Apple tax affairs changes triggered surge in Irish economy

Huge revisions to Irish GDP levels that led to “leprechaun economics” claims earlier this year were almost completely caused by Apple re-arranging its tax affairs after the Government closed off tax loopholes.

Apple tax affairs changes triggered surge in Irish economy

Economic analysts revealed the situation last night saying the move led to the multinational giant shifting more of its intellectual property into Ireland, resulting in the firm paying out substantially more in corporation taxes to this country.

The Government has yet to admit that the enormous disruption to Irish GDP figures and the surge in corporate tax revenues was due to the actions of a single multi-national.

However, the independent conclusion throws new light on the Coalition’s renewed commitment to appeal the European Commission’s ruling that Apple repay the State €13bn in back taxes.

Karl Whelan, professor of economics at UCD, said a large part of the surge in corporate tax receipts and the huge GDP revisions can be attributed to the rearrangement of Apple’s tax affairs.

He said this is because Apple brought onshore more of high-value intellectual property to Ireland, while continuing its massive contracts with overseas’ manufacturers to make its iPhones and iPads.

The summer revisions which saw the CSO enormously upgrade 2015 Irish GDP growth to 26.3% drew the jibe of “leprechaun economics” from a top economist. The revisions also meant Ireland paid more into the EU budget.

Further evidence of the huge effects are identified in a report published today by the Irish Fiscal Advisory Council.

The watchdog shows that Ireland’s corporate tax base — the level of company trading profits before tax — unexpectedly surged last year by €23bn to almost €75.4bn, as the country’s capital stock surged €300bn.

In its pre-budget statement, the IFAC warns the Government cannot rely on corporate taxes to fund future spending and tax cuts.

It said Finance Minister Michael Noonan has enough money for modest tax cuts and spending increases, and should not be tempted to splurge any more new money above the €1bn budget package he said he favours.

Finance Minister Michael Noonan
Finance Minister Michael Noonan

The expert opinion emerged as Government TDs roundly rejected suggestions Ireland is a tax haven and that they were passing up on a €13bn windfall by not recouping Apple taxes promptly.

As expected, a Government motion to appeal the Brussels ruling was passed by 93 votes to 36 after an 11-hour Dáil debate.

Taoiseach Enda Kenny warned the claim Ireland provided illegal state aid to Apple would not only damage Ireland but other countries by scaring off investors.

Public Expenditure Minister Paschal Donohoe said there was “no pot of gold” as Apple would have appealed it, adding: “Ireland cannot be a global tax collector for a single company.”

The €13bn will be effectively frozen, Finance Minister Michael Noonan said, saying NTMA chiefs would advise how it could be invested without risk.

The costs of the appeal would be sizeable, he said, adding that Revenue would not reveal tax affairs or whether there were similar cases to the Apple one.

Public Expenditure Minister Paschal Donohoe
Public Expenditure Minister Paschal Donohoe

The comment was seized upon by opposition parties, which claimed an unknown number of major multi-national firms have side-stepped potentially more than €130bn in unpaid taxes over the past decade because of tax loopholes.

The figure is based on a 2014 Department of Finance briefing document given to a previous finance sub-committee examination of multi-nationals’ tax rates, which was referred to by People before Profit TD Richard Boyd Barrett under Dáil privilege.

People before Profit TD Richard Boyd Barrett
People before Profit TD Richard Boyd Barrett

Meanwhile, Taoiseach Enda Kenny will rule out the possibility of a giveaway budget this evening.

Mr Kenny will also announce plans for a cabinet sub-committee on Brexit, which will be chaired by the Taoiseach and ministers.

Ministers will also meet with their British counterparts about Brexit in Dublin today.

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