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'Political input' contributed to European tax ruling on Apple, says minister

Ireland's finance minister has said a European ruling that Apple owes the country 13 billion euro (£11.1 billion) in unpaid taxes is a mix of tax law and politics.

The Republic's government has already spent 1.8 million euro (£1.5 million) fighting the landmark decision which says the tech giant secured illegal state aid.

Answering questions at a parliamentary inquiry into the case in Dublin, Michael Noonan said he did not think the ruling helped the fight to get multinationals to pay more tax.

An investigation by the European Commissioner for Competition Margrethe Vestager last year found Apple paid 50 euro in tax for every one million of profit made outside the US in 2014.

The government and Apple are both appealing the decision.

At the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, Mr Noonan said: "I don't think (the Commission) were focusing on Ireland particularly.

"I don't think Apple worldwide were paying sufficient tax. The argument was that the tax liability was not in Ireland."

Mr Noonan added: "I think a lot of decisions in Europe are a mix of technical data and mix of politics and I think there was a political input here."

Apple got rulings from Ireland's tax inspectors in 1991 and 2007 about a complex corporate structure involving three subsidiaries - Apple Operations International (AOI), Apple Sales International (ASI) and Apple Operations Europe (AOE) - and how sales were routed through Ireland.

Mr Noonan said he was surprised Commissioner Vestager estimated the tax due was 13 billion euro over 10 years.

Apple boss Tim Cook rejected an invitation to attend committee hearings on the case.

Mr Cook previously appeared at a congressional hearing in Washington DC, where he explained that Apple effectively paid 2% tax rate for its subsidiaries in Ireland, where the headline corporation tax rate is 12.5%.

Ms Vestager told the committee during the week that her office's inquiry began in 2013 after evidence from Apple to the US Senate that it had a "tax incentive arrangement" with Ireland.

Negotiations are ongoing with Apple for the 13 billion euro to be transferred into an escrow where it would be held until the appeal at the European courts runs its course.

In his statement to the committee, Mr Noonan said it was untrue that Ireland treated Apple more favourably.

"It is important to take this seriously as it is very damaging for our reputation to be called into question in this way," he said.

"This affects how Ireland could be treated by other jurisdictions, damages Ireland's credibility in the international tax debate and inhibits Ireland in pressing arguments that serve our national interest."

Mr Noonan said a central aspect of the case is that the economic activity that created the value in Apple's business operations was not conducted in Ireland.

"E veryone knows that the iPhone and other well-known Apple products were developed in the US, not Ireland.

"Our tax legislation, which reflects international norms, only allows us to tax non-resident companies on the profits that they make in Ireland.

"As a result, the bulk of Apple's profits were not subject to Irish tax," he said.

Mr Noonan also accused the commission of "attempting to re-write Irish corporation tax legislation".

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