Ireland’s cabinet has approved an appeal against an EU ruling that it should receive 13 billion euros in unpaid taxes from technology giant Apple.
Dublin is siding with the world’s richest company and rejecting the huge windfall for its treasury because it said it “disagrees profoundly” with the EU ruling.
The appeal is to protect a tax regime that attracts multinational companies thereby creating jobs.
Ireland’s prime minister Enda Kenny explained: “It is important that we should appeal the decision to the European Court to get legal clarity and legal certainty on it, and beyond that I make no apology whatsoever for defending the right to appeal this because this is about Ireland, it is about our people, it’s about us as a sovereign nation, actually setting out what we consider our appropriate policies to devise job opportunities and employment careers for our people.”
Simon Harris, a member of Kenny’s party and Ireland’s Minister for Health, also invoked democracy: “The people of Ireland are very pro-European. I don’t think they take kindly to unelected European bureaucrats telling us what to do here in this country in relation to our own business environment.”
The parliament will vote on the issue next Wednesday. The main opposition party, Fianna Fail, also favours challenging Brussels, so the government should easily win.
Review of how multinationals are taxed
There will now be a review of how Ireland taxes companies. That was demanded by independent lawmakers in the coalition minority government in return for them backing the appeal.
John Halligan, Minister of State for Training, Skills and Innovation, from the Independent Alliance, said: “I believe that Apple should have paid the money. But I’ve also made my position quite clear that I don`t think that the government should be destablised or brought down on this issue. There are far more important issues like the budget, Brexit coming down the line, and I think that the Independent Alliance have got a good deal. For the first time ever in the history of the state there will be an independent review as to what tax is paid by the multinationals, and are they paying fair tax.”
The European Commissioner has ordered the payment on the basis that Apple’s low tax arrangements in Ireland constituted illegal state aid.
Legal experts have said it is impossible to predict how EU courts might rule on the appeals by Ireland and Apple, given that the case covers areas that have not been tested before.
Most experts said the EU judges dealing with any Apple appeal to overturn the ruling would be focused on whether the European Commission has strayed too far into dictating national tax policy by rejecting Ireland’s view of transfer pricing.
“What Apple and Ireland have done sounds really outrageous but the last word has not been spoken as to whether the Commission can use transfer pricing rules to identify what a subsidy is,” said Herwig Hofmann, Professor of law at the University of Luxembourg.
“There’s a good argument to be made that if you want to do that, actually you have to harmonize tax laws and you don’t have the power to do that.”
EU law says only governments can approve a harmonization of tax systems.