Commission accused of undermining Ireland’s tax code

The European Commission has been accused of using state aid rules to undermine Ireland's tax code.

Chartered Accountants Ireland said the commission's ruling on Apple represented an "infringement" of Irish sovereignty.

"Because it is unable to challenge the tax system of a member state directly, the EU continues trying to use state aid rules to undermine the Irish tax system by the back door," said president Liam Lynch.

He warned the ruling was part of a wider push by Brussels to assert control over tax in Europe.

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“Both from the direct dealings this institute has with the commission and from initiatives such as the common consolidated corporate tax base (CCCTB) project which would centralise corporation tax law, we see a push to move control over tax rules towards Brussels and away from EU member states where the control properly belongs. This has to be resisted.”

Second guessed

The American Chamber of Commerce Ireland, which represents 700 US companies in Ireland, said Ireland or any other EU state should not have its tax policy and administration second guessed retrospectively. “It is important to note the original commission ruling stated its decision did not call into question Ireland’s general tax system or its corporation tax rate.”

Oxfam Ireland said the ruling backs up its recent assessment that Ireland facilitates corporate tax avoidance on a grand scale.

"The billions shaved off Apple's tax bill are not an abstract sum. Tax-dodging has a real human cost," said Oxfam Ireland's chief executive Jim Clarken.

“ When a company gets away without paying the tax it should, that has a direct impact on the lives of people around the world. This is tax that should be paying for schools, roads, medicine and lifting people out of poverty.”

Scrutiny

Shaun Murphy, managing partner at KPMG said that the Apple ruling “ concerns the very particular facts of one case and isn’t in our view of widespread relevance - it’s also important to note that the Commission isn’t calling into question the fundamentals of Ireland’s tax regime including the 12.5 per cent corporation tax rate.”

He said that Ireland, and other EU states appealing against Commission tax rulings are questioning “whether the EC has overstepped the boundary for the application of State aid provisions into taxing matters which should, as the Government has argued, rest solely with each Member State.”

Peter Vale, tax partner at Grant Thornton, said it was difficult to reconcile the Commission’s ruling on Apple with prevailing Irish tax legislation. “Indeed the Commission’s verdict could be seen as undermining the integrity of the Irish system, making the decision to appeal essential,” he said.

The ruling also casts doubt on a country's sovereign right to set its own tax rules, something which is regarded as sacred.Sinn Féin MEP Matt Carthy has said the Government's appeal against the commission's ruling on Apple was "weak, shows poor political judgement and is likely to fail".

Mr Carthy, a member of the European Parliament's economic and monetary affairs committee and Panama Papers inquiry, claimed the Government's arguments do not stand up to scrutiny. "The Department of Finance chooses to ignore the economic reality that the structures put in place by Apple and sanctioned by Revenue facilitated industrial-scale tax avoidance."