THERE IS NO room for complacency with respect to the European Commission’s decision to commence an investigation into the tax status of Apple in Ireland.
Successive Irish Governments have relied on foreign direct investment as a vehicle to drive employment since at least the 1980s and – irrespective of your views on how Apple may or may not have paid tax, the rate of corporation tax and any other matters relating to the Irish taxation system – this matter must be handled professionally and robustly by the Government, the Department of Finance and the Revenue Commissioners. Jobs and the reputation of Ireland as a location to do business are at risk.
The potential downside for Ireland is significant. The fines in competition cases taken by the European Commission are now reaching towards the billion euro mark in some cases (mostly anti-trust). This is a matter that the Government cannot leave to the normal structures of civil service to be dealt with. Repeated concerns have been raised over the last number of years of the lack of professionally qualified people within different public sector bodies (most recently the Office of the Director of Corporate Enforcement announced that he had only one accountant).
Statistics released by the European Commission earlier this month show that there are nearly 800 people working for the Competition Directorate of the Commission. You can be sure that whatever number of staff they ultimately put working on the case, those working on it will be highly qualified and experienced professionals. It is essential that the team Ireland puts out to defend the case are equally (if not better) qualified and skilled as well as properly resourced.
Turf wars between Ministers or Departments, taking months to establish cross Departmental working groups etc will impact on the quality of the defence that Ireland can make. The Competition Directorate has reportedly been “informally gathering” information for some months, so Ireland is already behind in terms of preparation. It is essential that the Taoiseach ensures that the usual system does not apply in this case. A team of the best people need to be put working on this defence immediately, and these people need to be on the team irrespective of who their current employer is.
While some will no doubt see this as a call to feather the nests of well-heeled professionals, it absolutely is not. Rather it is an investment in the protection of the Irish State and Irish employers against the potentially crippling effects of an adverse decision in this investigation. Every million euros lost to the State in the event of a finding against Ireland can be measured in a drop of nurses, medical cards and Gardaí on the streets.
The Department of Finance has expressed its confidence that no State aid rules have been broken, but then again Microsoft maintained throughout its anti-trust trial that it was innocent, as did the many of the international banks ensnared in the more recent Libor cases, but this did not stop them ultimately failing in their defence; their fines were €860 million and €1.71 billion respectively. Confidence is fine, complacency is not.
It cannot be argued that we were not told that there could be a tsunami on the way. We have been told clearly that an earthquake has taken place out at sea – do we act now to avoid as much of the damage as possible, even if the tsunami does not materialise, or do we wait until we see a mountain of water coming towards the beach?
Richard is currently the Chief Executive of the Institute of Incorporated Public Accountants (www.iipa.ie). In addition to being a qualified accountant, he also holds a Masters in Public Administration and worked in the Public Service for more than 10 years before moving to the private sector.
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