Joan Burton
Question:4. Deputy Joan Burton asked the Taoiseach if he will report on his meeting with a person (details supplied) on 18 June 2018. [27493/18]
View answerTuesday, 10 July 2018
Questions (4, 5)
Richard Boyd Barrett
Question:5. Deputy Richard Boyd Barrett asked the Taoiseach if he will report on his recent meeting with a person (details supplied). [27746/18]
View answerOral answers (32 contributions)
I propose to take Questions Nos. 4 and 5 together.
I met Mr. Tim Cook, chief executive of Apple, on 18 June in Dublin. Apple is a major investor in the country and employs more than 5,000 people in Ireland, mostly in Cork. I regularly meet companies with a presence in Ireland and it is right for me to do so. During our meeting Mr. Cook highlighted Apple's continued investment in Ireland, in particular, a new extension to the Cork facility which was completed in May this year. We discussed some topical issues, including the impact of Brexit, the digital Single Market, digital taxation and data protection. We also discussed the European Commission's state aid case and noted that payments were being made by Apple, in accordance with the agreed schedule, into the escrow fund which had been set up pending the appeal submitted to the European Court of Justice. We discussed the Athenry data centre site and noted the new policy and legal frameworks we were putting in place for future data centre development.
Apple is a very important employer in Ireland, particularly in the Cork region, and extremely important to the economy. Was it the Taoiseach's office or the Office of the Ceann Comhairle which was responsible for the rather delicate wording of the question, namely, "To ask the Taoiseach if he will report on his meeting with a person (details supplied)", the person obviously being Mr. Tim Cook of Apple? I would have thought he was world famous and entitled to his name, even in the wording of the question. Someone who is a private citizen falls into a different category.
The Taoiseach mentioned the European Commission's judgment. Why has the tax payment which is being made into the escrow account - I assume it is the full €13 billion, but the Taoiseach might enlighten us in that regard - not included in the Exchequer returns? Many tax payments are made by businesses to the Revenue Commissioners where the final tax liability is in dispute; however, they are included in the normal Exchequer returns. There can be a corresponding note if it is expected that they might be paid to somebody else or not held. Why has there been a departure from a strong tradition in the publishing of Exchequer returns in this case?
Apple is among several significant companies that are being used in citing Ireland as a tax haven. During the years, I have participated in extensive discussions with the OECD on tax reform. I am very concerned that the goodwill towards Ireland is being diluted by constant references in different reports, among them, the Panama Papers, the Luxembourg Leaks, the Commission's report on the Apple tax issues and Wikileaks, all of which cite Ireland.
The Deputy should conclude.
Has the Government given any consideration to this commentary which potentially is very damaging to our reputation? Has it considered introducing a minimum effective corporation tax rate? That would mean that, no matter what tax mechanisms were open to a company, notwithstanding the 12.5% corporation tax rate, they would have to pay at a minimum rate of, say, 6.5% or 7.5%, and genuinely pay at that rate.
I do find it slightly ironic, but I am glad that the Labour Party is now proposing the introduction of a minimum effective corporation tax rate.
We always did.
We always did.
When we proposed it, when the Labour Party was in government for five years, it did not bring forward a minimum effective corporation tax rate.
Read history.
It did not bring forward a minimum effective corporation tax rate. That is a fact. There is no history to read. We asked the Labour Party to do so time and again. I am glad that it is now in favour of it.
We always were.
Under a Labour Party Government.
It is amazing.
It is strange that Tim Cook's name cannot be mentioned. It is a little odd. Perhaps it is symptomatic, or just an office thing, but there is a fear of and deference shown to Tim Cook, Apple and similar corporations which I find extraordinary, with the access they enjoy. The Taoiseach and I disagree on Ireland's role in tax avoidance by Apple, but one thing is beyond dispute or doubt - Apple is an aggressive tax avoider which uses, exploits and abuses loopholes, whether it be in the Isle of Man, on the Cayman Island or here to evade tax. I find it odd that we do not challenge it about it, or, specifically, that the Taoiseach does not do so. Instead, we roll out the red carpet; it is given extraordinary access and there is no statement from the Taoiseach to say we think Apple should pay its taxes and that it is unconscionable one of the richest corporations in the world pays less than 2% in tax. How can that be anything other than obscene? When the Taoiseach met Mr. Cook, did he mention the extraordinary housing crisis in this country and the massive deficit in investment in water infrastructure, two issues which should be of importance to him, as well as the €110 million deficit in the public health service? In that context, did he perhaps reconsider, with Mr. Cook, whether it was a good idea to engage in a legal action to try to prevent the €13 billion from being paid into the Exchequer in taxes the European Union believed Apple owed to this country? Do the huge deficits in housing and infrastructure provision not give the Taoiseach and Mr. Cook cause for thought?
