Government TDs will today criticise an EU order to recoup €13bn in taxes from Apple and instead argue that the ruling undermines and conflicts with the global consensus around tax systems.
A briefing document circulated to TDs last night ahead of the Dáil debate today on the European Commission judgment also outlines what will be done with the money and Ireland’s position on tax reform.
However, a number of Opposition parties want stronger protections agreed for the Irish tax system before agreeing to the Government proposed motion to appeal the EC ruling.
The basis for the appeal against the Apple ruling is, according to the document circulated by the Department of Finance to TDs, to defend Ireland’s tax system, to provide tax certainty to business and to challenge “the encroachment of EU state aid rules into the sovereign member state competence of taxation”.
The State has a period of two months and 10 days to bring an appeal. But the appeal may take several years.
Despite the appeal, Ireland is required by law to recover the alleged State aid from Apple, in a similar manner to how the Netherlands has been required to recoup taxes from Starbucks in a similar case. The Apple case involves recouping tax payments over a 10-year period up until 2013. The calculated €13bn is also subject to interest. However, Ireland is not subject to any fines.
Finance Minister Michael Noonan is expected today to say the recouped funds will be effectively placed on ice in a holding-type account.
The document for TDs adds:“Pending the outcome of any appeal process, the recovery sums may be placed in a ring-fenced escrow account. If an appeal is successful, the money will be repaid to the company; if an appeal is unsuccessful — and the Commission’s decision upheld — the sum will be paid to the Irish State.”
The documents also notes that the money owed to Ireland could in fact be reduced if other countries or if the US order Apple to pay more taxes there from its business activities.
The document for TDs singles out this exception, noting: “This is an entirely unprecedented aspect of the State aid decision — the concept that Ireland would not be judged to have granted illegal State aid if another jurisdiction had exercised taxing rights over the profits concerned is difficult to understand.”
Ministers and party leaders are expected though today to make a strong defence of Ireland’s tax system.
“The issue of aggressive tax planning by multinational companies is a global problem that requires a global solution,” adds the briefing file for deputies.
It is noted that Ireland has already agreed to the OECD’s Base Erosion and Profit Shifting proposals, which will help reduce corporate tax avoidance. Ireland has also agreed the anti-tax avoidance directive with other EU member states.
In summary, the briefing for TDs concludes: “In the Government’s view, the European Commission’s decision undermines, impedes and conflicts with the global consensus.”
Meanwhile, while some Opposition TDs will declare the debate today a waste of time in the absence of the publication of the full EU Apple judgment, others will call for stronger measures to protect Ireland’s tax system.
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