Apple paid a very low amount of tax, it has a very large tax liability. However, the way US corporate tax works is that the liability only turns into tax to be paid when the profits are repatriated. Then tax is paid at 35%. The low percentage of tax that Apple paid is correct. However, if one looks at what Apple's tax liability was, it is much larger than that. The liability is to the US exchequer because it is in the US that economic activity principally occurs that gives rise to the profits that Apple make.If Members have an Apple iPhone they can see very small print engraved on the back of it - I had to get one of my children to read it for me because my eyes were not good enough - stating that it is designed in California and manufactured in China. The economic activity, therefore, does not occur in Ireland but in the United States. Under OECD principles the tax is due to the United States and under US tax law the tax is due in the US but not payable until Apple repatriates its profits. That is the reason Pascal Saint-Amans of the OECD said that if this tax arrears is due anywhere it is due in the United States. It is not due in Ireland, therefore why should the responsibility of collecting it rest on the Irish tax authorities?

I appreciate that the issue is very complex. I thank all the Members for their contribution and our Sinn Féin colleagues for making the debate interesting by having a different point of view. Conflict often clarifies-----