On a contrary approach, one of the entirely false accusations made against some of the large companies that operate out of Ireland is that they are somehow brass plate entities or that they are only tax vehicles. That is nonsense. Apple has been one of the biggest employers in Cork for almost four decades. I can recall that in the late 1990s, when we had just entered into government, there was huge clamour from the Opposition to do what we could to prevent Apple from closing in Cork. It was related to its pipeline at the time and so on. The late Joe Gantly who was managing director of Apple in Cork went to Steve Jobs and told him that they could do different things in Cork, in the provision of customer support and financial operations in the European and the Middle East and Africa, MEA, region. The level of employment was not significant at the time; I do not think it was as much as 700 or 800. Its growth has been dramatic and the real innovation has been the advent of touchscreen iPhones, the iPod, the music revolution, Apple's research capacity and so on, which transformed its operations in Cork, in both manufacturing and also service support for the MEA region.
Whether we like it, a report was published today on growth in Ireland from the 1980s to date. Notwithstanding the global financial crisis and its impact on this country, growth has been upward. Without question, our foreign direct investment policy has been the linchpin of Ireland's industrial and economic growth from the 1980s and before, the 1960s and 1970s. If one looks to see what was the defining change historically, it was opening the country to foreign direct investment.
Does that mean we ought to ignore tax avoidance?
No, but I challenge the Deputy and others to talk to the workforces in these companies, including Intel and the pharmaceutical companies. I was the Minister with responsibility for enterprise for four years. Who are we up against? It is not other European states but Switzerland, Israel and Singapore. People from Singapore were knocking on every door on which representatives of IDA Ireland were knocking.
That is what we are up against. We cannot change unilaterally or arbitrarily target certain companies. I say this at European level. There is protectionism in Europe. We have to be very careful not to change taxation policy unilaterally in a way that would favour larger economies in Europe. That would be the net outcome of some of what is being proposed. I accept that global companies should pay tax, but there has to be a global resolution of this issue. Equally, we have to revise and review our industrial policy. What worked for the last 40 years might not work for the next 30, in the light of what is happening in America and Europe and the changes that are occurring globally.
There is an element that keeps targeting and hitting companies that have been providing thousands of jobs in various parts of the country for well over four decades. I would like to see the alternative blueprints others might have for creating similar numbers of jobs. How do they propose to facilitate the creation of thousands of jobs in the decades ahead? I am prepared to work on that issue. The attacks on our largest employers have been far too simplistic and negative so far. What does the Taoiseach understand to be the likely timing of future movements in the Apple tax case?
It is important not to have a false argument. Although there are brass plate operations, I did not hear anybody make a blanket assertion that all of the large foreign direct investment corporates are simply brass plate operations. I hear an increasingly unanswerable case for fair taxation, for large corporate entities to pay their fair share, but that does not represent an attack on large employers. I would have thought it was simply a fairly basic statement in an open democratic society. Just as citizens comply with the law, play their part and pay their taxes, corporate citizens should do likewise. The Deputy should not get excited or go off on a false tangent.
I am not getting excited. I am getting very real. I am focusing on the jobs in the economy which are often ignored.
Of course. Everybody wants people to be in jobs. That is the type of nonsense that has prevented a thoughtful debate on fair taxation in this jurisdiction. The minute one mentions fair play in terms of corporate entities-----
I support foreign direction investment and the generation of high quality jobs, just as the Deputy does.
That was not the case for a long time.
Everybody wants people to have decent work. Taxes are needed because we have to pay for things.
I agree with fair taxation.
I have seen documents from the Department of Finance and the then Department of Jobs, Enterprise and Innovation related to the decision taken by the former Minister, Deputy Michael Noonan, to raise to 100% the amount of intangible assets multinationals could write off against profits in any given year. The result of this decision was a massive placing onshore of billions of euro of such assets. While the documents to which I refer leave some questions unanswered, they shed some light on the motivations behind a move that is costing the State €650 million a year. At the time, a senior policy adviser in the tax unit of the then Department of Jobs, Enterprise and Innovation warned against the former Minister's proposal, saying he disagreed with it "on reputation grounds" on the basis that it "would reduce the potential minimum effective tax rate from 2.5 per cent to 1.25 per cent, as 1.25 per cent is too low and such a change could backfire." Rather than taking this advice, the former Minister decided to increase the threshold which was under discussion in the paper in question, from 90% to 100%. We know from a letter that the Minister for Finance, Deputy Paschal Donohoe, sent to Deputy Pearse Doherty that the Department of Finance admits that Apple raised these precise changes in 2014 during the passage of the Finance Bill. The Department will not release the minutes of four meetings it had with Apple which was the largest beneficiary of this tax move. Why are the meetings with Apple at which this issue was discussed being kept secret? Will the minutes be published for the purposes of transparency? Was this issue discussed when the Taoiseach had his meeting with Mr. Cook? Will budget 2019 close the gap and make these billions of euro of assets taxable?
For the avoidance of doubt, Mr. Tim Cook's name can be mentioned in the Chamber. His name was mentioned in my response. I do not know why it did not appear in the question. I have used his name in the Chamber. I do not think there is any person in the world whose name cannot be mentioned in this Chamber.
