Apple tax Q&A: What is the situation to date and what happens next?

What is the situation to date? On Wednesday, a four-hour Cabinet discussion broke down after little or no progress was made between ministers on the issue of the European Commission’s ruling on Apple’s tax affairs in Ireland.

During the meeting ministers were given their first opportunity to read the detailed ruling which found against the State.

It is understood that there was no softening of stances on the part of Fine Gael or the Independent Alliance despite separate breakout meetings between Finance Minister Michael Noonan and both Shane Ross and Finian McGrath.

The Independent Alliance held a number of discussions with independent tax experts and Mr Noonan again yesterday and these talks went on late into yesterday evening

Independent TD Katherine Zappone threw another spanner in the works during Wednesday’s Cabinet meeting.

The usually unquestioning and loyal minister for children, was uneasy with appealing the decision and asked Taoiseach Enda Kenny for time to reflect on the ruling.

She met the attorney general for two hours yesterday morning to seek clarity on elements of the ruling. She then spent much of the day in meetings with independent tax analysts.

She indicated last night that she would be making a decision on the matter at today’s cabinet meeting.

What is happening today?

Ministers are due to reconvene a Cabinet meeting at 11am after Wednesday’s meeting was adjourned when those around the table failed to reach any agreement on how to react to the €13bn European Commission tax ruling against Apple. This is seen as a make-or-break discussion and has tested the already weak minority Government.

What are they going to discuss?

Ministers must discuss a way forward to deal with the implications of the European Commissions ruling.

However, the Cabinet meeting could go on for longer than usual despite the fact that only one topic will be on the agenda, given the major impasse that caused Wednesday’s adjournment.

They must reach some sort of agreement or at least compromise today or face the possibility of the Government collapsing.

What are the options?

Ministers can decide to adopt one of a number of options. However, if they cannot agree on a united way to proceed on the ruling it could signal a political crisis and the unraveling of the minority government

Fine Gael has voiced its strong support of an appeal. Finance Minister Michael Noonan immediately said he favours an appeal and strongly denied the ruling that the State had granted illegal aid to Apple through taxation measures.

However, there is significant unrest among the ranks of the Independent Alliance and with Ms Zappone over this clear-cut option.

A middle ground option is to recall the Dáil to debate the issue.

The Independent Alliance has demanded that this happen and has also said it would support an appeal if it is agreed that a motion on taxation measures is brought forward. That would involve an assessment of tax paid by multinationals here.

However, Fine Gael has said it would only deal with these suggestions after it is agreed by Cabinet that an appeal will be made.

Apple tax Q&A: What is the situation to date and what happens next?

What happens then?

If the second compromise option, which seems the most likely, is agreed upon today the Dáil will be recalled.

It is likely that TDs would return to Leinster House next week to debate and discuss the fallout from the European Commission’s ruling.

Fianna Fáil and Labour have already said that they would support a State appeal and so this would be a rubber-stamping exercise that would provide further backing to the Government decision.

However, if, like last Wednesday, the Cabinet cannot formulate a united view on the issue today, it could throw the Government into turmoil.

It is worth nothing that the minority Government has just one seat more than required to maintain the support of Fianna Fáil under the confidence and supply agreement.

It cannot afford to see any members jump ship over this or any other issue.

What happens the money while this is going on?

The European Commission has ordered Ireland to recoup €13b from Apple in what it views as back taxes.

However, after the ruling a senior Revenue official revealed that this figure could actually rise to €19bn when interest on the unpaid sum is taken into account.

The money will not immediately be given to the State but will be held in a frozen escrow account.

If an appeal — which could take four to five years — is successful Apple will not be liable to pay the €13bn and this money would be returned to them.

However, even if the appeal is quashed the entire amount may still not end up in Irish coffers.

The European Commission has said that a portion of the money may be recouped by other governments if they are able to make a case that the tax should have been paid there in the first place.

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