Thirteen billion reasons ‘not enough’ to accept EU’s Apple tax ruling

There may be 13 billion reasons for wanting to accept the European Commission's ruling that Ireland gave Apple illegal State aid but it would be a false economy to do so, the Oireachtas Finance Committee has been told.

Appearing before the committee, which is investigating the Commission's decision to order the Republic to collect €13 billion given in aid from the technology giant, Brian Keegan, director of public policy and tax at Chartered Accountants Ireland, reiterated its stance that the ruling infringes on Irish sovereignty.

Mr Keegan was among a number of leading experts including American Chamber of Commerce chief executive Mark Redmond, Oxfam Ireland head Jim Clarken and Trinity College Dublin's Prof Jim Stewart, to be questioned by the committee on Tuesday. The grilling comes a week after European competition commissioner Margrethe Vestager was in Dublin to answer questions on the ruling.

In his opening statement, Mr Keegan, said any adjudication by the commission on any aspect of the direct tax affairs of an EU member must be regarded with some suspicion.

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Belief

“Our belief is that the application of the State Aid rules to overturn an administrative decision on a direct tax matter goes beyond EU competence,” he told TDs and Senators.

He added that no arm of the State can function efficiently if it leaves itself open to being second-guessed by an external authority.

Wary of being seen as siding with the Government, which is appealing the commission’s decision, Mr Keegan said his concern was the impact of the decision, irrespective of its consequences, on the independence of the Revenue Commissioners.

Prof Jim Stewart, a tax expert, noted that Ireland is very important to Apple in terms of profitability and tax structure. He said however, that in appealing the case, the Irish Government was effectively defending the use of international tax law by multinationals.

This he said was a strategy that could hurt Ireland’s standing with other Member States.

“The Irish Government case is identical to the Apple case. The Government has spent considerable sums defending the Apple case and there will be further expenditures in future,” he said.

Prof Stewart said Apple had deep pockets but that the commission’s case was very strong and therefore the company and the Government would likely lose the case.

“In the context of Brexit, where we’re likely to seek important concessions from our EU partners and special economic measures, perhaps in an emergency for certain sectors, it is unfortunate that in two areas - the introduction of a Common Consolidated Corporate Tax Base (CCCTB) and the Apple case - Ireland is in dispute with the commission. There is a risk that by appealing this case, a number of EU governments and perhaps more importantly, public opinion in EU countries will interpret this as a support for Apple’s strategy,” he said.

‘Inaccurate Picture’

Also appearing before the committee, Mr Redmond said he was concerned that the ruling could be used to "paint a highly inaccurate picture of the nature of US business investment in Ireland.

“In the current climate, with challenges including Brexit and a changing world order for global trade, it is vitally important that every opportunity is taken to put on the record the real nature of this investment, how it has been to the benefit of both Ireland and the US and the role played by corporation tax policy,” he said.

The Chamber, which supports the Government’s decision to appeal the commission’s ruling, also questioned possible attempts to undermine the independence of the Revenue Commissioners.

“Not only is Ireland’s taxation regime competitive, by any global standard it is also highly transparent and consistent,” Mr Redmond said.

Separately, Jim Clarken, chief executive of Oxfam Ireland, said there were lessons to be learned from the Apple case to ensure the development of a global system that ends corporate tax avoidance.

“Even if just a small amount of the billions of profits that are generated by multinational companies like Apple were taxable in developing companies, these additional resources would make a huge difference to the people with whom Oxfam works, and who are fighting every days to lift themselves out of poverty,” he said.

Mr Clarken also said he had “serious concerns” as to whether the existing processes Ireland is engaged in go far enough to really address the problem of tax avoidance.