Noonan signals intention to take a small bite from Apple’s favourable tax status
Opinion: Move seen as attempt to limit reputational damage
“We know that Irish corporate tax law came under scrutiny in a number of inquiries quite recently,” Noonan told reporters in the wake of the budget. “We don’t want to incur any reputational damage. We don’t think we have done so yet but we don’t want to encourage reputational damage.”
If sustained criticism of Ireland’s system in the US, Germany and France is anything to go by, the damage is already being done. Although others would dispute this, Noonan insisted the capacity to claim stateless status under Irish law was the “one weakness” in the regime.
He also implied that the development might not have come as news to the firms in question. “We understand from our sources in the system that it won’t lead to any diminution in foreign direct investment flows into Ireland because it’s something to protect our reputation,” he said.
“We think it will be an additional bulwark to the reputation which is so important when companies set up here.”
It would appear that all parties resolved that the public and highly politicised disclosure of the “stateless” ploy by a subcommittee of the US Senate now necessitates a row-back.
If it can be stated with some certainty that the Government would rather if it did not find itself in this space, it still felt compelled to move. The criticism stung and a response was required.
This is all the more striking given Dublin’s preference for cordoning off discussion of international corporate tax matters within the Organisation for Economic Co-operation and Development, a relatively sedate arena.
Double Irish Dutch Sandwich
The message here was always that Ireland might move if everyone else was moving too. It was all the more relevant in a scenario in which countries such as the Netherlands, Luxembourg and Slovakia are known as shrewd strategists in the international tax game. If Google’s use of the infamous “Double Irish Dutch Sandwich” trick exploits both Irish and Dutch tax law, the attitude is that Dublin could hardly be expected to move if The Hague does not.
It was not for nothing, therefore, that Noonan’s first response to the Apple tax disclosures was to say that Ireland would not allow itself to become a “whipping boy” for the US. Still, this invites the obvious observation that the Franco-German assault on Ireland’s corporate tax system at the outset of the bailout made whipping boys of Noonan, Kenny and every other Irish notable.
If exit from that very bailout in December will be heralded as the moment at which Ireland’s economic sovereignty is finally reclaimed, the net point must be that there are always limits to such sovereignty. Pressure on corporate tax is not going to go away.