European competition commissioner Margrethe Vestager will answer questions from members of an Oireachtas committee on Tuesday as she visits Dublin to defend the European Commission's decision to order the Republic to collect €13 billion given in illegal state aid from iPhone maker Apple.
While it is understood that Ms Vestager, who was scheduled to land in Dublin late on Monday night, will seek to focus attention on the commission’s general approach to state-aid cases, she is expected to come under sustained questioning by members of the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the Apple case.
“Our committee welcomes the opportunity to engage with Commissioner Vestager to discuss the rationale behind the commission’s August ruling, which may have serious implications for the Irish tax code in terms of future determinations by the Revenue Commissioners,” said John McGuinness, the committee’s chairman.
“Apple Inc employs thousands of people in Ireland and this ruling could have far-reaching implications for multinationals in this country.”
Ms Vestager's brief trip to Ireland will also involve a press briefing and courtesy call on Minister for Finance Michael Noonan. Mr Noonan secured Cabinet backing late last year to appeal the commission's decision that Apple owes the State €13 billion of back taxes, plus interest, for having received preferential treatment by Revenue Commissioners for decades. The case may take up to six years to work its way through European courts.
Final ruling
Earlier this month, Apple chief executive Tim Cook declined an invitation to appear before the Oireachtas committee looking into the matter, saying the company didn't want to "potentially prejudice future outcomes" of the case.
The final EU ruling, published a month ago, said the Government failed to put forward any justification as to why Apple received “selective” treatment when it came to paying taxes in Ireland. It also said the Revenue was mistaken in the way it handled the allocation of profits between different parts of the Apple operation for tax purposes.
The Department of Finance is appealing on the grounds that the commission is "incorrect" in saying the two Apple companies at the heart of the investigation received an unfair advantage.
It also argues that the commission is attempting to “rewrite the Irish corporation tax rules” in saying that opinions from the Revenue Commissioners to Apple on what profits were taxable in Ireland should have been along the lines of the Brussels view of how “arm’s length” deals between two parts of the same group should be struck.
‘Predetermined outcome’
Apple, which appealed the EU decision last month, has argued that the commission approached the case from the outset, in 2014, with a “predetermined outcome”, which disregarded decades of Irish and US tax law. It said that because its products and services were created, designed and engineered in the US, that was where it paid most of its tax.
“If their opinion is allowed to stand, Apple would pay 40 per cent of all the corporate income tax collected in Ireland, which is unprecedented and, far from levelling the playing field, selectively targets Ireland,” it said on December 19th.
Meanwhile, Apple is scheduled to publish quarterly results and host an analysts’ conference call on Tuesday evening, where it may give an update on the case.
The company has agreed to put the money the commission says it owes to the Republic into an escrow account pending the outcome of appeals.
The technology giant remains in talks with State officials and the commission on technical aspects of how the money will be collected and held.
While an original deadline was set for earlier this month, the Revenue Commissioners must align the EU’s formula for how much tax is owed between 2003 and 2014 with Irish tax law. Some estimates for just the interest bill on the amount is about €1.5 billion.