The money that has been mentioned is being paid into an escrow account which is now open. Billions of euro have been deposited in it so far. It is being paid into the account in phases according to a schedule. It has not been paid in full into the account.
How much has been paid in?
I do not have the exact amount that has been paid in so far.
Is it the full amount?
It is not the full amount, but it will be by the end of the year. It is being paid in in tranches on the basis of an agreed schedule. I do not know why it is not part of the Exchequer returns. I will ask the Minister for Finance to provide an answer for Deputy Joan Burton in that respect. I am sure there is a good reason, but I honestly do not know what it is.
Ireland is not a tax haven and we do not want it to be one. We certainly do not want it to be seen as a tax haven. That is not our industrial policy at all. We are working with the OECD, particularly in the base erosion and profit-sharing process, to remove loopholes in our tax system that companies or individuals might use to exploit our tax laws. We have got rid of the double Irish arrangement. We have also got rid of the idea of state discorporations. Under the information sharing agreements we now have, we share with the revenue commissioners in other countries how much tax individual companies are paying. It is really important for us to know how much they are paying in Germany or Ireland because it enables us to make sure tax is being paid. Today the Cabinet signed off on a further OECD-led international agreement on tax transparency and base erosion and profit sharing. It will be ratified by the Dáil and enable us to deal with the issue further.
To be frank, large corporations should pay their taxes. They should pay them in full and where they are owed. Often, there are disputes about how much is owed and where it is owed. That applies to all taxpayers.
We dispute the European Commission's view that Ireland gave Apple state aid by means of a special bespoke tax deal. I ask Deputies to bear in mind that this is a state aid, rather than a tax, case. We dispute the Commission's argument that many decades ago Ireland gave Apple state aid in the form of a special tax deal that was not open to other companies. Ultimately, the matter will be decided in the European court. We do not yet have a court date. The date for the appeal is at the discretion of the court. It is expected that we will receive approximately six weeks' notice. Although Apple's appeal is separate from Ireland's, given that they relate to the same subject matter, it is possible that the court will arrange for the cases to be heard together in what is known as a rejoinder. The US Government sought for the court to intervene in Apple's appeal, but this was rejected by the general court of the European Court of Justice.
I was asked whether housing had come up during the discussion. Yes, it did. Almost every time I meet the chief executive of a major corporation, he or she raises the issue of housing. It is a major concern for citizens looking for homes in which to live. It is a major concern for employers also because their employees need homes in which to live. Increasing housing and rental costs are putting upward pressure on wages. This is one of the areas in which the Government, the Opposition and the big corporations are totally aligned. Nobody disputes that we need more housing in Ireland. Mr. Cook and I had a particular discussion about the need to build many new homes in Cork in the context of the increasing Apple workforce in Hollyhill.
I had a very interesting discussion with Mr. Cook on the proportion of Apple employees who now work from home. Between one quarter and one third of Apple employees work from home. This has huge benefits. It means that more people can live in other parts of Cork and Munster and work from home. If they have to go into the office just one or two days a week, it makes good sense in finding affordable housing and good planning. It also spreads the benefits of investment well beyond Cork city to a much wider region. As broadband is extended to more and more parts of the country, the opportunities for more and more people to work from home are enormous. That will help in dealing with the transport problems and traffic congestion we face in cities. It will also help in dealing with climate change. We had a really interesting discussion on that issue. Apple could have even more employees working from home. Other employers might be able to follow its example by increasing the level of working from home. It would be useful for parents - men and women - if we could enable more of them to work from home.
I was also asked about the minimum effective rate of corporation tax. I will have to study it because I have not looked at it for a couple of years. I will have to understand its impact before being able to say whether it is a good idea.
One would certainly have to consider the impact it would have on research and development, the knowledge box and intellectual property. A big part of our industrial strategy is to encourage more research and development, more intellectual property development and more value creation at the highest end in Ireland. If the introduction of a minimum effective tax rate were to undermine our knowledge box, it would undermine our industrial policy and tax base. That would not be a good move. I would have to understand how the proposals being made by the Labour Party and others would affect the knowledge box, particularly research and development. Without having studied this, which I admit is the case, I would be concerned that it would be damaging. I would have to study it properly to give an informed view.
I do not have the documents that Deputy McDonald has, or at least I do not have them in front of me. The change that was made to our tax laws at the time in question was linked to the abolition of the double Irish. That is why the decision was made at the time. It has been already reversed. It was reversed by the Minister for Finance, Deputy Paschal Donohoe, in the last budget, if not the one before.
The matters to which Deputy McDonald referred were not discussed at the meeting I had with Tim Cook. I was not at the meeting in question. I do not have the minutes.
Can they be published?
I do not know why they cannot be published. It may be due to commercial sensitivities. I will ask the Minister for Finance to respond to the Deputy directly on it.