Government to appeal €13bn tax bill for Apple

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2 September 2016 | 0

The Government will be appealing the European Commission’s ruling that Apple received what amounted to illegal State aid and was liable for €13 billion in back taxes.

The decision was made after a cabinet meeting today in which it was feared that ministers from the independent alliance would advocate for the collection of the so-called Apple Tax.

“The Government has decided unanimously to bring an appeal before the European Courts to challenge the European Commission’s decision on the Apple State aid case,” said Minister for Finance Michael Noonan in a statement released this afternoon. “I believe that there are some very important principles at stake in this case and that a robust legal challenge before the Courts is essential to defend Ireland’s interests. The full amount of tax was paid in this case and no State aid was provided.  Ireland did not give favourable tax treatment to Apple.  Ireland does not do deals with taxpayers.”

The terms of the appeal will now be formulated by the Attorney General and debated in the Dail next Wednesday. The cabinet also announced an independent expert review of the corporation tax system.

“It is good practice to undertake periodic reviews of key areas of Government policy.  The last review of corporation tax policy took place in 2014.  Since then a wide range of new international developments have emerged in international taxation, such as the OECD Base Erosion and Profit Shifting Project.  We need to ensure that Ireland’s corporation tax code meets these new standards while remaining competitive as the economy continues to grow,” the Minister said.

The Government’s position was welcomed by industry group ICT Ireland whose director, Paul Sweetman, said: “The Government is right to appeal this decision. It is important that this major issue is resolved in the appropriate setting. We must focus on the facts of the case and remove uncertainty. In the last three months, the European Commission has published decisions on over 100 state aid cases. Appealing state aid rulings is common and, in this case, essential. Businesses need as much certainty as possible on their trading environments, including the taxation regime.”

According to the European Commission ruling Apple had received treatment that amounted to illegal state aid in 2003 and 2014. At issue is the company’s strategy of logging European sales through an Irish office which then paid out profits back to the US in for research and development and the remainder to a stateless ‘head office’ which existed only on paper and paid no tax whatsoever.

While the Irish tax system requires corporations pay tax at 12.5%, Apple’s arrangement allowed it to pay only 1% in tax in 2003, a bill which dropped to .005% in 2014.

In a decision released last Wednesday, Competition Commissioner Margrethe Vestager said Apple’s tax arrangements “did not correspond to economic reality”.

Apple CEO Tim Cook reacted strongly to the decision, slamming it as “total political crap” in an interview.

The Governement has two months and 10 days to lodge the appeal. Pending the outcome of that appeal, Ireland is required to recover up to €13 billion with interest, from Apple.  The sum may be placed in an escrow account until legal proceedings have concluded.

TechCentral Reporters

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