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THERE IS NO room for complacency with respect to the European Commission’s decision to commence an investigation into the tax status of Apple in Ireland.
Successive Irish Governments have relied on foreign direct investment as a vehicle to drive employment since at least the 1980s and – irrespective of your views on how Apple may or may not have paid tax, the rate of corporation tax and any other matters relating to the Irish taxation system – this matter must be handled professionally and robustly by the Government, the Department of Finance and the Revenue Commissioners. Jobs and the reputation of Ireland as a location to do business are at risk.
The potential downside for Ireland is significant. The fines in competition cases taken by the European Commission are now reaching towards the billion euro mark in some cases (mostly anti-trust). This is a matter that the Government cannot leave to the normal structures of civil service to be dealt with. Repeated concerns have been raised over the last number of years of the lack of professionally qualified people within different public sector bodies (most recently the Office of the Director of Corporate Enforcement announced that he had only one accountant).
Statistics released by the European Commission earlier this month show that there are nearly 800 people working for the Competition Directorate of the Commission. You can be sure that whatever number of staff they ultimately put working on the case, those working on it will be highly qualified and experienced professionals. It is essential that the team Ireland puts out to defend the case are equally (if not better) qualified and skilled as well as properly resourced.
Turf wars between Ministers or Departments, taking months to establish cross Departmental working groups etc will impact on the quality of the defence that Ireland can make. The Competition Directorate has reportedly been “informally gathering” information for some months, so Ireland is already behind in terms of preparation. It is essential that the Taoiseach ensures that the usual system does not apply in this case. A team of the best people need to be put working on this defence immediately, and these people need to be on the team irrespective of who their current employer is.
While some will no doubt see this as a call to feather the nests of well-heeled professionals, it absolutely is not. Rather it is an investment in the protection of the Irish State and Irish employers against the potentially crippling effects of an adverse decision in this investigation. Every million euros lost to the State in the event of a finding against Ireland can be measured in a drop of nurses, medical cards and Gardaí on the streets.
The Department of Finance has expressed its confidence that no State aid rules have been broken, but then again Microsoft maintained throughout its anti-trust trial that it was innocent, as did the many of the international banks ensnared in the more recent Libor cases, but this did not stop them ultimately failing in their defence; their fines were €860 million and €1.71 billion respectively. Confidence is fine, complacency is not.
It cannot be argued that we were not told that there could be a tsunami on the way. We have been told clearly that an earthquake has taken place out at sea – do we act now to avoid as much of the damage as possible, even if the tsunami does not materialise, or do we wait until we see a mountain of water coming towards the beach?
Richard is currently the Chief Executive of the Institute of Incorporated Public Accountants (www.iipa.ie). In addition to being a qualified accountant, he also holds a Masters in Public Administration and worked in the Public Service for more than 10 years before moving to the private sector.
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Excellent article, the Irish state must have the best minds on this. Apple may be a one-off, but if anything is found re the Apple tax arrangements the investigators will be looking at other multinationals located in Ireland.
Apples is not a one off but at least they can justify their tax deal with the amount if people they employ here. There are several companies who employ very few here that have similar deals
The EU is not interested in how many people they employ. They are interested in tax rules. And they will fine if they find fault and as usual not care about potential damage to the people of Ireland.
It’s quite shocking how people wrap themselves in the national flag to defend these highly questionable tax arrangements. Apple has made staggering profits, paying hardly any tax in Ireland or elsewhere in the EU. It contributes very little to the Irish or European economy. In a time where the poor and vulnerable are paying the highest cost for economic crisis it is only fair that these multinationals pay a fair share.
It’s not that black and white. They leave Ireland – then say goodbye to over 3000 jobs in Cork. It would be catastrophic to the area.
indeed it would be “fair” that Apple does not take advantage of a favourable tax deal with Ireland. It would be “fair” that it paid tax in France for the profit made in France. The point here is that it would be a serious blow to the Irish economy because, yes, we are partly funded by the money we unfairly allow companies to not pay into other countries’ tax coffers. Any return to “fairness” here would be our loss. So if you want fairness, be prepared to pay more tax, Dom, as we may soon lose the taxes (unfairly) paid by Apple here.
If there is proved to be a sweetheart deal with Apple, as opposed to Apple taking advantage of a loophole, we should not defend the indefensible. We should close the gaps open to creative accounting, remove the Double Irish loophole and lower the corporation tax rate to 9% to offset losses. Our tax regime should be airtight legally, but low in percentage.
Hi Neil
Thanks for the comment.
The matter is not one of defending the action, it is about defending the country from having to pay a fine that would wreck the public finances. Companies are now being fined close to €1Bn. A similar or larger fine would do horrible damage to the country.
Bye, bye apple. The core is now rotten. Time to plant the seed somewhere else. USA up to its old tricks again.
Apple metaphors. Nice.
Scary
Are people not aware you or I would go to prison if we engaged in the same practice’s as Apple and the rest. Tax dodging is tax dodging end of. While they might benefit cork., they do nothing for our economy as a whole. So we continue to get hit with more taxes while these parasites avoid contributing.
13 trillion folks and that is only the tip of the iceberg of what these parasites are hiding in taxes globally. Wake up.
so say they find ireland and apple clean does this mean the irish state can sue the US senate and newspapers and media that actually might not of done any back checking at all so we could get rid of water charges and property tax cause that would be swell but you know thats a if ireland are clean sure we will be grand ;)
Our problem is we think if we don’t give into these big companies they will leave, now its too late we did it once too often. The Governments have over the years sold this Country
as a free for all, just look at the expense of medicines here the highest in Europe. Our government thinks thats ok.
Sure they will pay they wont say a word
Lets show them by uniting next Saturday for the water rates, and we wont stop there.
Why do we sell ourselves short
Interesting.
have your say