Updated at 7.04pm
THE GOVERNMENT HAS decided to appeal the Apple tax ruling announced by the European Commission earlier this week.
The decision was made at a Cabinet meeting this morning. Public Expenditure Minister Paschal Donohoe called for Cabinet unity after the decision today.
In penalising the American tech giant to the tune of €13 billion in unpaid taxes, the commission has earned the ire of Apple CEO Tim Cook and caused a huge dilemma for Ireland in whether to accept the money, or appeal the ruling.
Asked, on RTÉ’s Six One News, whether he “thought long and hard” about whether Ireland should “forgo this money”, Taoiseach Enda Kenny said:
“No. Because it’s important we should appeal the decision to get legal clarity and legal certainty on it.
Beyond that, I make no apology about our decision to appeal this because it’s about Ireland.
“It’s about our people, it’s about us as a sovereign nation actually setting out what are appropriate policies to devise job opportunities and employment careers for our people.
This is about the right to small nations. I’m not sure whether the European Commission want to ingratiate themselves with countries more powerful than ours. But this is a small country, and the first meeting I attended after being elected in 2011 was [about increasing] our tax rate.We make no apology for defending that 100% and we will stand over it, as all governments have done over the last number of years.
Cabinet partners
Kenny also defended Minister for Finance Michael Noonan’s decision to declare that the Government would appeal what Kenny calls the European Commission’s “wrong decision”, before consulting with Fine Gael’s Cabinet partners, the Independent Alliance (IA). He said:
Partnership government is about consultation, and is about discussion. Well, that’s what we had from Wednesday.
“When we went into the room, I said I want a really good discussion about this, and we adjourned the discussion, and all day yesterday, any questions, queries, anxieties and concerns were all dealt with.
“In 13 minutes today, everybody was able to give a very clear, a very definitive decision to the Attorney General and to appeal the decision. Obviously, we are a party to three other appeals to the European judicial system. In this case, the sum is exceptionally large.”
He added:
The scale of the figure mentioned was unprecedented. In any event, I regard this matter as being questioning Ireland’s right as a sovereign nation to actually set out policies that are appropriate for Ireland, to actually set out job opportunities and investment for people here.
“And we stand over our 12.5% corporate tax rate, and that has been applied fairly and unequivocally by the Revenue Commissioners over the years, through all sectors, through all sectors, through all companies.”
Michael Noonan
Noonan, meanwhile, had some harsh words to say about the commission’s finding.
Speaking after the announcement of the appeal, Noonan said that “there was a lot of envy across Europe about how successful we have been in putting the headquarters of so many companies into Ireland and especially into Dublin”.
Asked if he thought the move was an attack on Ireland’s corporation tax rate, he said: “I do.”
He said that during the Taoiseach’s first meeting in Europe in 2011, former French president Nicolas Sarkozy attempted to “bully him” in particular “to drive the corporation tax up to 15% as a quid pro quo for the bailout programme”.
“I think it was a dreadful thing to do at the time, and there are still people who think that Ireland is doing too well in terms of foreign direct investment (FDI) and that they would like to change the 12.5% regime,” said Noonan. “We have a different view – we are going to stick by the 12.5%.”
Noonan said his message to international investors and the Irish people is “there will be no change in Ireland’s 12.5%”, adding: “We will fight it at home and abroad and in the courts.”
Independent Alliance
With the majority of the Government apparently in favour of appealing the ruling, the chief stumbling block was the IA ministers.
Kevin ‘Boxer’ Moran, Deputy Chief Government Whip, released a statement on behalf of the IA, which includes Shane Ross, Finian McGrath and John Halligan, following the announcement:
“We have been carefully examining the entirety of Apple’s tax treatment to ensure that any decision reached is in the best interests of this country over the long-term.
“The integrity of the tax system and to provide tax certainty to business is also paramount.
I am also pleased to say that the Government has agreed to a review of Ireland’s corporation tax system by an independent expert to be appointed by the Minister for Finance.
