Fianna Fáil believes that Ireland’s long standing right as an independent nation to determine our corporation tax policy in all its respects must be vigorously defended.
Ireland’s corporation tax policy has been a fundamental pillar of our hugely successful inward investment strategy in recent decades. Taxation is a national competence and we must ensure it remains so.
The central premise of the European Commission’s case is that Apple got a special deal – preferential or selective treatment that was not available to any other company in Ireland. The case will ultimately be won or lost in the European Courts on this key question of ‘selectivity’.
Ireland’s corporation tax laws in the 1990s or 2000s are not the issue here. The laws applied to every company. The net issue is what the Commission calls Revenue ‘rulings’ but which were actually ‘advance opinions’ given by the Revenue in 1991 and 2007 in relation to the allocation of profits between the Irish branch and Head Office of two Apple companies that were not tax resident in Ireland – Apple Operations Europe, and most importantly, Apple Sales International.
Fianna Fáil has not seen the Commission’s report, but we have carefully read all the available documentation and listened intently to the arguments of Commissioner Vestager.
We do not support the Commission’s conclusion that these Revenue ‘rulings’ amount to illegal state aid being provided to Apple and Fianna Fáil will be supporting the motion put down by the government.
To not appeal the Commission’s finding would be to accept that Ireland has engaged in illegal state aid for the past 25 years. This is not backed up by the facts and the Commission’s decision must be strongly contested.
It is our view that, as elective representatives, we should stand behind the Revenue Commissioners as a respected and independent State body. Since its establishment by government order in 1923, the Revenue Commissioners have served this country well, in good times and bad, and their integrity is beyond doubt.
In the Apple case before us, the Revenue Commissioners are adamant that there was no preference shown in applying the law and that the profits which could be taxed in Ireland were taxed here in accordance with the law at the time.
Under Irish tax law, non-resident companies are chargeable to Irish corporation tax only on profits attributable to their Irish branches by reference to the facts and circumstances in each case. The Revenue Commissioners have reassured us repeatedly that this is what happened in the case of the Apple companies.
It is not clear how many ‘advance opinions’ from Revenue relating to other companies were provided to the Commission.
But it is interesting to note that the Commission has not backed up its claim – at least not in the press release or subsequent commentary – that Apple got selective treatment by contrasting it with how other companies were dealt with by the Revenue.
How then can the Commission argue that Apple got a deal that wasn’t available to anyone else?
Ceann Comhairle, €13 billion plus interest is undoubtedly a mouth-watering prospect and there is no doubt much good could be done with it. We would be naïve to believe this money would be there for Ireland if only we were willing to collect it.
We have to look beyond the dramatic headline and examine this on its merits.
Whatever decision this House makes tonight, Apple is appealing this finding to the European Courts. The funds in question are going to be frozen until that process has been completed and we are told it will take years. So fundamental are the issues at stake for Ireland, we must appeal this decision in our own right.
Ceann Comhairle, there are some bizarre elements to the Commission’s decision.
The Commission has, on the one hand, concluded that Ireland was solely responsible for the collection of corporation tax on some 60% of Apple’s global profits.
But on the other hand, the Commissioner has invited many other countries to make a claim for whatever slice of the €13 billion they believe they may be due. She goes on to say the amount owed to Ireland would also be reduced if the US authorities were to require Apple to pay larger amounts of money to their US parent company for this period to finance R&D efforts.
Saying that the €13 billion is state aid and on the other hand that other countries may be entitled to tax it is a direct contradiction.
These comments introduce an unprecedented level of uncertainty into a ruling of the Commission.
The Commission says the Revenue rulings endorsed a way to establish taxable profits for the two Irish incorporated but non-resident companies of the Apple Group which ‘did not correspond to economic reality’. This begs the obvious question: where is the economic reality in a finding that requires Apple to pay tax on all their profits outside of the Americas to Ireland?
The truth is there is no economic logic to this and that is why the Commission has opened the door to other countries to claim their share.
Ireland’s strong economic relationship with the US is also central in this debate.
US companies directly employ more than 140,000 people in Ireland and a further 100,000 indirectly. In 2015, 80% of all corporation tax in Ireland was paid by the multinational sector.
The US is furious at the Commission’s decision as their administration believes these profits would ultimately be subject to US corporation tax on repatriation.
We have to take the long view on this. We want to live in a country that continues to attract the world’s top companies here.
We are a world leader in sectors such as ICT, Pharma, financial services, and life sciences. This was not an easy achievement and must be protected.
We respect the IDA and we fully support them in their work. They have a difficult task in a landscape that is becoming more competitive by the day. The headlines on the UK newspapers the day after the Apple ruling inviting multinationals to move to the UK will not have gone unnoticed by the IDA.
Listening to the Chief Executive of the IDA Martin Shanahan on Morning Ireland on Monday, one could get the clear sense of just how serious this issue is for our country.
We have achieved success in inward investment that makes us the envy of Europe. Corporation tax and certainty around that are vital ingredients in that inward investment offering.
Companies operating in Ireland should pay and do pay 12.5% corporation tax on the profits that are properly taxable in Ireland in accordance with our own laws. Equally, we agree that profits should not go untaxed anywhere. Multinationals should pay their fair share of tax.
Profits should be taxed where the economic activity that generated those profits took place. This is what lies at the heart of the recent reforms in how multinational profits are taxed internationally.
Ireland should continue to move in tandem with other countries to implement the OECD’s BEPS reforms. We cannot achieve tax justice on our own but we should continue to play our part through these international reforms.
In our own domestic politics, it is striking that the Commission’s finding on Apple has been seized upon by those who would normally disagree with every word the Commission says.
Let’s all be honest here. Ireland’s corporation tax regime has been targeted by Europe on several occasions. Powerful member states have eyed our corporation tax rate, during some of the lowest points in the economic crisis.
Ireland was forced to secure binding legal safeguards about our corporation tax rate during Treaty negotiations.
The European Commission has tried and so far failed to secure agreement on a Common Consolidated Corporate Tax Base. They will come again in the next few months.
I believe the Commission is now encroaching on our national sovereignty in the area of corporation tax through the mandate they have over competition policy.
The government’s lack of preparedness for this decision deserves to be criticised but launching a political attack is not the priority today when a vital issue of national interest is at stake.
Finally, Ceann Comhairle, it has to be said in this debate, Apple’s presence in Ireland is not brass plate in nature. Apple employs almost 6,000 people in Ireland and is continuing to invest here. Apple made the decision to locate in Cork in dark economic times in 1980 and when jobs were being lost hand over fist in our economy. This investment is welcome.
Apple recently announced a new facility in Cork, over one thousand new jobs and a €850 million investment in a data centre in Galway. Since 2012, Apple has invested nearly €140 million in Cork supporting over 2,500 additional jobs locally, providing services such as facilities, catering, security, recruitment, printing, fulfilment and maintenance.
We welcome Apple’s commitment to Ireland. Long may it continue.
If we want to be in a position to win similar investment opportunities in the future, now is not the time to equivocate. There is too much at stake.
We have to hold firm and defend our right as a sovereign nation to set our own corporation tax policy and to defend the capacity and competence of our Revenue Commissioners to apply that policy in a fair and consistent manner.
I look forward to the rest of the debate and hopefully to a decisive vote tonight in favour of this motion supporting the appeal.