Answering the €13bn question - Apple tax deal

THE €13bn question most people are asking today is why the Irish Government is not keeping that huge sum following yesterday’s declaration by the European Commission that Apple, the richest company in history, owes Ireland that amount in unpaid and allegedly illegal tax benefits from a sweetheart deal between the State and the tech conglomerate.

Those in favour of grabbing the money believe — wrongly, according to EU rules — it should be used to reform Ireland’s ailing public health service; or could be used to modernise the education system, house the homeless; or invested in badly needed infrastructure improvements. It could, however, be used to reduce the national debt.

The position adopted by both the Government and Apple is one of fundamental disagreement with the commission’s analysis. They argue that no sweetheart deal with Apple existed and intend to immediately appeal the verdict. Sorting out the row between Dublin and Brussels promises to be a long and complex legal process which could go on for years, with lawyers laughing all the way to the bank.

President Barack Obama is determined to recoup unpaid Apple taxes for the US Treasury, which is driving the case against Ireland. If anything, the scenario will get even more torturous following the commission’s declaration that other EU countries could also be entitled to a slice of the juicy Apple tart.

While Fianna Fáil, architect of the 12.5% corporation tax policy, remains committed in principle to supporting the Government’s strong denial that a secret deal was ever agreed with Apple, it remains to be seen how Independent politicians will react to the administration’s refusal to avail of the biggest tax windfall in the nation’s history.

The Independent Alliance says it is “shocked” by the sheer scale of Apple’s €13bn tax debt and is reviewing the situation. At the same time, the minority government is intent on taking legal action to defend Ireland’s international reputation and to secure the 5,000 Apple jobs in Cork, with a commitment to create an extra 1,000 jobs — reflecting the company’s commitment to Ireland, according to Finance Minister Noonan.

Basically, the commission’s case is that Ireland cobbled a secret deal with Apple which saw the company pay as little as €50 tax on every €1m of profit it made. The problem for Ireland is that the verdict portrays it as a tax haven involved in a web of international tax avoidance on a vast scale. Inevitably the appeal will be seen as another example of “leprechaun economics”. Meanwhile, the plans to spend the Apple money will, as Fr Ted might put it, be resting in the coffers of the NTMA, hopefully gathering interest.

With so much at stake in terms of jobs and US investment in Ireland, politicians should not rush their fences when Mr Noonan today seeks Cabinet backing for an appeal against the commission’s decision that he describes as “bizarre”. Ironically, if Ireland were to lose the appeal, it could keep the money and use it to reduce the national debt. If Ireland wins, it will have to give the money back to Apple.

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