“The agreement reflects the Independent Alliance’s approach of greater scrutiny of major decisions and the need to place accountability and transparency at the heart of Government decision-making,” Moran said.
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The Government will arrange for annulment proceedings to be brought before the General Court of the European Union on state aid and “request the Attorney General to prepare the legal grounds in support of those proceedings and to take all other steps incidental to the conduct of those proceedings”.
The motion that will be put before the Dáil is as follows:
That Dáil Éireann:
- Supports the Government decision to appeal the European Commission’s decision that Ireland provided unlawful state aid to Apple;
- Commits itself to the highest international standards in transparency in the taxation of the corporate sector;
- Resolves that no company or individual receives preferential tax treatment contrary to the Tax Acts and calls on the Revenue Commissioners to continue to observe this principle;
- To reaffirm Ireland’s 12.5% corporation tax rate;
- To arrange for a review of Ireland’s corporation tax system by an independent expert to be appointed by the Minister for Finance, excluding the 12.5% corporation rate.
Speaking after the Cabinet meeting, Noonan said the Dáil will most likely be recalled next Wednesday “to deal with this matter”.
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“I knew for a week that a decision would be coming this week, but I didn’t know which day … We’ve known for some time that it was trending towards being negative … but we didn’t know about the amount of money, but we suspected it would be quite large.
“The amount doesn’t really matter, it’s the principle. I mean it obviously matters in terms of dealing with this … There’s a principle here where, for the first time that I know of, the Commission has decided to be retroactive in their rules.”
Minister Donohoe called for Cabinet unity after the decision.
This government stands fully behind our corporation tax regime. We stand fully behind the ability of this regime to create jobs here in Ireland now and in the future.
Donohoe said that during the meeting ministers “reviewed the clear need for the Irish government to defend the 12.5% tax rate, to defend our institutions and how they treat companies here in Ireland”.
“We believe it is absolutely essential that this rate and our tax system be maintained to build on the jobs that we have here in Ireland and to create even more jobs in the future.”
‘A new era’
After the decision was announced, Children’s Minister Katherine Zappone, who is independent but not in the IA, said: “I believe [the move] will bring Ireland into an era of tax justice.
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“I want to be clear at the outset that there are aspects of the European decision that I agree with as it corresponds with my well-established views in the area of fair and just taxation.
I agree that the tax deal was unethical and I believe that the Commission has actually acted in the public interest by bringing this issue into the public media and political spotlight.
“I do think that Ireland has to learn from this and such unfair deals really must never happen again. In that regard I welcome that the Government has accepted my calls in the context of our decision this morning for a review of our corporation tax code via independent experts to transpose some of the EU directives by the end of the year.”
Zappone added that Ireland will be “taking the lead on tax justice”, with the Taoiseach agreeing to chair a meeting on it with international experts later this year.
‘Simply wrong’
Sinn Féin’s deputy leader Mary Lou McDonald has said the Government’s decision is “simply wrong”.
“Everybody, including multi-nationals, should pay their fair share.
“The rate of corporation tax in this state is 12.5%. Apple were found by the EU Commission to have benefitted from a special deal with the Irish state that allowed them to pay a much lower rate. This was ruled to breach competition laws.
So this is not about the EU trying to encroach on our tax sovereignty. It is about a level playing pitch and ensuring everyone pays their fair share.
“What is truly astonishing is that it has taken a decision against one of the world’s most profitable companies for the Government to take a stand against Europe.
“There was no uproar from government when we were saddled with billions of euros of banking debt, nothing when we had a crippling austerity programme imposed on us and nothing again when we democratically voted to get rid of water charges in the recent general election,” McDonald said.
Speaking on RTÉ’s Prime Time last night, Housing Minister Simon Coveney said it would be “madness” not to appeal the decision.
Yesterday Tim Cook described the Commission’s decision as “maddening” with “no basis in fact or law”.
He denied that Apple had ever been granted a sweetheart deal by any Irish government.
“The Irish government has done absolutely nothing wrong,” he added.
- with reporting by Christina Finn, Darragh Peter Murphy and Cianan Brennan
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