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Tax avoidance

Ireland denies giving illegal State aid to Apple as FT front page makes world headlines

The Department of Finance says that Apple has been “taxed fully” in Ireland.

Updated 2.20pm

IRELAND HAS DENIED that Apple received “selective treatment” on taxes paid in Ireland over two decades as the European Union investigates possible illegal state aid.

The Financial Times is reporting today that the preliminary findings from the European Commission (EC) say that the US tech giant paid a 2% tax rate in Ireland and benefited from “illicit state aid after striking backroom deals with Ireland’s authorities”.

But the Department of Finance (DoF) has come out to deny the allegations, insisting that there has been “no breach of State aid rules” and that Apple was “taxed fully in accordance with the law”.

“Ireland is confident that there is no breach of State aid rules in this case and has already issued a formal response to the Commission earlier this month,” according to a DoF statement.

Ireland welcomed that opportunity to clarify important issues about the applicable tax law in this case and to explain that the company concerned did not receive selective treatment and was taxed fully in accordance with the law.

Speaking to reporters in Dublin today, Tánaiste Joan Burton said that Ireland is engaged in the OECD’s BEPS project which aims to address perceived flaws in international tax rules and will cooperate fully with the Commission’s investigation.

She said: “I would anticipate and hope that Ireland and the arrangements that we’ve made will actually on examination be found to be in agreement. If changes are required we will obviously address whatever recommendations are made in the Commission’s report.”

Apple began operating in Ireland in 1980 and the The Financial Times story says that the company discussed changes in the law with the Irish Government in 1991. The EU investigation is to go back to that date.

A 2013 investigation conducted by the US Senate found that Apple paid a lower rate by channelling overseas sales through subsidiaries in a deal negotiated with the Irish government.

Apple did not immediately respond to comment but has denied the company was given a special deal.

The Organisation for Economic Cooperation and Development (OECD) has also this month began efforts to crack down on “aggressive” tax avoidance by multinational companies, such as the notorious mechanism known as the ‘Double Irish‘.

Under such arrangements, a subsidiary based in a higher-tax country pays another subsidiary based in a tax haven, reducing the amount of tax the corporation pays on overall profits.

The DoF, however, has been quick to respond to this morning’s report, pointing out that the investigation is concerned with Apple alone.

“The enquiry relates to a technical tax issue in respect of this one company and does not relate to Ireland’s corporation tax rate or the Irish corporate tax system more generally,” the argue.

The commission is set to publish further details of their concerns and scope for the investigation tomorrow. Irish authorities were sent a formal letter in June outlining the commission’s ‘opening decision’.

The final decision is expected to take a considerable period of time with the DoF saying that “Ireland will not be commenting further on any individual aspects of this case”.

Apple’s European headquarters is located Cork, where it employs 4,000 people.

Additional reporting by Hugh O’Connell, Órla Ryan and © – AFP 2014 

Read: ‘Double Irish’ tax loophole in the firing line

Read: TD warns that Apple tax probe could result in job losses

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