Thursday, 16 July 2020

Questions (2)

Paul Murphy


2. Deputy Paul Murphy asked the Minister for Finance the way in which he plans to respond to the ruling of the General Court of the European Union in regard to a case (details supplied) which was due on 15 July 2020; and if he will make a statement on the matter. [16606/20]

View answer

Oral answers (6 contributions) (Question to Finance)

The Apple tax ruling is being portrayed as some sort of victory for Ireland. It is a strange victory where we do not get the €14.3 billion currently sitting in an escrow account. That money is to be added on to Apple's massive cash pile and we cannot use it for housing provision, creating green jobs and avoiding climate catastrophe. I saw coverage of the Minister at a press conference yesterday celebrating this victory and talking about how it shows that we have equality of treatment for taxpayers in this country. If PAYE workers knock on the door of Revenue headquarters later today, will they also be able to access a 0.0005% tax rate?

The Deputy will be aware that the General Court of the European Union annulled the European Commission's state aid decision of 30 August 2016 with respect to Apple. The court concluded that the Commission in its decision had failed to demonstrate that by issuing the opinions in 1991 and 2007, the Irish authorities had granted the two Apple companies, ASI and AOE, a selective advantage. The court rejected all three lines of argument put forward by the Commission and overturned the Commission's 2016 decision that Ireland had granted a state aid to Apple.

Ireland has always been clear that, based on Irish law, the correct amount of Irish tax was charged to the company and that Ireland did not provide state aid to Apple. This was the reason Ireland appealed the Commission decision, and yesterday's judgment from the General Court of the European Union supports the stance we took and our decision to appeal the decision. The State and its lawyers are now examining the detail of the judgment. As both the State and Apple have been successful in having the judgement annulled, the issue of an appeal for either the State or Apple is not possible and does not arise. An appeal is open to the Commission at this stage. The approach we have taken in dealing with this matter, in laying out why we believe that Apple and other taxpayers were treated correctly with regard to the law at that point in time, will continue to be defended by the State in any further action that may ensue.

Does the Minister agree that the grounds upon which the court found in favour of Ireland and Apple were very narrow? It did not find that Apple was not availing of a 0.0005% tax rate. It did not find that Ireland was not a tax haven. It simply found that the tax rulings which were available to Apple did not constitute state aid because they could have been available to other companies as well. That is the essence of the ruling that "the Commission did not succeed in showing .... that, by issuing the contested tax rulings, the Irish tax authorities had granted ASI and AOE a selective advantage". That is the point. Ireland remains a tax haven today but the point is that this extremely low tax rate is also, supposedly in any case, available to other multinational corporations.

In pursuing this issue, the only interest I have had in mind is that of the many hundreds of thousands of people who work in very large companies in this country. At a time of economic turmoil, when we are seeing rates of employment and rates of income change very quickly, the only interest I have had, in three years of dealing with this matter, is how we can continue to stand over an approach that does two things. First, it is part of a legitimate model of competitiveness in which taxation plays a part and which allows for the creation and retention of jobs in our country.

Second, it is about ensuring that all taxpayers are treated fairly and with regard to the law. Yesterday's court ruling was not narrow. The court made very clear in its ruling that it did not accept, in its entirety, the case brought forward by the Commission. I do not know what press conference Deputy Paul Murphy was watching but the last thing I am going to take in dealing with this is an undue tone. The work on how large companies are taxed, as well as on how we handle a changing economy and how that is taxed, will continue. Ireland has to play a role in that but we need to ensure our interests and jobs are recognised.

The problem with basing a big portion of one's economic strategy on being one of the world's top ten tax havens, according to a paper produced by the IMF, is that it is not only immoral but also is completely unsustainable because ultimately, Ireland Inc. cannot win this race to the bottom. It can be outbid by a tax rate of 0.004% or 0.003%. The only winners in this race to the bottom that Ireland is driving with headline and actual corporation tax rates are the big corporations. The losers are those on trolleys and housing waiting lists and those who are going to pay the price for climate catastrophe. Apple continues to avail of extremely low tax rates using a new tax avoidance scheme known as the "green jersey". Will the Minister agree to stop the model of Ireland being a tax haven?

What I want is to have the tax revenue available to pay for public services and to, for example, generate a huge income subsidy support plan over a matter of days that played a role in hundreds of thousands of jobs being retained. I want to have the tax revenue to allow us to bring in payments like the pandemic unemployment payment. My interest is in having the tax revenue to deliver the public services that both I and Deputy Murphy want, as well as the jobs to keep our country at work and provide a good standard of living to people. That is my interest. The Deputy did not mention, though I think it is addressed in a later question, the OECD papers on country-by-country reporting. Based on its analysis, the OECD states that our average effective tax rate is 12% for multinational companies based here. It is not the lowest in the European Union, though it is clearly not the highest either. The only interests I have are the ones I have outlined and, in the future, making the kinds of changes that are needed to ensure larger companies, particularly digital ones, are taxed fairly and effectively.