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Yui Mok
creative accounting

Apple's 2% tax in Ireland claim could lead to a formal EU investigation

Such a probe would be ‘worrying’ according to Fianna Fáil.

REPORTS THAT THE European Commission could launch a formal investigation into Ireland’s corporate tax regime have been described as ‘worrying’.

Fianna Fáil’s finance spokesperson Michael McGrath TD said this afternoon that such a development could ultimately lead to job losses.

International concern about the tax practices of multinational firms has been growing in recent years with both the G7 and European Commission making overtures that they wish to see greater controls globally.

Ireland was brought into specific focus by hearings in the US Senate when Apple’s CFO claimed that the Ireland had given the company a special 2 per cent tax rate over 30 years ago.

The Irish Government denied that Apple paid tax at this rate in Ireland but the claim is believed to have promoted the EU to look at the issue which could lead to a formal investigation.

The Irish Times reports that in San Francisco yesterday California Governor Jerry Brown even joked that “when you look at their (Apple’s) tax return, they are really an Irish company.” Adding that they are in Ireland because of “creative accounting”.

Reacting to speculation that the European Commission could decide on Wednesday to launch an investigation, McGrath said that such a inquiry would be a long-term threat to the economy:

The reality is that any decision by the EU to launch a full blown formal investigation would be a serious and worrying development and could ultimately cost jobs. Such an investigation could take quite a long period of time and represent a lingering threat to our economic recovery.

“If a formal EU investigation is launched, the government needs to be open and transparent in addressing the issues raised and needs to ensure the investigation is concluded quickly and not allowed to drag on over an indefinite period of time,” he added.

An investigation by a Trinity College Professor published earlier this year claimed that multinationals in Ireland paid an effective tax of 2.2 per cent.

This was denied by Taoiseach Enda Kenny who said the figure was closer to 11.9  per cent.

Read: Legality of tax loopholes to be investigated by the European Union >

Read: Multinational companies paid just 2.2 per cent tax in 2011 – report >

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