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Apple tax ruling reaction 'paints unfair caricature of Ireland'

Published 07/09/2016

Finance Minister Michael Noonan said it is untrue that Ireland provided favourable treatment to Apple
Finance Minister Michael Noonan said it is untrue that Ireland provided favourable treatment to Apple

Critics of Ireland's tax regime in the wake of Europe ordering Apple to pay 13 billion euro in back taxes are drawing outdated and unfair caricatures, the Finance Minister has said.

As the Dail was recalled early to debate the controversial ruling, Michael Noonan reiterated the Government's position that no sweetheart deal had been done with the iPhone maker.

"It is simply untrue that Ireland provided favourable treatment to Apple," the minister said.

Politicians are being asked to back the Government's decision to appeal against the order by a Brussels competition watchdog to recoup 13 billion euro.

The ruling by Commissioner Margrethe Vestager found that Ireland gave Apple a special tax deal which ultimately allowed the global brand to pay 0.005% tax in 2014 - 50 euro for every one million of profit.

Mr Noonan said: "The reaction to the European Commission's decision has, at times, painted an outdated and unfair caricature of Ireland's position on tax," he said.

"This is a caricature that is at odds with the evidence and which overlooks our proven track record in recent years.

"The facts show our constructive engagement at the international table, with matchless implementation of reforms ahead of many of our partner countries."

The debate is taking place on the same day as Apple launches its next generation iPhone in San Francisco.

In the wake of the ruling, Apple also confirmed it has made provisions on its balance sheets for 30 billion US dollars of "deferred" tax bills in the US.

Mr Noonan insisted that the tech giant, which holds about 230 billion US dollars in cash reserves, paid full taxes in Ireland and got no special treatment from Ireland's Revenue Commissioners.

"Ireland has done nothing wrong here. We have a proven track record in international tax reform and a matchless commitment to meeting the best international standards," he told the Dail.

"We should not see ourselves through the eyes of our detractors - those who would paint a cartoonish and negative image of Ireland."

Part of the wider debate is Ireland's generous corporation tax rate of 12.5%.

But Mr Noonan said that was founded on fairness, transparency, consistency and the rule of law, and he called on critics to to move on from myths and generalisations.

He said the European Commission ruling was encroaching on sovereign states' decisions on tax and contained contradictions on where Apple owed tax.

Taoiseach Enda Kenny also rejected claims of a sweetheart deal for one of the world's biggest companies.

"It is not how we do business," he said.

He described the Commission's ruling as "especially unhelpful" while efforts are ongoing internationally to reform what he said was a "broken system for corporate tax".

He also said: "If the situation in Europe is to be that tax rulings can be revisited and set aside by the Commission even decades after the event, investors will simply not know where they stand when they locate in Europe."

Mr Kenny said Ireland's membership of the European Union is not at issue.

Apple boss Tim Cook defended his company's attitude to tax and said it paid 400 million US dollars of corporation tax in Ireland in 2014 and another 400 million US dollars of similarly classed tax in America that year. He put its corporation tax bill at 26.1%.

The company has also insisted it will not abandon Ireland, where it has about 6,000 employees and is planning to build a huge data centre.

In Ireland, where a fragile Fine Gael minority Government is propped up by Independents, the appeal against the European Commission is supported by the main opposition party, Fianna Fail.

Leader Micheal Martin said: "The attempt to paint Ireland as a rogue nation on tax has been ongoing for decades.

"It is wrong on every level to claim that Ireland is competing unfairly."

Mr Martin highlighted corporation tax in France, where he said an official rate of 33% compares to the actual rate of 7.4%.

"The argument that Ireland is providing a tax-free, libertarian haven for multinationals is simply nonsense," he said.

"There is no doubt that abuses arose particularly in relation to what were termed 'stateless companies'; however, they were far from unique to Ireland and they have been addressed."

The appeal is opposed by Sinn Fein, the Anti-Austerity Alliance-People Before Profit group and the Greens.

Sinn Fein finance spokesman Pearse Doherty said Apple made 104 billion euro of tax-free profits over 10 years from 2003 by using Irish-incorporated firms Apple Sales International and Apple Operations Europe to book sales outside the US and move money into a "sort of untaxed Bermuda triangle".

"For too long this state has had its head in the sand when it comes to the global moves towards tax transparency and fairness," he said.

"This is our money."

Mr Doherty said it was a "cynical lie" to suggest that Brussels was attacking Ireland's corporation tax rate and that the case was fundamentally about equal tax treatment for all.

Labour leader Brendan Howlin, who supports the appeal, said the ruling by Europe was troubling.

"They know well that this is a problem that has its origins in the interaction of different tax codes on a global level," he said.

"And yet they seem to believe that Ireland, a small nation, should carry the reputational hit for correcting this problem."

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