Noonan faces taxing times over Apple

Cantillon: European Commission move comes after Minister’s decision to prevent companies avoiding tax through effective statelessness

Minister for Finance Michael Noonan. The Government has been swift to assert its intention to contest any suggestion of improper State aid to Apple. Photograph: Gareth Chaney/Collins

Minister for Finance Michael Noonan. The Government has been swift to assert its intention to contest any suggestion of improper State aid to Apple. Photograph: Gareth Chaney/Collins

Thu, Jun 12, 2014, 01:00

That the European Commission has finally decided to act on what it sees as aggressive and anti-competitive tax policy is scarcely a surprise. It has been talking about it long enough.

What is less clear, perhaps, is why the decision to act should be taken by a commission with an already packed agenda to try and clear as it comes to the end of its term. The specific target – at least in Ireland’s case – is also intriguing. The furore over the calculation of profits by Apple for the purposes of tax has been somewhat overtaken by the decision of Minister for Finance Michael Noonan to prevent, from 2015, the practice of companies avoiding tax by effectively making themselves stateless.

In that sense, the commission is looking at something more of historical relevance than of common currency. That raises the practical issue, in the event of an adverse finding, of who pays. It is unlikely that Apple would be pursued for any money.

The Government has been swift to assert its intention to contest any suggestion of improper State aid, raising from the outset the possibility of challenging any adverse finding in the European Courts

At the same time, it has expressed the hope that the investigation will take less than a year to reach conclusion. That seems particularly optimistic on two counts.

State aid cases tend to drag on interminably, wreaking reputational havoc as they go.

The larger concern for the Government though is that this is but a first assault in a longer battle to dismantle what many in the capitals of fellow euro zone states, as well as in London and Washington, consider an unfair advantage for Ireland in its pursuit of foreign investment and jobs.

PwC tax partner Feargal O’Rourke advised recently that the Government move pre-emptively to address those concerns – regardless of how ill-founded Government might believe them to be. As Brussels ups the ante, that advice looks increasingly sensible.

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